Global markets steadied on Thursday after U.S. President Donald Trump sought to calm fears of imminent U.S. military action against Iran, easing pressure on oil and gold prices that had surged on geopolitical anxiety. However, relief in commodities contrasted with continued weakness in global tech stocks, as investors rotated out of richly valued artificial intelligence and semiconductor names.
Currency and bond markets, particularly in Japan, reflected rising political uncertainty as speculation over snap elections and fiscal stimulus reshaped expectations for yields and foreign exchange policy.
Oil and Gold Retreat on Reduced Geopolitical Risk
Oil prices fell sharply after rallying to multi-month highs in the previous session. Brent crude dropped 3.4% to $64.25 a barrel, while U.S. Nymex crude slid 3.4% to $59.89, reversing gains driven by fears of supply disruption linked to Iran.
The pullback followed Trump’s comments that violence in Iran’s protest crackdown appeared to be subsiding and that there were no current plans for mass executions—remarks that reduced the perceived likelihood of near-term U.S. intervention.
Gold also eased as safe-haven demand cooled, falling 0.5% to around $4,598 per ounce after hitting a record high above $4,640 a day earlier.
Tech Stocks Slide as Rotation Accelerates
A selloff in technology stocks extended from Wall Street into Asian markets, reflecting a broader rotation away from high-growth sectors. The Nasdaq Composite fell 1% overnight, dragging sentiment across the region.
Japan’s Nikkei slipped 0.9% after hitting a record high, while tech-heavy markets in Taiwan and Hong Kong also declined. By contrast, broader indices showed resilience, with Japan’s Topix and South Korea’s KOSPI both reaching fresh record highs, underscoring a widening divergence within equity markets.
Asia Markets Mixed, Policy Signals in Focus
Asian stocks delivered mixed performances. Chinese blue chips edged lower, while South Korea’s KOSPI gained as much as 1.3% after the Bank of Korea left interest rates unchanged and signalled an end to its easing cycle in favour of financial stability.
In Europe, futures pointed higher, with the FTSE and STOXX 50 set to extend recent record gains, reflecting stronger cyclical momentum outside the technology sector.
Japan: Yen Volatility and Bond Yield Pullback
Currency markets paused after sharp moves in the yen, which briefly weakened to its lowest level since July 2024 before rebounding on renewed warnings of intervention from Japanese authorities. The dollar was last steady against the yen at around 158.4.
Bond markets in Japan also stabilised after recent volatility. The 20-year government bond yield eased to 3.135% after hitting a record high, following confirmation that Prime Minister Sanae Takaichi plans to dissolve parliament and call snap elections. Expectations of expanded fiscal stimulus have driven selling pressure in both bonds and the yen in recent days.
Implications
The session highlighted a market recalibration rather than a broad risk-off move. While geopolitical risk premiums faded, investors continued to reassess stretched valuations in technology stocks, favouring cyclical and domestically oriented sectors tied to economic resilience.
Japan’s political uncertainty adds another layer of complexity, with fiscal expansion expectations clashing with currency stability concerns and testing policymakers’ tolerance for market-driven yen weakness.
Analysis
Markets appear to be transitioning from geopolitics-driven volatility to valuation-driven selectivity. Trump’s ability to calm Iran-related fears underscores how sensitive energy and safe-haven assets remain to political signalling rather than fundamentals alone.
At the same time, the sustained rotation out of tech suggests investors are no longer willing to pay any price for growth, even as broader indices reach record highs. This divergence points to a more mature and potentially more fragile phase of the global rally, where leadership narrows and policy missteps, particularly in Japan, could quickly reprice risk.
With information from Reuters.
