(March 5): Asian equities rebounded after a selloff, tracking gains in US stocks fuelled by upbeat economic data, even as uncertainty over the Iran war continued to cloud the outlook. Oil rose for a fifth day.
South Korea’s Kospi Index jumped 11%, bouncing back from the gauge’s worst crash ever in the prior session. The broader MSCI Asia Pacific Index rose 2.8%, while futures on US benchmarks advanced Thursday as sentiment showed signs of stabilising after the initial bout of volatility triggered by the Middle East conflict.
The Asian gains followed advances on Wall Street, where the S&P 500 Index climbed 0.8% and the Nasdaq 100 rose 1.5%, helped along by a rally in tech megacaps. Equities were supported by data showing the US service economy expanded at the fastest pace since mid-2022, while a price index hit an almost one-year low, partly soothing inflation concerns. Treasuries were little changed while the dollar slipped early Thursday.
“I think that market participants are looking and trying to say, ‘How is this going to play out? What’s the end game?’” said David Solomon, Goldman Sachs chair and chief executive, in an interview on Bloomberg TV. “As they have more information in the coming days, the coming week or two, I think that will have an impact on risk premiums.”
Meanwhile, China set its 2026 gross domestic product target at 4.5%-5%, the least ambitious expansion target since 1991. China set its 2026 CPI growth target at about 2%.
Support from US stocks offered Asian traders a partial reprieve from Wednesday’s broad regional declines, as investors continued to assess the war’s impact on growth and inflation. For the rebound to be sustained, investors will likely need greater clarity on the duration of the conflict and the extent to which it will fan inflation.
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“The most likely outcome is the geopolitical stuff works itself out and the economy continues to accelerate,” said Charles Lemonides, founder and chief investment officer of ValueWorks LLC, a New York-based hedge fund. “I would definitely not be stepping to the sidelines.”
Traders remained focused on oil as the spike in prices following the Iran war threatens to accelerate inflation. Crude climbed as traders assessed the widening fallout from the US and Israeli war against Iran, with the combatants vowing to press on with the conflict that’s upending energy markets.
West Texas Intermediate climbed towards US$76 a barrel, after spiking about 11% in the first three days of the week, while Brent closed near US$83. In other commodities, gold advanced after the dollar, which has been the haven asset of choice for investors after the war broke out, declined and sentiment stabilised in equities markets.
See also: UAE markets to resume trading on March 4 after Iran crisis closure
Bullion was near US$5,170 an ounce in early trading, after adding 1% in the previous session. Gold and silver had risen along with stocks earlier this year. In other corners of the market, the dollar was a touch weaker Thursday and Treasuries held their losses from the prior session, with the yield on the benchmark 10-year at 4.10%.
Meanwhile, President Donald Trump expressed confidence in the military campaign against Iran even as the timeline for operations remained unclear. Tehran targeted Israel and Gulf states while Israeli and American forces followed through on pledges to bomb targets in the Islamic Republic. The US sank an Iranian warship in international waters.
Tehran also dismissed a report it had reached out to the US to negotiate an end to the conflict as “pure falsehood”. China, meanwhile, will dispatch its special envoy on Middle East affairs to the region to conduct mediation efforts.
Although risk assets face a “significant headwind” from the war and anxiety over artificial intelligence, economic strength and robust earnings mean the extent of a pullback will be limited, according to Goldman Sachs Group Inc’s Peter Oppenheimer.
After lowering interest rates three times in 2025, Fed officials pivoted to holding borrowing costs steady in January, citing above-target inflation and a recent stabilisation in the labour market. Several policymakers have even considered the likelihood that the US central bank may need to raise interest rates if inflation stays elevated.
The Labor Department will issue its February jobs report Friday and officials will receive fresh inflation data next week. Policymakers next gather March 17-18 in Washington.
Corporate highlights:
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- Morgan Stanley is laying off around 3% of its workforce or about 2,500 people, according to people familiar with the matter.
- Broadcom Inc delivered a solid sales forecast and announced a stock buyback plan worth as much as US$10 billion, signalling that its push to capitalise on AI spending is paying off.
- Nvidia Corp chief executive officer Jensen Huang doesn’t see his company’s investments in OpenAI reaching US$100 billion — the maximum amount that the chipmaking giant had once pledged to spend on the startup.
- Alphabet Inc’s Google unveiled a new system for apps on its Android phones and tablets.
Some of the main moves in markets:
Stocks
- S&P 500 futures rose 0.3% as of 9.37am Tokyo time
- Hang Seng futures rose 1.6%
- Nikkei 225 futures (OSE) rose 4.2%
- Japan’s Topix rose 3.8%
- Australia’s S&P/ASX 200 rose 0.4%
- Euro Stoxx 50 futures rose 0.5%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at US$1.1641
- The Japanese yen rose 0.2% to 156.82 per dollar
- The offshore yuan rose 0.1% to 6.8872 per dollar
- The Australian dollar was little changed at US$0.7082
Cryptocurrencies
- Bitcoin fell 0.6% to US$72,880.88
- Ether fell 0.9% to US$2,130.31
Bonds
- The yield on 10-year Treasuries was little changed at 4.09%
- Japan’s 10-year yield advanced 3.5 basis points to 2.145%
- Australia’s 10-year yield advanced three basis points to 4.78%
Commodities
- West Texas Intermediate crude rose 1.5% to US$75.77 a barrel
- Spot gold rose 0.6% to US$5,170.99 an ounce
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