BY COMFORT OGBONNA
Asian stock markets opened strongly on Thursday, following a rebound on Wall Street that helped restore investor confidence after several days of volatility linked to escalating tensions in the Middle East. South Korea’s benchmark index led the recovery, regaining much of the historic losses recorded a day earlier.
In early trading, futures tied to major U.S. indexes slipped slightly. Contracts linked to the Dow Jones Industrial Average fell 0.3%, while futures for the S&P 500 edged 0.1% lower, indicating a cautious outlook among investors despite the recent rally.
Markets in South Korea saw the most dramatic movement. The benchmark Kospi index surged 10.1% to 5,607.71 after suffering its largest single-day decline on record the previous day. The sharp rebound came as the South Korean government unveiled emergency economic measures designed to stabilize financial markets and support the domestic economy.
The earlier plunge had followed rising geopolitical concerns tied to the expanding conflict involving Iran, prompting investors to lock in profits after the Kospi had recently climbed to record highs.
In Japan, the Nikkei 225 gave back some early gains but still closed higher, rising 2.8% to 55,793.74 as investor sentiment improved across the region.
Elsewhere in the Asia-Pacific region, markets also posted moderate gains. Australia’s S&P/ASX 200 edged up 0.1% to 8,913.10, while New Zealand’s benchmark index climbed 0.5%. Meanwhile, Taiwan’s main stock index advanced 2.2%, reflecting broader optimism among regional investors.
Financial markets around the world have been highly sensitive to developments in the Middle East this week, with oil prices emerging as a key driver of market sentiment. Traders are closely watching the price of crude as a gauge of the potential economic fallout from the conflict.
On Wednesday, U.S. stocks staged a notable recovery after oil prices temporarily stabilized and fresh economic data suggested continued strength in the American economy.
The S&P 500 climbed 0.8% to close at 6,869.50, recovering much of the ground it had lost since tensions with Iran escalated. The Dow Jones Industrial Average gained 0.5% to finish at 48,739.41, while the tech-heavy Nasdaq Composite jumped 1.3% to 22,807.48.
However, oil prices resumed their upward trend early Thursday, reflecting ongoing concerns about energy supply disruptions. The international benchmark Brent crude rose 2.6% to $83.51 per barrel, while West Texas Intermediate crude—used as the primary U.S. benchmark—climbed 3.2% to $77.01 per barrel.
Economic data released in the United States also helped boost investor sentiment. One report showed that business activity in sectors such as real estate, finance and other service industries accelerated last month at the fastest pace since mid-2022. Encouragingly for policymakers, the report also indicated that price increases in these sectors were slowing, at least before the latest spike in oil prices triggered by the conflict.
Another report suggested that hiring by private employers strengthened last month, raising hopes that the broader employment report expected from the U.S. government on Friday could show continued resilience in the labor market.
Despite the rebound, investors remain cautious about the broader economic outlook. Markets are grappling with several uncertainties, including how long the war with Iran may last, how high inflation could climb due to rising energy costs, and how these factors might affect corporate profits worldwide.
Historically, global financial markets have often recovered relatively quickly from military conflicts in the Middle East. However, that resilience typically depends on oil prices remaining under control. A sustained surge in crude prices could pose a much greater threat to economic growth and financial stability.
Some investment professionals are advising patience during the current volatility, suggesting that markets may eventually stabilize if energy prices do not rise too sharply.
Others, however, are far more pessimistic. Francis Lun, chief executive of Venturesmart Asia, warned that the situation could worsen significantly.
“I think the Iran situation is getting out of hand, and I believe U.S. President Donald Trump miscalculated enormously,” Lun said. “The situation is very grim.”
On Wall Street, several sectors contributed to Wednesday’s rally. Companies tied to the cryptocurrency industry surged as the price of Bitcoin rebounded above $73,000.
Shares of Coinbase Global jumped 14.6%, while Robinhood Markets rallied 8.1%.
Retailers and travel-related companies also moved higher amid hopes that a resilient economy and easing gasoline prices could support consumer spending.
However, the biggest contribution to the market’s gains came from major technology companies. Amazon rose 3.9%, while chipmaker Nvidia added 1.7%. Because these companies are among the most valuable in the U.S. market, their movements carry significant weight in major indexes such as the S&P 500.
The encouraging economic reports also offered some relief for policymakers at the Federal Reserve, whose dual mandate is to maintain a healthy job market while keeping inflation under control. However, the recent surge in oil prices could complicate that task by pushing inflation higher at a time when policymakers are still trying to stabilize prices.
In currency trading early Thursday, the U.S. dollar weakened slightly against the Japanese yen, slipping to 156.77 yen from 156.79 yen. Meanwhile, the Euro eased to $1.1626 from $1.1632.
With geopolitical tensions continuing to influence energy markets and investor sentiment, analysts expect financial markets to remain volatile in the days ahead as traders closely monitor both economic data and developments in the Middle East.
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