The Nikkei closed 0.06 percent higher at 64,217.27, recovering from an early selloff of nearly 3 percent, although market breadth remained weak, with many stocks in negative territory. The broader Topix slid 0.45 percent to 3,830.35.

“There still appears to be a lack of drivers strong enough to attract meaningful fresh inflows, and investors remain somewhat cautious, suggesting the market is not yet ready for a decisive move higher, even if some buying has started to appear,” said Naoto Takahashi, an analyst at Aizawa Securities.

AI-related shares, which had dragged the Nikkei lower earlier in the session, narrowed some losses. Tech investment conglomerate SoftBank Group fell 1.4 percent after tumbling as much as 7.5 percent.

The United States launched new strikes against multiple targets overnight in Iran, and President Donald Trump vowed even more attacks if no peace deal is secured.

At the market close, the benchmark Shanghai Composite index declined 0.2 percent, while the blue-chip CSI300 index dropped 0.6 percent.

In Hong Kong, the benchmark Hang Seng Index fell 0.7 percent, marking a seventh straight losing session and its longest losing streak since October.

Tech shares dropped across the board, with Shenzhen’s startup board ChiNext sliding 1.1 percent, and Hong Kong’s tech shares shedding 1.5 percent.

The decline followed weakness in regional peers, as MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 percent.

Analysts at HSBC Qianhai Securities said in a note that the rally in AI hardware stocks could resume amid continued capex spending from major cloud service providers and solid earnings fundamentals, “but a more balanced approach on AI vs non-AI is warranted in the second half of this year”.

Hong Kong shares of e-commerce giant Alibaba fell 5.4 percent to their lowest closing price since July 2025, after reports about its Dingtalk CEO Chen Hang’s departure following debates about AI focus.

Meanwhile, US consumer inflation increased at its fastest pace in three years in May, boosted by surging prices for energy products amid the Middle East conflict, and giving the Federal Reserve more reason to maintain a hawkish tilt into 2027.

The ECB raised borrowing costs by an expected 25 basis points, its first hike in nearly three years, while lifting inflation forecasts and cutting its growth outlook amid the price pressures stemming from the ongoing Middle East conflict.

“It’s not a rate hike that will derail the euro zone economy,” said Carsten Brzeski, global head of macro at ING. “The risk of doing nothing and potentially falling behind the curve is larger than the risk of any adverse effects on growth from higher interest rates.”

Traders still expect borrowing costs to rise another 25 basis points before the end of the year, according to LSEG-compiled data.

Rate-sensitive sectors lagged. Financial services slipped 0.7 percent, with asset managers ICG and Partners Group down 4.7 percent and 3 percent, respectively. Real estate stocks also fell 0.8 percent.

The broader pan-European STOXX 600 closed up 0.5 percent at 621.53 points, while major regional bourses also advanced.

The STOXX 600 briefly pared gains after Trump said the US would hit Iran “very hard tonight” and would soon take control of the country’s oil and gas infrastructure and markets.

Crude prices see-sawed throughout the day. They were last up 0.5 percent at USD93.58 a barrel.

Technology stocks were mixed. Semiconductor shares led the gains on the benchmark index, with BE Semiconductor and ASM International rising 6.6 percent and 7.3 percent, respectively, on expectations they will benefit from the AI boom.

Software stocks, however, slipped after Oracle fell sharply following a forecast for higher-than-expected capital spending, pressuring the broader enterprise software sector.

SAP dropped 6.6 percent, Capgemini fell 4.2 percent and Dassault Systemes declined 5.8 percent. UBS also downgraded European IT stocks to “neutral” from “attractive”, citing elevated valuations and renewed focus on AI.

Chipmakers bounced back after Wednesday’s selloff sent major Wall Street indexes down more than 1 percent and technology stocks into correction territory, a 10 percent drop from their record close.

Intel soared 6 percent, while Nvidia and Micron Technology were up 0.5 percent and 3.2 percent, respectively. The S&P 500 technology index rose 0.7 percent, while the Philadelphia SE Semiconductor index advanced 3.5 percent.

Stocks steadied even as US President Donald Trump warned Washington would hit Iran “very hard tonight” and soon take control of the Middle Eastern country’s oil and gas infrastructure and markets. Oil prices were nearly flat.

“That’s (Trump’s warning) a pretty worrisome thought for the market but what we’re seeing here is a market that may have been grossly oversold over the past few days. And so that’s why we’re seeing some sort of a bump,” said Phil Blancato, chief market strategist at Osaic Wealth.

At 11:53 a.m. ET, the Dow Jones Industrial Average rose 268.31 points, or 0.54 percent, to 50,187.09, the S&P 500 gained 18.57 points, or 0.26 percent, to 7,285.56 and the Nasdaq Composite gained 103.26 points, or 0.41 percent, to 25,272.76.

The S&P 500 has dropped about 4 percent since hitting a record closing high in early June as investors grapple with concerns about stretched tech valuations and tighter monetary policy, with the Middle East conflict stoking inflationary pressures.

Data showed US producer prices increased more than expected in May, leading to the largest annual gain in over three years.

Separately, the number of Americans filing claims for unemployment benefits increased marginally last week.

