Renewed tensions between the US and Iran have caused Asian stock markets to retreat from historic highs, while rising energy prices have heightened inflation concerns, leading to a more cautious market sentiment.
During early Thursday trading in the Asia-Pacific region, the MSCI Asia Pacific Index fell 0.4%. Japanese and South Korean markets declined, with the Nikkei 225 index up 0.1% and the Topix index down 0.2%. South Korea's KOSPI index briefly fell below the 8100-point level and was down 1.22% at the time of reporting.
Oil prices surged 2%, while gold prices remained under pressure, dropping below $4400 per ounce during the session.
The US dollar strengthened, and US Treasury prices fell. The yield on the 10-year US Treasury note rose 2 basis points to 4.50%. Australian and New Zealand bonds also moved lower.
On the news front, the US President expressed dissatisfaction with negotiations with Iran, and the White House subsequently denied reports from Iranian media suggesting progress in talks. This quickly cooled the market's previously optimistic expectations for a ceasefire agreement.
**Unclear Negotiation Prospects, Oil Prices Spike Sharply** As the US-Iran conflict enters its fourth month, the prospects for a ceasefire remain unclear. According to reports, the US President stated at a cabinet meeting that the US and Iran have not yet reached an agreement and that the US side is "not satisfied" with the situation. He also completely denied a potential mechanism for joint management of the Strait of Hormuz by Iran and Oman.
Simultaneously, the US Central Command shot down four one-way attack drones launched by Iran, which were originally targeting a commercial vessel. US forces also struck another Iranian drone launch site near Bandar Abbas—a location adjacent to the critical Strait of Hormuz. Previously, the Kuwaiti military stated it was responding to hostile missile and drone threats.
Brent crude and WTI crude oil futures saw intraday gains expand to 2.5%, reaching new daily highs. Persistently high energy prices have intensified market concerns about a resurgence of inflation.
**South Korean Stock Market Faces Risk of "Rapid Reversal"** South Korea's composite stock price index (Kospi) recently reached a historic high, with cumulative gains nearly doubling since the beginning of the year. However, according to a report, BTIG analyst Jonathan Krinsky warned that the index faces the risk of a "rapid reversal," with the core vulnerability lying in excessive concentration in just two stocks: Samsung Electronics and SK Hynix.
Krinsky pointed out that Samsung Electronics and SK Hynix together account for over 50% of the Kospi's weighting. Meanwhile, only 42% of the index's component stocks are trading above their 200-day moving average. "Most stocks are not only lagging behind the index but are actually moving in the opposite direction," he noted. He also observed that although the Kospi has risen over 20% in the past month, only 4 out of 19 industry sectors recorded positive returns, with 10 sectors declining more than 5%.
SK Hynix's stock price has accumulated gains of approximately 250% year-to-date, with its market capitalization surpassing 1 trillion USD. The rally has been primarily driven by sustained strong demand for high-bandwidth memory chips from AI servers and accelerators. Samsung Electronics also crossed the 1 trillion USD market cap threshold earlier this month, becoming the second Asian company after TSMC to reach this milestone. The iShares MSCI South Korea ETF is currently approaching a trendline resistance level, a situation Krinsky views with caution.
**Inflation Pressure Raises Interest Rate Hike Expectations** Rising energy prices and increasing inflation risks are complicating the policy outlook for central banks worldwide. A Federal Reserve Governor explicitly stated that the direction of inflation is "wrong," and if this trend continues, she is prepared to support an interest rate hike, emphasizing that "risks remain tilted to the upside for inflation." The Fed Vice Chair projected that inflation would recede later this year as the effects of tariffs and energy costs fade but similarly warned that upside risks persist.
The US PCE price index rose 3.5% year-on-year in March. Economists expect the April data to further increase to 3.8%, significantly above the Fed's long-term target of 2%. The release of this data on Thursday will serve as an important reference for the market in judging the interest rate path.
Despite this, overall sentiment on Wall Street remains relatively optimistic. Goldman Sachs strategist Ben Snider raised the year-end target for the S&P 500 from 7600 points to 8000 points, citing an "exceptionally strong Q1 earnings season," aligning with the forecasts of Morgan Stanley and Deutsche Bank.
Updates to follow.