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HONG KONG — Fresh worries about the Middle East ceasefire and the prospect of a US interest rate hike hit most stocks and lifted oil prices Thursday, following a rollercoaster week for markets that has sent shivers through trading floors.
Investors took a little heart from closely watched data Wednesday that showed May US inflation had come in around expectations but still hit a more than three-year high as fuel costs surged owing to the Iran war.
The reading came days after figures showing a forecast-busting jump in jobs creation last month ramped up bets on the Federal Reserve hiking interest rates for the first time since 2023.
Attention will now turn to the Fed's next policy meeting in a week's time, and while the new chief Kevin Warsh is unlikely to make a hike his first act, observers said futures markets suggest a move up could come before the end of the year.
"Overall (the inflation report) was not as bad as it could have been and core was a little lighter than expected so the market is seeing this as a positive," Neil Wilson, Saxo investor strategist, said.
"This could re-anchor expectations a touch for a bit but I still think that the Fed is swinging more quickly behind a hike than it might have done or markets might think.
"Time is growing short and even if it could have been a hotter read, headline CPI above four per cent against a really strong labour market clearly deserves attention from the Fed."
The prospect of higher borrowing costs once again hurt tech firms, which tumbled on Wall Street, where the Nasdaq sank two per cent and the S&P 500 shed almost as much.
Asia mostly fell but stabilised after the previous three days of whipsawing.
Hong Kong, Shanghai, Sydney, Wellington, Taipei, Manila and Jakarta were all in the red.
But Seoul — at the forefront of the region's tech-led rally to record highs — edged up, having seen wild swings over the previous two days.
Tokyo, Singapore, Mumbai and Bangkok also crept up.
London and Paris opened with gains, while Frankfurt was flat.
A series of fresh US military strikes on sites in Iran, on top of those carried out Tuesday for the downing of a helicopter, added to the sense of unease among investors.
They led Tehran to hit back at US targets in the Middle East, with Iranian officials saying they would target any ship passing through the Strait of Hormuz.
And while US Central Command said it had completed its strikes, the latest increase in attacks fuelled concerns about their shaky truce and attempts to reach a peace deal to reopen the strait and allow crude ships to pass again.
The second day of US strikes followed President Donald Trump's complaint that Tehran's negotiators were taking too long and "playing us for suckers". Earlier this week he had suggested a peace accord was just days away.
"We hit them hard yesterday. We're going to hit them again hard today," the US president told reporters Wednesday morning. "We were really close to a deal, but they keep stringing us along."
Oil prices jumped as much as two per cent Thursday, extending similar gains the day before.