The Federal Reserve is widely expected to hold interest rates steady at its policy meeting next week, with investors pricing in at least one 25 basis point rate hike by the end of the year.

“Inflation is a bigger concern for markets right now than growth. As a result, any near-term correction is more likely to be driven by inflationary pressures than by a deterioration in economic activity,” said Kevin Gordon, head of macro research and strategy at the Schwab Center for Financial Research.

The highly anticipated Friday market debut of Elon Musk’s SpaceX, set to be valued at USD1.75 trillion, could also test the rally this year that has repeatedly lifted stocks to record levels.

The MSCI emerging Asia equities index was down 0.5 percent after falling nearly 2 percent earlier in the session. South Korea’s KOSPI ended slightly higher after falling as much as 4.4 percent at the open, helped by a 2.6 percent gain in chipmaker SK Hynix.

Regional equities earlier this week posted their biggest drop in three months as escalating Middle East tensions and rising expectations of a Federal Reserve rate hike dampened risk appetite. The US launched new strikes against multiple targets overnight in Iran, in response to which Iran announced a closure of the Strait of Hormuz. Crude prices rose more than USD1 a barrel on the escalation.

Uncertainty over a Middle East peace deal and a decline in AI stocks led to USD27.08 billion in foreign outflows from regional stocks this month.

The US and Iran traded airstrikes for a second straight day, with the latest escalation having been triggered earlier this week by the downing of a US Apache helicopter near the Strait of Hormuz, which set off reciprocal strikes across Iran and against US bases in the region. Tehran closed the Strait of Hormuz after the US strikes.

Dubai’s main share index declined 0.4 percent, with blue-chip developer Emaar Properties losing 2.4 percent. In Abu Dhabi, the index eased 0.3 percent. The Qatari index was down 0.3 percent, weighed down by a 1.5 percent slide in the Gulf’s biggest lender Qatar National Bank.

The U.S. and Iran traded airstrikes for a second straight day, with the latest escalation having been triggered earlier this week by the downing of a U.S. Apache helicopter near the Strait of Hormuz, which set off reciprocal strikes across Iran and against U.S. bases in the region.

Tehran closed the Strait of Hormuz after the U.S. strikes.

Dubai’s main share index declined 0.4%, with blue-chip developer Emaar Properties losing 2.4%.

In Abu Dhabi, the index eased 0.3%.

The Qatari index was down 0.3%, weighed down by a 1.5% slide in the Gulf’s biggest lender Qatar National Bank .

Geopolitical tensions continue to weigh on sentiment, but indications that diplomatic talks remain active have helped cushion the impact despite lingering escalation risks, said Joseph Dahrieh, managing director at Tickmill.

Saudi Arabia’s benchmark index reversed early losses to finish 0.3% higher, helped by a 0.4% gain in oil major Saudi Aramco.

Meanwhile, Brent futures fell $1.10, or 1.2%, to $92 a barrel by 1206 GMT, as traders assessed the actual impact of the renewed hostilities on supply.

Outside the Gulf, Egypt’s blue-chip index retreated 0.9%.

The CSE All Share index settled down 0.89% at 21,270.02, bringing its decline since the start of June to about 4.7%.

Kandy Hotels Co and Odel PLC were the top percentage losers on the CSE All Share index, falling 6.7% and 6%, respectively.

Trading volume on the CSE All Share index rose to 86.4 million shares from 69.2 million in the previous session.

The equity market’s turnover fell to 1.66 billion Sri Lankan rupees ($4.97 million) from 1.67 billion rupees in the previous session, according to exchange data.

Foreign investors were net sellers, offloading stocks worth 183.7 million rupees, while domestic investors were net buyers, purchasing shares worth 1.56 billion rupees, the data showed.

The Nifty 50 shed 0.23% to 23,161.6, while the BSE Sensex lost 0.2% to 73,832.55.

Twelve of 16 major sectors logged losses. The broader small-caps and mid-caps fell 0.7% and 0.8%, respectively.

The United States and Iran traded air attacks for a second straight day on Thursday, with President Donald Trump vowing further strikes if Tehran does not immediately agree to a peace deal.

Meanwhile, data released overnight showed U.S. consumer inflation increased at its fastest pace in three years in May, raising the risk of a prolonged period of high interest rates.

High U.S. interest rates would not only lure foreign investors away from emerging markets such as India but also impact spending in the world’s largest economy.

Indian IT firms, which get the bulk of their revenue from the U.S., dropped 1.6%. The index has dropped 10.6% cumulatively in seven straight sessions.

Renewed concerns over the impact of AI disruption, following Anthropic’s new tools, also contributed.

“The key concern is that productivity improvements in software engineering are occurring much faster than in non-software domains,” said Sumit Pokharna, senior vice president of fundamental research at Kotak Securities.

Private banks rose 0.6%, partially offsetting the broader decline, as the central bank’s decision earlier this week to provide concessional forex swap for overseas borrowings and allow leverage for NRI deposits made bank stocks more attractive.

Among individual stocks, television broadcaster Zee Entertainment, which recently secured streaming rights for FIFA World Cup in India, jumped 8.3% after it announced plans to raise 23 billion rupees in phases. The World Cup is scheduled to begin on June 12 as per Indian Standard Time.

The pan-European STOXX 600 index edged 0.3% higher to 620.24 points by 0717 GMT.

