Market Slips as Geopolitical Worries Deepen
Asian stocks dip on Thursday on Thursday as growing tensions in the Middle East stirred investor anxiety. The selloff followed continued uncertainty over the possible involvement of the United States in the escalating Israel-Iran air conflict. U.S. President Donald Trump remained non-committal, telling reporters outside the White House, “I may do it. I may not do it,” when asked whether the U.S. would join Israel’s attacks on Iranian nuclear sites.
Reports from The Wall Street Journal indicated that Trump had already approved military plans but delayed giving the final command to see if Iran would step back from its nuclear ambitions. This lingering ambiguity weighed heavily on investor sentiment across Asian markets.
Japan’s Nikkei index fell by 0.8%, contributing to the overall Asian stocks dip, partly due to a stronger yen, which makes Japanese exports less competitive abroad. Taiwan’s benchmark also declined by 0.9%, while Hong Kong’s Hang Seng index dropped 0.8%. U.S. S&P 500 futures also reflected the global uncertainty, slipping by 0.4%. Most U.S. markets remained closed on Thursday due to a national holiday, limiting immediate domestic trading reactions.
Safe Havens Rally: Gold and Yen in Focus
As equities weakened, investors sought refuge in traditional safe havens. Gold prices rose 0.3% to $3,378 per ounce, driven by uncertainty over geopolitical developments. The Japanese yen also gained 0.2% against the U.S. dollar, climbing to 144.92, as as global risk aversion increased amid the Asian stocks dip.
“The market is still on edge,” said Kyle Rodda, a senior analyst at Capital.com. “There’s a lot of speculation – some likely fueled deliberately by the Trump administration – that U.S. involvement is imminent. If that happens, the escalation could trigger a direct response from Iran, with significant consequences for regional stability, energy supplies, and global economic performance.”
Brent crude oil prices dipped slightly to $76.32 per barrel but remained close to last week’s 4.5-month high of $78.50, reflecting market concerns about potential disruptions to oil supplies in the Middle East.
Meanwhile, the U.S. dollar also gained traction as a safe-haven asset, climbing 0.1% against the euro to $1.1472 and 0.2% versus the British pound to $1.3398. The Swiss franc saw a slight decline of 0.1% to 0.8193 per dollar.
Central Banks in Spotlight Amid Uncertain Outlook
Attention also turned to monetary policy decisions expected from the Bank of England (BOE) and the Swiss National Bank (SNB). The BOE is widely expected to maintain its current interest rates, while the SNB is anticipated to implement a modest rate cut of 25 basis points, signaling diverging policy directions among central banks.
In the U.S., the Federal Reserve kept interest rates unchanged, aligning with expectations. However, it sent mixed signals to the market. While it maintained forecasts for two rate cuts later this year, Fed Chair Jerome Powell cautioned against further easing in the short term. He pointed to “meaningful” inflation risks ahead, partly due to the impact of aggressive U.S. trade tariffs, which may complicate the Fed’s path forward.
As global markets continue to digest the dual uncertainties of geopolitics and central bank policy, investors remain cautious, leaning on safe assets until greater clarity emerges, a trend underscored by the recent Asian stocks dip.
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