Asian stocks declined, with technology shares continuing to face pressure, as Middle East tensions escalated following a U.S. military strike on Iran. Oil prices rose slightly.
The MSCI Asia-Pacific Index fell 1%, as a renewed selloff in tech stocks erased some of Tuesday’s rebound, putting it on track for its fourth consecutive decline in five trading days. The Korea Composite Stock Price Index (KOSPI) led the region lower, dropping more than 2%, with chipmakers broadly falling. The index is seen as a barometer for artificial intelligence spending. The Asia Tech Index declined 1.9%.
After U.S. forces launched an airstrike following the downing of a U.S. helicopter in Iran, Brent crude prices rose 0.9% to around $92.30 per barrel. The gain narrowed after the U.S. announced the end of the airstrike operation. Earlier, Brent crude had briefly reached a high of $93.26 per barrel.
Since the outbreak of the Middle East conflict, the dollar has been the preferred safe-haven currency. With attacks threatening the fragile ceasefire agreement and efforts to reopen the Strait of Hormuz, the dollar strengthened against nearly all G10 currencies.
Market volatility is intensifying as traders struggle to cope with a growing array of risks: overvalued assets, escalating tensions in the Middle East, rising oil prices that could fuel inflation, and increasing expectations for Federal Reserve rate hikes. Attention now turns to Wednesday’s inflation report, which may provide the clearest signal yet on whether interest rates will remain high for an extended period.
These attacks pose a new threat to the peace deal that Trump has claimed is on the verge of being reached for weeks. Iranian Foreign Minister Abbas Araghchi posted on X, stating that Iran “will not ignore any attack or threat.”
The market’s focus has now shifted to Wednesday’s U.S. inflation report. Although oil prices have retreated from their multi-year highs hit in April, strong U.S. employment data last week has increased expectations that the Federal Reserve will need to raise interest rates.
Gennady Goldberg, head of U.S. interest rate strategy at Daiwa Securities, said: “Strong nonfarm employment data combined with persistently high inflation levels has increased market expectations for tighter monetary policy by the Federal Reserve. This has led to continued yield increases, although risk aversion in equities appears to be helping support yields.”
Technical Analysis:
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Gold: After testing the 4,280 level yesterday and rebounding, prices are expected to remain range-bound today due to a lack of major data releases. Market sentiment has also eased following the pause in hostilities between Iran and Israel. Therefore, we anticipate limited movement today, with trading opportunities primarily focusing on counter-trend moves after liquidity sweeps. For detailed positioning, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: Prices rebounded overnight in a corrective move, then entered consolidation later in the night. Today, we will primarily focus on the rebound signals following liquidity sweeps around 29,000/29,100. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Prices retreated after continuing to sweep through the yellow zone we previously highlighted in our plugin alert, falling from above 96 to around 91. We recommend locking in most profits for short positions. For today, we will continue waiting for shorting opportunities—traders can consider entering when prices reverse after a liquidity sweep above 93. For detailed positioning, please consult the plugin.
(Crude Oil 15-minute Chart)
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Today’s key financial data and events to watch:
20:30 U.S. May CPI Year-on-Year