Crude prices were near $95 a barrel as fresh airstrikes by the US and Iran added to traders’ concern over energy supplies, with no signs of the Strait of Hormuz, a critical global oil shipping route, reopening soon.

Energy cost-sensitive travel and leisure stocks were among top sectoral decliners, with easyJet and Lufthansa down 1.7% and 0.5%, respectively. Offsetting some of those concerns, Wizz Air reported annual profit above estimates, sending shares up 4.6%.

However, the carrier did not provide a forecast for fiscal 2027, citing an uncertain outlook.

Dealmaking news was also on the radar as Hugo Boss rose 6.4% after the UK’s Frasers Group launched a €2 billion ($2.31 billion) takeover offer for the struggling German fashion brand.

Chip stocks such as BE Semiconductor and ASM International gained 4.2% and 4.8%.

The broader tech has seen some volatility since late last week as AI stocks globally have paused from a strong rally over the past two months.

Focus will shift later in the day to the ECB’s monetary policy decision, with traders pricing in a 25-basis-point rate hike, according to LSEG-compiled data.

Greater attention will be paid to the central bank’s monetary policy path, given the repercussions of the oil shock on the economy.

The United States and Iran traded airstrikes for a second straight day.

The latest escalation was triggered earlier this week by the downing of a US Apache helicopter near the Strait of Hormuz, setting off reciprocal strikes across Iran and against US bases in the region.

Tehran closed the Strait of Hormuz after the US strikes.

Saudi Arabia’s benchmark index fell 0.1%, with Al Rajhi Bank losing 0.4%.

Dubai’s main share index declined 0.7%, with blue-chip developer Emaar Properties losing 1.5%.

In Abu Dhabi, the index eased 0.3%.

The Qatari index was down 0.2%.

Meanwhile, Brent futures were up 8 cents, or 0.09%, to $93.18 a barrel by 0702 GMT.

The United States launched new strikes against multiple targets overnight in Iran and President Donald Trump vowed even more attacks if no peace deal is secured.

By the midday break, the benchmark Shanghai Composite index was down 0.7%, while the blue-chip CSI300 index dropped 1.1%.

In Hong Kong, the benchmark Hang Seng Index fell 1.1%.

Tech shares dropped across the board, with China’s tech-focused STAR 50 falling 1.1%, Shenzhen’s startup board ChiNext declining 1.8%, and Hong Kong’s tech shares shedding 2%.

The decline followed weakness in regional peers, as MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, while Taiwanese shares and the Nikkei 225 also fell.

“We believe the rally in AI hardware could continue after the sharp correction due to the continued capex spending from major cloud service provider (CSPs) and solid fundamentals in earnings, but a more balanced approach on AI vs non-AI is warranted in the second half of this year,” analysts at HSBC Qianhai Securities said in a note.

Meanwhile, US consumer inflation increased at its fastest pace in three years in May, boosted by surging prices for energy products amid the Middle East conflict, and giving more ammunition to the Federal Reserve to keep interest rates unchanged into 2027.

Separately, market participants will shift their attention to China’s May credit lending data to gauge the health of the economy, following an unexpected contraction in new yuan loans in April. ‑Reuters

The S&P/ASX 200 index fell 0.8% to 8,583 by 0027 GMT, with most sectors trading lower.

The benchmark ended 0.6% higher on Wednesday, snapping three straight sessions of losses.

Overnight, Tehran announced the closure of the Strait of Hormuz and warned that any vessel attempting to pass through will be shot at, after the US launched a fresh round of strikes against multiple targets in Iran.

Oil prices gained more than $2 a barrel, while gold prices hit a more than six-month low on fears that central banks would keep interest rates higher for longer to rein in inflation.

In Sydney, gold stocks dropped as much as 5.1% to hit a nine-month low.

Evolution Mining and Newmont fell more than 4% each.

Shares of Northern Star Resources dropped over 5% to hit their lowest in more than two months.

Activist investor Elliott Investment Management said the gold miner must act immediately to restore shareholder value by strengthening its board and undertaking a formal strategic review.

Miners fell as much as 2.8% to hit the lowest level in a month, weighed down by weak commodity prices.

Sector majors BHP Group, Rio Tinto and Fortescue declined between 1.1% and 2.1%.

Financials lost 1%, with the “Big Four” banks shedding more than 1% each.

Technology stocks declined 1.9%, tracking weakness in their US peers.

Among gainers, energy stocks advanced 2.1% in their steepest intraday rise in three weeks.

Oil and gas firms Woodside Energy and Santos rose more than 2% each. In New Zealand, the benchmark S&P/NZX 50 index fell 0.7% to 13,164.94.

The Nikkei was down 1.3% at 63,360.96, as of 0046 GMT. Earlier in the session, the benchmark fell as much as nearly 3%, slipping below the 63,000 level for the first time since May 22.

The broader Topix slid 1.6% to 3,787.08.

Washington carried out renewed strikes against multiple targets overnight in Iran, the US military said on Wednesday, hours after President Donald Trump vowed new attacks if no peace deal is secured. Tech investment conglomerate SoftBank Group dragged the Nikkei index by 233 points, down 3.6%.

