Summary
- Asian markets had already been hit earlier in the day, with MSCI’s broad Asia‑Pacific index down 2.3 percent and South Korea’s KOSPI plunging 4.5 percent as AI stocks came under pressure.
- inflation figures, expected to show a 4.2 percent annual rise in May — the largest since April 2023.
- The dollar index edged 0.1 percent lower to 99.92, while Wall Street’s fear gauge, the VIX, touched its highest intraday level since early April.
Global markets came under renewed strain on Wednesday as fresh U.S.–Iran strikes rattled investors and President Donald Trump warned Tehran it would “pay the price” for delaying negotiations.
European stocks, which had initially shrugged off the hostilities, turned sharply lower after Trump’s comments. The pan‑European STOXX 600 fell 0.6 percent, while Wall Street futures dropped between 1 and 1.2 percent. European government bond yields also rose in response.
Iran’s Revolutionary Guards said they launched missile and drone attacks on U.S. bases in Jordan, Kuwait, and Bahrain, describing them as retaliation for American strikes on Iranian targets around the Strait of Hormuz. The clashes marked one of the most significant flare‑ups since the April ceasefire.
Asian markets had already been hit earlier in the day, with MSCI’s broad Asia‑Pacific index down 2.3 percent and South Korea’s KOSPI plunging 4.5 percent as AI stocks came under pressure. Analysts said investors were also positioning ahead of U.S. inflation data and the highly anticipated SpaceX IPO.
Oil prices, which had touched seven‑week lows in the previous session, extended gains. Brent crude rose 1.7 percent to $92.88 a barrel, while U.S. West Texas Intermediate climbed 1.5 percent to $89.56.
The renewed volatility comes as investors brace for U.S. inflation figures, expected to show a 4.2 percent annual rise in May — the largest since April 2023. A stronger‑than‑expected jobs report last week has already shifted expectations toward a Federal Reserve rate hike in December, reversing earlier bets on cuts.
“The Fed probably cannot hike aggressively into a pure supply shock, but it also cannot ignore inflation expectations if oil keeps rising,” said Charu Chanana, chief investment strategist at Saxo in Singapore.
The dollar index edged 0.1 percent lower to 99.92, while Wall Street’s fear gauge, the VIX, touched its highest intraday level since early April.
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