Key Takeaways

• Broad regional decline: Japan’s Nikkei fell 1.1%, TOPIX shed 0.7%, Chinese indexes lost 0.6-1%, and South Korea’s KOSPI was the worst performer on renewed chip losses.
• Fresh U.S.-Iran strikes: The two sides exchanged another round of attacks after Iran shot down a U.S. helicopter in the Strait of Hormuz.
• Oil spikes: Renewed hostilities sent crude prices surging, spooking regional markets.
• S&P 500 futures down 0.2%: U.S. stocks pointed lower ahead of key CPI data.
• Japanese PPI shocks: Factory gate prices ran much hotter than expected in May on Iran war fuel costs — raising BOJ rate hike pressure.
• BOJ to discuss hikes next week: The central bank has already signaled it will weigh further tightening at its upcoming meeting.
• SoftBank crashes 10%: Bloomberg reported that talks to raise $6 billion via a margin loan backed by its OpenAI stake have stalled.
• Chinese CPI misses: Softer-than-expected consumer prices highlight continued weakness in domestic demand.
• Chinese PPI surges: Factory prices rose at the fastest pace in nearly four years, driven by Iran war commodity disruptions.
• Tech recovery fizzles: The brief chipmaking stock rebound from Monday’s selloff ran out of steam.
• KOSPI weighed down: South Korean chipmakers saw renewed losses after Monday’s major wipeout.
• U.S. CPI due today: The key inflation reading will shape Fed rate expectations for the rest of 2026.

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Asian stocks fell on Wednesday, pressured by heightened risk aversion after a renewed military flare-up between the United States and Iran, while a recovery in technology stocks also fizzled out.

South Korea’s KOSPI was the worst performer in the region, pressured by renewed losses in heavyweight chipmaking stocks after a major wipeout on Monday. Chinese and Japanese stocks slid after local inflation data raised heightened concerns over the inflationary impact of the Iran war.

Asian markets took a middling lead-in from Wall Street, as a flare-up in U.S.-Iran tensions and renewed losses in chipmakers spurred overnight losses. S&P 500 futures fell 0.2%, with focus turning to key U.S. consumer price index inflation data due later in the day.

Regional markets were spooked by a spike in oil prices after the United States and Iran exchanged a fresh round of strikes on Tuesday evening. The renewed hostilities stemmed from Iran’s shooting down of a U.S. helicopter in the Strait of Hormuz earlier this week.

China and Japan Stocks Dip on Inflation Concerns

Japan’s Nikkei 225 index fell 1.1%, while the broader TOPIX index shed 0.7%.

Japanese producer price index inflation read much hotter than expected for May, driven chiefly by higher fuel costs stemming from the Iran war.

The print spurred concerns that surging factory gate prices could spill over into the broader economy — in turn pushing the Bank of Japan into hiking interest rates further. The central bank has signaled it will discuss raising interest rates when it meets next week.

Losses in tech also weighed on the Nikkei. SoftBank Group Corp. tumbled nearly 10% after Bloomberg reported that the tech conglomerate’s talks with potential creditors to raise $6 billion from a margin loan backed by its OpenAI stake had stalled.

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes fell 1% and 0.6%, respectively. Chinese CPI data for May read softer than expected, highlighting continued weakness in local consumer spending and demand.

Chinese PPI inflation surged in May, rising at its fastest pace in nearly four years, as disruptions in Middle East supplies pushed up the prices of oil and other key commodities.