Fujikura, which produces optical fibre that is a key component of AI data centres, lost 6%, while semiconductor testing equipment maker Advantest shed 3.7%.

There were 184 decliners in the Nikkei index against 40 advancers.

South Korean shares fell on Thursday as risk appetite retreated as the Middle East conflict escalated overnight.

The benchmark KOSPI was down 141.39 points, or 1.83%, at 7,589.43 as of 0233 GMT.

The KOSPI briefly turned higher during the session on a jump in chipmaker SK Hynix, after falling as much as 4.4% earlier.

The United States launched new strikes against multiple targets overnight in Iran, the US military said on Wednesday, as President Donald Trump vowed even more attacks if no peace deal is secured.

South Korea’s exports in the first 10 days of this month surged 85.9% from a year earlier on strong chip sales, data showed.

Among index heavyweights, chipmaker Samsung Electronics fell 2.15%, while peer SK Hynix gained 0.59%. Battery maker LG Energy Solution slid 1.82%.

Hyundai Motor and sister automaker Kia Corp were down 3.99% and down 5.07%, respectively. Steelmaker POSCO Holdings shed 4.68%, while drugmaker Samsung BioLogics fell 2.23%.

Of the total 921 traded issues, 265 shares advanced, while 622 declined. Foreigners were net sellers of shares worth 1.8 trillion won ($1.18 billion).

The won was quoted at 1,528.5 per dollar on the onshore settlement platform, 0.54% lower than its previous close at 1,520.2.

In money and debt markets, June futures on three-year treasury bonds lost 0.04 point to 103.09.

The most liquid three-year Korean treasury bond yield rose by 0.7 basis point to 3.897%, while the benchmark 10-year yield rose by 0.7 basis point to 4.283%.‑Reuters

The KSE-100 opened the trading session with brief selling that pushed the index to an intra-day low of 168,682.25. However, the bulls gained momentum in the latter hours, pushing the index to an intra-day high of 170,138.19.

It was followed by some selling that erased the intra-day gains and pushed the index back to the red. However, soon after the announcement of the Economic Survey for the outgoing FY2025-26, buying returned to the index to ensure a positive close.

At close, the benchmark index settled at 169,703.60, up by 276.16 points or 0.16%.

On the index contribution front, index heavyweights MEBL, MARI, ENGROH, UBL, and POL emerged as the primary drivers of upside momentum, collectively contributing 315 points to the benchmark’s gain, underscoring sustained institutional interest in blue-chip names across the energy and banking sectors, brokerage house Topline Securities said in its post-market report.

On Wednesday, the KSE-100 Index declined by 903.12 points or 0.53% to close at 169,427.44 points compared to the previous close of 170,330.56 points.

Internationally, Asian stocks fell on Thursday, weighed down by a Wall Street selloff after a hotter-than-expected U.S. inflation reading, while renewed US strikes on Iran fuelled a rise in oil prices.

MSCI’s broadest index of ​Asia-Pacific shares outside Japan was down 0.9%, led by a 3% drop in South Korea’s ‌KOSPI. S&P 500 e-mini futures were 0.3% lower.

Brent crude rose 2% to $94.93 a ​barrel as trading resumed in Asia.

Strategists believe that Asian stocks that had rallied hardest ⁠during the past two months are likely to extend recent losses, as markets question whether the sky-high expectations ​for earnings growth that had driven the gains can be maintained.

“Given already stretched valuations, these extreme bullish expectations ​set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector,” said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore, in a note to clients.

Meanwhile, the Pakistani rupee gained against the US dollar in the inter-bank market on Thursday. At close, the local currency settled at 278.35 , a gain of Re0.01 against the greenback.

Volume on the all-share index decreased to 771.93 million from 791.64 million recorded in the previous close.

The value of shares increased to Rs27.05 billion from Rs25.48 billion in the previous session.

F. Nat.Equities was the volume leader with 118.36 million shares, followed by Sitara Petroleum with 53.70 million shares, and Maple Leaf with 35.48 million shares.

Shares of 487 companies were traded on Thursday, of which 190 registered an increase, 250 recorded a fall, and 47 remained unchanged.

The United States launched new strikes against multiple targets in Iran, the US military said on Wednesday, as President Donald Trump vowed even more attacks if no ​peace deal is secured.

The escalation pushed Brent crude futures up 1.1% ​to $94 per barrel, while Asian stocks dropped 0.4%.

GIFT Nifty futures ⁠were trading at 23,069 as of 7:43 a.m. IST, indicating that ​the benchmark Nifty 50 would open below Wednesday’s close of 23,214.95.

The Iran ​war, now in its fourth month, has raised energy prices and triggered concerns over its impact on growth and inflation in India, the world’s third-largest oil importer.

Data released ​overnight showed that U.S. consumer inflation increased at its fastest pace in three ​years in May, boosted by surging energy prices amid the Middle East conflict, giving ‌the ⁠Federal Reserve more ammunition to keep interest rates unchanged into 2027.

Higher interest rates in the U.S. tend to make emerging market equities less attractive for foreign portfolio investors (FPIs).

FPIs sold Indian shares worth 21.25 billion rupees ($223.06 million) ​on Wednesday, marking ​a ninth straight ⁠session of outflows. They have offloaded a record $30.4 billion worth of shares in India so far this year.

