Key Takeaways

Asian stock markets retreated on Thursday as fresh U.S. military strikes on Iran dampened recent investor optimism over a near-term peace agreement, while traders turned cautious ahead of key U.S. inflation data later in the day.

Wall Street’s major indexes closed at all-time highs overnight on hopes of easing Middle East tensions and lower oil prices.

U.S. stock futures were little changed during Asian hours on Thursday.

U.S. Strikes Iran Again; Peace Deal Hopes Fade

Sentiment weakened in Asian trading after reports that the United States had carried out fresh military strikes on Iran on Wednesday — marking a second round of strikes this week.

The attacks came shortly after U.S. President Donald Trump dismissed reports that Iran and Oman would jointly oversee shipping through the Strait of Hormuz under a proposed peace arrangement.

Oil prices rebounded more than 2% after the strikes, reversing part of Wednesday’s steep decline. Brent crude traded near $97 a barrel, while U.S. West Texas Intermediate crude climbed above $90.

Japan’s Nikkei 225 eased 0.1% to 64,921.1 points on Thursday after hitting a record high of 66,428.81 points in the previous session. Japan’s broader TOPIX index edged down 0.2%.

South Korea’s KOSPI fell 1.1% to 8,139.21 points after scaling fresh record highs of 8,457.09 on Wednesday, with chipmakers and AI-linked stocks pausing following a strong recent rally.

Shares of heavyweight semiconductor firms came under mild pressure as investors trimmed risk exposure ahead of U.S. inflation data and amid renewed geopolitical uncertainty.

U.S. PCE Inflation Data Looms

Hong Kong’s Hang Seng index declined nearly 2%, weighed by weakness in technology shares.

China’s Shanghai Composite slipped 0.4%, while the blue-chip Shanghai Shenzhen CSI 300 fell 1.1%.

Singapore’s Straits Times Index lost 0.7%, while futures tied to India’s Nifty 50 edged down 0.3%.

Australia’s S&P/ASX 200 also declined 1.1%.

Investors are now focused on the U.S. Personal Consumption Expenditures (PCE) price index due later on Thursday — the Federal Reserve’s preferred inflation gauge.

Markets fear that persistently high energy prices linked to the Iran conflict could complicate the Fed’s policy outlook and lead to a potential interest rate hike this year.