Asian equities rebounded after a selloff, tracking gains in US stocks fueled by upbeat economic data, even as uncertainty over the Iran war continued to cloud the outlook. Oil rose for a fifth day.
South Korea's Kospi Index jumped 12%, bouncing back from the gauge's worst crash ever in the prior session. The broader MSCI Asia Pacific Index rose 2%, while futures on US benchmarks advanced Thursday as sentiment showed signs of stabilizing after the initial bout of volatility triggered by the Middle East conflict.
The moves followed gains on Wall Street, where the S&P 500 Index climbed 0.8% and the Nasdaq 100 rose 1.5%, helped along by a rally in tech megacaps. Equities were supported by data showing the US service economy expanded at the fastest pace since mid-2022, while a price index hit an almost one-year low, partly soothing inflation concerns. Treasuries rose and the dollar slipped.
Meanwhile, China set its 2026 gross domestic product target at 4.5%-5%, the least ambitious expansion target since 1991. China set its 2026 CPI growth target at about 2%.
In commodities, West Texas Intermediate climbed toward $76 a barrel, while gold edged higher.
Photo Credit: Bloomberg News
Support from US stocks offered Asian traders a partial reprieve from Wednesday's broad regional declines, as investors continued to assess the war's impact on growth and inflation. For the rebound to be sustained, investors will likely need greater clarity on the duration of the conflict and the extent to which it will fan inflation.
“The most likely outcome is the geopolitical stuff works itself out and the economy continues to accelerate,” said Charles Lemonides, founder and chief investment officer of ValueWorks LLC, a New York-based hedge fund. “I would definitely not be stepping to the sidelines.”
President Donald Trump expressed confidence in the military campaign against Iran even as the timeline for operations remained unclear. Tehran targeted Israel and Gulf states while Israeli and American forces followed through on pledges to bomb targets in the Islamic Republic. The US sank an Iranian warship in international waters.
Meantime, Tehran dismissed a report it had reached out to the US to negotiate an end to the conflict as “pure falsehood.” China, meanwhile, will dispatch its special envoy on Middle East affairs to the region to conduct mediation efforts.
Although risk assets face a “significant headwind” from the war and anxiety over artificial intelligence, economic strength and robust earnings mean the extent of a pullback will be limited, according to Goldman Sachs Group Inc.'s Peter Oppenheimer.
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After lowering interest rates three times in 2025, Fed officials pivoted to holding borrowing costs steady in January, citing above-target inflation and a recent stabilization in the labor market. Several policymakers have even considered the likelihood that the US central bank may need to raise interest rates if inflation stays elevated.
The Labor Department will issue its February jobs report Friday and officials will receive fresh inflation data next week. Policymakers next gather March 17-18 in Washington.
In Asia, a weaker US dollar lifted regional currencies, with the yen strengthening to about 157 per dollar on Wednesday with the Australian and New Zealand dollars also gaining against the greenback.
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Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.1% as of 9:04 a.m. Tokyo time
- Hang Seng futures rose 1.6%
- Japan's Topix rose 2.8%
- Australia's S&P/ASX 200 rose 0.3%
- Euro Stoxx 50 futures rose 1.8%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.1635
- The Japanese yen was little changed at 156.95 per dollar
- The offshore yuan was little changed at 6.8919 per dollar
Cryptocurrencies
- Bitcoin fell 0.7% to $72,805.34
- Ether fell 1% to $2,129.29
Bonds
- The yield on 10-year Treasuries was little changed at 4.09%
- Japan's 10-year yield declined two basis points to 2.110%
- Australia's 10-year yield advanced four basis points to 4.78%
Commodities
- West Texas Intermediate crude rose 1.5% to $75.80 a barrel
- Spot gold rose 0.4% to $5,163.42 an ounce
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