MSCI’s broadest index of ​Asia-Pacific shares outside Japan was down 0.9%, led by a 3% drop in South Korea’s ‌KOSPI. S&P 500 e-mini futures were 0.3% lower.

The United States began a fresh round of strikes against multiple targets in Iran, the US military said on Wednesday, hours after President Donald Trump vowed new attacks if no peace deal is secured. ​Iran announced the closure of the Strait of Hormuz in response.

Brent crude rose 2% to $94.93 a ​barrel as trading resumed in Asia.

Strategists believe that Asian stocks that had rallied hardest ⁠during the past two months are likely to extend recent losses, as markets question whether the sky-high expectations ​for earnings growth that had driven the gains can be maintained.

“Given already stretched valuations, these extreme bullish expectations ​set a vulnerable backdrop for momentum in Korea, Taiwan and the Asia tech sector,” said Rupal Agarwal, Asia quant strategist at Bernstein in Singapore, in a note to clients.

Trimming positions in these stocks would be “most prudent,” she added, noting that “the re-escalation ​on the war front could further accelerate this unwind.”

On Wednesday, the S&P 500 was down 1.6% with the ​Nasdaq Composite 2.0% lower after data showed US inflation accelerated last month at its fastest pace since April 2023, albeit in ‌line ⁠with market expectations. Brent crude prices settled at $93.10 a barrel, up $1.65 or 1.8%, as US President Donald Trump threatened to resume attacks on Iran.

The US dollar index , which measures the greenback’s strength against a basket of six currencies, held steady at 100.03, firmly within the tight trading range it has sat in throughout the past week. ​Safe-haven buying has driven ​the global reserve currency ⁠to its strongest levels since the U.S. and Iran began negotiating a ceasefire in early April.

Meanwhile, market expectations of the timing of the next rate hike moved ​closer, though they remain finely balanced. Fed funds futures are now pricing an ​implied 51.6% probability ⁠that the Federal Reserve’s next hike will come at its two-day meeting on October 28, compared to a 50.1% chance a day earlier that the US central bank would remain on hold until December, according to the CME ⁠Group’s ​FedWatch tool.

The yield on the US 10-year Treasury bond was up ​2.6 basis points at 4.564%.

Bitcoin was down 0.5% at $61,445.19, while ether was 0.6% lower at $1,619.04, as the upcoming SpaceX IPO drove a rotation out ​of cryptocurrencies and other speculative assets.

Gold was off 0.3% at $4,059.59.

At market close, the Shanghai Composite index was down 0.4 percent at 3,993.23 points. China’s blue-chip CSI300 index slipped 1.1 percent.

In Hong Kong, the benchmark Hang Seng Index was down 0.6 percent at 24,407.96. The Hang Seng Tech index dropped nearly 1 percent.

In one of the biggest exchanges in hostilities since a ceasefire in April, Iran’s Revolutionary Guards said they carried out attacks against a US base in Jordan and 21 other targets in the Gulf on Wednesday in retaliation for American strikes around the Strait of Hormuz.

Shares took a snub in Asia, with MSCI’s Asia ex-Japan stock index trading 2.3 percent lower and Japan’s Nikkei index down 1.9 percent.

Among the biggest losers onshore, the CSI AI Index dropped 2.2 percent and the satellite industry sector index lost 3.2 percent to pare some recent gains.

Chip shares defied the downtrend on Wednesday, with the CSI Semiconductor Index adding 1.6 percent. Defensive sectors also gained, with the CSI Banks Index up 1.6 percent and CSI Liquor Index up 1.1 percent.

On the data front, China’s producer prices rose for a third consecutive month in May to the highest since July 2022 as global AI-related demand provided a boost for some sectors.

Consumer prices remained elevated but came below the median Reuters forecast.

“In China, domestic demand remain anaemic. However, global AI investment is supporting external demand and emerging industries, mitigating the risk of a sharp economic slowdown,” analysts at KGI said.

Investors should utilize technological innovation themes as growth engines, anchored by stable financial sectors to navigate volatility and achieve resilient returns, the analysts said.

Crude oil prices were higher and hovered near USD93 a barrel after one of the biggest exchanges in hostilities between the US and Iran since the two countries agreed to a ceasefire in April.

US President Donald Trump said on Wednesday Iran had taken too long to negotiate a deal and would now “have to pay the price,” while Tehran said it would reassess diplomatic engagement with Washington.

“What we are seeing today looks more like sporadic fire exchange rather than a broadening or restart of the wider conflict,” Luca Bindelli, head of investment strategy at Lombard Odier, said.

Bindelli added that both Washington and Tehran have clear reasons to seek a deal, as a resolution could help Trump politically, while Iran is under pressure because large volumes of its oil remain stuck near the Strait of Hormuz due to the US blockade.

The pan-European STOXX 600 index was down 0.08 percent at 618.17 points, closing lower for the fourth consecutive session.

Investor sentiment was also affected by a darker outlook for Europe’s largest economy. Germany is likely to slide into a technical recession this year as an energy-price shock linked to the Iran war derails its fragile recovery, the DIW economic institute said, halving its 2026 growth forecast. The country’s main stock index dropped about 1 percent.

Attention now turns to the ECB, whose two-day policy meeting began on Wednesday. The central bank is widely expected to raise interest rates by 25 basis points as it tries to contain the inflationary impact of higher energy costs. Markets will be focused on policymakers’ guidance for the rate path beyond this week.

Meanwhile, US consumer inflation rose in May at its fastest pace in three years. While the increase matched expectations, it reinforced the case for the Federal Reserve to keep rates unchanged into 2027.

Volatility has picked up across stock markets in recent days, as investors contend with a widening array of risks, including high valuations in the tech sector, escalating Middle East tensions and expectations that the Federal Reserve may need to hike interest rates to curb inflation.

The CBOE Volatility Index rose 1.84 points to 21.73, after hitting its highest level since April 7 in the previous session.

US consumer prices increased 4.2 percent in the 12 months through May, the largest gain since April 2023, data showed, as the Middle East conflict raised the price of gasoline and other energy products.

The pace of increase was, however, in line with forecasts, as per a Reuters poll of economists.

“The data wasn’t as bad as expected, but the report is not anywhere near good. You’re still seeing inflation on the rise. That’s troublesome,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

The Federal Reserve is widely expected to hold interest rates at its June policy meeting. Investors are pricing in at least one 25 basis point rate hike by the end of the year.

Technology and AI stocks have borne the brunt of the selloff as investors priced in a tighter monetary policy and worried about stretched valuations in the sector.

Nvidia, Micron and Broadcom fell between 2.6 percent and 4.2 percent, extending losses after a brief rebound on Monday. The S&P 500 tech index was down 1.6 percent.

Super Micro Computer tumbled 17.7 percent after announcing plans to raise USD7 billion through a series of equity and equity-linked financing transactions to fund component purchases for its growing AI server demand.

The rotation out of highly subscribed technology shares has aided other areas of the markets that have lagged this year, including healthcare, real estate and consumer staples.

Five of 11 major S&P 500 sectors moved higher, with energy shares leading gains, as oil prices rose more than 1 percent.

Asian stocks have been whipsawed by shifting headlines from the Middle East, with a fragile ceasefire repeatedly marred by fresh military flare-ups.

A closely watched US inflation reading later in the day will be the next major market test.

The MSCI EM Asia index slumped 2.8 percent, dragged primarily by a plunge in South Korean stocks, and a more than 3 percent drop in Taiwanese equities.

The rupiah firmed sharply to 17,875 per dollar at the open, keeping to the stronger side of the psychological 18,000 mark. Stocks in Jakarta jumped 3.2 percent, building on Tuesday’s 7.6 percent advance.

Major banks in Indonesia — Bank Central Asia, Bank Mandiri, and Bank Rakyat Indonesia — advanced between 3 percent and 10 percent, extending gains.

Bank Indonesia on Tuesday raised interest rates by 25 basis points to stem a decline in the rupiah, which is down more than 7 percent this year, putting it among the world’s worst-performing currencies.

South Korea’s benchmark KOSPI index tumbled 4.5 percent, with Samsung Electronics and SK Hynix losing around 6 percent and 7 percent, respectively. The sharp drop triggered a sidecar mechanism to temporarily halt selling for the second time this week.

Meanwhile, the won appreciated to 1,527.7 per dollar, firming around 2.3 percent so far this week as authorities stepped up their crackdown on speculative trading.

Iran’s Revolutionary Guards said they attacked a U.S. base in Jordan and 21 other Gulf targets in retaliation for American strikes near the Strait of Hormuz, Iranian media reported.

The U.S. military said on X that it struck Iranian air defense systems, ground control stations and surveillance radar sites near the strait after President Donald Trump said Iran had downed a U.S. Apache helicopter on Tuesday.

The clashes mark one of the biggest exchanges of hostilities since the two countries agreed to a ceasefire in April, deepening doubts about prospects for a deal to end the war which began on February 28.

Saudi Arabia’s benchmark index fell 0.9%, pressured by a 2.3% fall in the country’s biggest lender by assets Saudi National Bank and a 0.4% decrease in oil major Saudi Aramco.

Meanwhile, Brent futures were up $1.74, or 1.9%, at $93.19 a barrel by 1127 GMT.

Dubai’s main share index lost 0.5%, with top lender Emirates NBD falling 1.3% and blue-chip developer Emaar Properties losing 1.4%.

In Abu Dhabi, the index was up 0.2%.

GCC stock markets have come under pressure as recent military incidents make investors cautious, though hopes that tensions will remain contained and diplomacy can advance may limit the broader impact on sentiment, said Milad Azar, market analyst at XTB MENA.

The Qatari index reversed early losses to close 0.1% higher, helped by a 0.8% rise in the Gulf’s biggest lender Qatar National Bank .

Outside the Gulf, Egypt’s blue-chip index retreated 2.1%.

The CSE All Share index settled down 0.40% at 21,461.47, giving up part of the previous session’s gains and leaving it down 3.9% over the past eight trading days.

Paragon Ceylon PLC and Agstar PLC were the top percentage losers on the CSE All Share index, falling 10.5% and 8.9%, respectively.

Trading volume on the CSE All Share index fell to 69.2 million shares from 73 million in the previous session.

The equity market’s turnover fell to 1.67 billion Sri Lankan rupees ($5.06 million) from 2.16 billion rupees in the previous session, according to exchange data.

Foreign investors were net buyers, purchasing stocks worth 90.6 million rupees, while domestic investors were net sellers, offloading shares worth 1.63 billion rupees, the data showed.

Iran launched missile and drone attacks on U.S. military bases in Jordan, Kuwait and Bahrain, after American strikes on Iranian targets near the Strait of Hormuz, in one of the biggest outbreaks of hostilities since the ceasefire in April.

The war, in its fourth month, has pummelled emerging market assets, forcing governments across Asia to take measures to curb the impact of the energy shock on growth and inflation.

India’s benchmark Nifty 50 fell 0.12% to end at 23,214.95, while the Sensex gained 0.09% to 73,983.18.

The indexes have fallen 7.8% and 9%, respectively, since the war broke out at the end of February, with about $29 billion in foreign outflows.

On Wednesday, 13 of the 16 major sectors declined. However, financials and private banks rose 0.2% and 0.7%, respectively, extending the previous session’s rise.

Lenders’ shares have been boosted by a concessional forex swap facility that would lower the cost of mobilizing foreign-currency deposits, according to G Chokkalingam, founder and head of research at Equinomics Research.

However, the benchmarks may struggle to rise much unless foreign outflows reverse and pressure from oil, fertiliser and gold imports eases, which are all contingent on the resolution of the war, Chokkalingam said.

Inflows into equity mutual funds fell to their lowest in about a year in May, while gold ETFs saw their first outflows in a year, suggesting weak returns and heightened uncertainty are starting to hurt domestic flows — a key support for Indian equities over the past four years.

On Wednesday, metal shares lost 1.7% on renewed Mideast hostilities and rising expectations of a Federal Reserve rate hike by year-end.

India’s broader small-caps and mid-caps fell 1.3% and 1.5%, respectively.

The benchmark Nikkei 225 Index sank 1.89% to close at 64,179.27, reversing course from a 2.1% surge in the prior session. The broader Topix slid 1.25% to 3,847.60.

The United States launched strikes against Iran on Tuesday in retaliation for the downing of a military helicopter, deepening doubts over a potential peace deal.

Price pressures from the Gulf crisis caused Japanese wholesale inflation to quicken to the fastest pace in three years, adding upward pressure on domestic bond yields, data showed on Wednesday.

“Declines are centred on AI- and semiconductor-related shares, as heightened tensions in the Middle East and upward pressure on domestic interest rates prompted investors to focus more on relative valuations,” said Wataru Akiyama, an equities strategist at Nomura Securities. “As a result, the Topix’s decline is relatively limited compared with the (tech-heavy) Nikkei.”

There were 99 advancers on the Nikkei index against 126 decliners.

The largest losers were all tech-related stocks, including Taiyo Yuden, down 12.9%, followed by Furukawa Electric ,  11.7% lower, and  Sumitomo Electric, which lost 11.7%.

Nintendo was a standout among decliners, dropping 6.76% after the video game giant’s presentation of upcoming titles disappointed investors.

The largest gainers on the Nikkei were developer Mitsubishi Estate, up 5.2%, followed by Tokyo Disneyland operator Oriental Land,  4.3% higher, and Screen Holdings, which gained 4.2%.

The benchmark S&P/ASX 200 index rose 0.6% to 8,653.30 points after three straight sessions of losses.

While inflation remains the Reserve Bank of Australia’s key focus ahead of next week’s meeting, recent data point to a slowing economy, said Luke Winchester, portfolio manager at Merewether Capital.

“The market is beginning to price in rate cuts now coming sooner than expected and perhaps no more rises before the next cut,” Winchester said.

Rate hike bets pared back after a softer inflation reading for April and slower-than-expected economic growth in the March quarter.

The market had long given up on a hike at the RBA’s June 16 meeting, but pricing for August has come back to around 35% from more than 80% a month ago.

Financials gained 0.9%, their best day in nearly two weeks. Westpac Banking climbed 2%, while two of the

other “Big Four” banks rose more than 0.7%.

Consumer staples sub-index jumped 3.9% with Coles and Woolworths advancing 5% and 3.2%, respectively.

Consumer discretionary stocks added 3.6%. Wesfarmers, Harvey Norman and JB Hi-Fi gained more than 3.5%.

Capping gains, miners dropped 1.4% in their fourth successive session of losses, as copper prices slid.

Rio Tinto and Fortescue slid 1% and 0.5%.

Adding pressure on the miners, gold stocks dropped 4.5% to its lowest since late March, tracking softer bullion.

Insurance broker Steadfast was the top gainer on the benchmark as it surged more than 35% to its best day after receiving a buyout bid of A$7.7 billion ($5.40 billion), including debt.

Further south in New Zealand, the benchmark S&P/NZX 50 index fell 0.4% to 13,253.65 points.

South Korean shares fell more than 4% on Wednesday, as worries mounted over rising hostilities in the Middle East.

The benchmark KOSPI closed down 366.11 points, or 4.52%, at 7,730.82. On Tuesday, it rose 8.2%, after falling 8.3% the day before.

During the session on Wednesday, the index fell as much as 6.86%, triggering a “sidecar” trading curb.

The U.S. on Tuesday launched strikes against Iran after President Donald Trump said Tehran had shot down a U.S. Apache helicopter in the Strait of Hormuz, deepening doubts over a potential peace deal and further straining a fragile ceasefire.

South Korea’s finance minister agreed with other top economic policymakers to closely monitor risk around increased volatility in financial markets and its impact on various sectors, the ministry said.

Among index heavyweights, chipmaker Samsung Electronics fell 6.06%, while peer SK Hynix lost 7.54%. Battery maker LG Energy Solution slid 2.77%.

Hyundai Motor and sister automaker Kia Corp were down 5.79% and down 2.80%, respectively.

Steelmaker POSCO Holdings shed 0.41%, while drugmaker Samsung BioLogics rose 0.15%.

Of the total 921 traded issues, 343 shares advanced, while 550 declined.

Foreigners were net sellers of shares worth 2.8 trillion won ($1.84 billion).

The won was quoted at 1,524.2 per dollar on the onshore settlement platform, 0.56% higher than its previous close at 1,532.7.

In money and debt markets, June futures on three-year treasury bonds gained 0.12 point to 103.13.

The most liquid three-year Korean treasury bond yield fell by 1.9 basis points to 3.886%, while the benchmark 10-year yield fell by 0.4 basis point to 4.268%.

The pan-European STOXX 600 index edged 0.1% higher to 619.88 points by 0710 GMT, with most sectors marginally higher.

Crude oil prices hovered near $90 a barrel after U.S. and Iran traded fresh strikes, clouding the outlook for an imminent end to the conflict. Traders, however, clung to remarks by President Donald Trump that a deal to reopen the Strait of Hormuz, a vital artery for global oil supplies, was close.

The European Central Bank’s two-day meeting on monetary policy will start on Wednesday, at the end of which it is widely expected to raise interest rates by 25 basis points to combat rising energy costs. However, the bigger focus will be on policymakers’ remarks on the outlook for monetary policy.

A U.S. inflation report is also due later in the day, which could offer clues on the Federal Reserve’s monetary policy path.

STMicroelectronics gained 2.9% after brokerage BofA Global Research upgraded the chip stock to ‘buy’ from ‘neutral’, while peer Infineon added 2.6%.

UK lenders, which fell in the previous session following a J.P. Morgan note flagging greater impact of new Chinese rules, extended losses on Wednesday. HSBC and Standard Chartered slipped over 1% each. Kongsberg rose 3.2% after the defence group said on Wednesday that it aims to triple its revenue by 2020, driven by growing military investments in Europe.

The market opened on a positive note and quickly gained momentum, with the index climbing to an intraday high of 170,729.57 points during the first hour of trading.

However, the bullish sentiment proved short-lived as selling pressure emerged across the board, erasing early gains. The benchmark then entered a gradual downward trajectory, slipping below the 170,000-point level around midday and extending losses through the afternoon session.

At close, the benchmark index settled at 169,427.44, down by 903.12 points or 0.53%.

“The wide intraday range reflected a tug-of-war between cautious optimism and lingering concerns, with sentiment remaining fragile as participants assessed evolving macroeconomic cues while positioning ahead of key market triggers,” said Topline Securities.

“On the index contribution front, heavyweight stocks including MEBL, ISL, POL, INIL, and ILP collectively added 183 points to the benchmark index.

“On the other hand, BAHL, UBL, MCB, ENGROH, and OGDC weighed on performance, collectively eroding 464 points from the index,” it added.

On Tuesday, PSX staged a strong recovery as easing geopolitical tensions between Iran and Israel and a decline in international crude oil prices boosted investor confidence, triggering broad-based buying across key sectors. The benchmark KSE-100 Index gained 1,376.85 points, or 0.81%, to settle at 170,330.56 points.

Internationally, Asian stocks fell on Wednesday while oil prices surged as escalating tensions in the Middle East unsettled markets, dimming hopes for an end ​to the months-long war that has pushed commodities higher and stoked inflation worries.

The United States launched strikes against Iran after ‌President Donald Trump said Tehran had shot down a U.S. Apache helicopter in the Strait of Hormuz, leaving investors on edge over a fragile ceasefire between all sides.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6%. Japan’s Nikkei fell 0.9% while the tech-heavy South Korean KOSPI slumped 2% in a volatile week where AI stocks have ​come under pressure.

Oil prices climbed about 1% in early trade, moving away from a seven-week low touched in the previous session in ​the wake of the fresh U.S. attacks. Brent futures rose 0.9% to $92.29 a barrel, while U.S. West Texas Intermediate ⁠WTI crude climbed 0.8% to $88.97.

Meanwhile, the Pakistani rupee gained against the US dollar on Wednesday. At close, the local currency settled at 278.36, a gain of Re0.01 against the greenback.

Volume on the all-share index increased to 791.64 million from 767.45 million recorded in the previous close.

The value of shares declined to Rs25.48 billion from Rs27.18 billion in the previous session.

TPL Properties was the volume leader with 64.04 million shares, followed by TPL Corp Ltd with 40.65 million shares, and Telecard Limited with 40.41 million shares.

Shares of 488 companies were traded on Wednesday, of which 191 registered an increase, 258 recorded a fall, and 39 remained unchanged.