HONG KONG, June 11 (Reuters) – Asian stocks turned lower on Thursday after a tentative early rise, dragged by a Wall Street selloff sparked by a hot U.S. inflation reading and renewed U.S. strikes on Iran that drove oil higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, with Taiwanese shares sliding 1.5% and the Nikkei 225 down by the same magnitude. S&P 500 e-mini futures rallied from modest declines to trade up 0.2%.
The United States began a fresh round of strikes against multiple targets in Iran, the U.S. 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 1.6% to $94.55 a barrel in Asian trading.
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.”
Some AI-linked stocks steadied as regional markets searched for a floor after five declines in the past six sessions. South Korea’s KOSPI swung between gains and losses, trading down 1.2% after earlier dropping as much as 4.4%.
Oracle shares fell 8.9% in extended trading after it forecast capital spending plans for fiscal 2027 above Wall Street estimates. The company also said it would raise nearly $40 billion through a combination of debt and equity financing next year, amid intense investor scrutiny over the rising debt load it is taking on to fund its AI infrastructure buildout.
On Wednesday, the S&P 500 fell 1.6% while the Nasdaq Composite tumbled 2.0% after data showed U.S. 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 Trump threatened to resume attacks on Iran.
In early European deals, pan-region futures were down 0.8%, German DAX futures lost 0.6% and FTSE futures were off 0.9%.
In currency markets, the euro edged up 0.1% to $1.1546 ahead of the European Central Bank’s policy meeting later, at which it is widely expected to hike interest rates.
The U.S. 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.
Market expectations of the timing of the Federal Reserve’s next rate hike moved closer, though they remain finely balanced. Fed funds futures are now pricing an implied 51.6% probability that the Fed will increase interest rates at its two-day meeting on October 28, compared with a 50.1% chance a day earlier that it would remain on hold until December, according to the CME Group’s FedWatch tool.
The yield on the U.S. 10-year Treasury bond was up 1 basis point at 4.5483%.
Bitcoin climbed 0.4% to $62,013.58, while ether rose 0.3% to $1,634.13, finding some footing after a selloff as the upcoming SpaceX IPO drove a rotation out of cryptocurrencies and other speculative assets.
Gold edged down 0.4% to $4,055.55.
(Reporting by Gregor Stuart Hunter; Editing by Jacqueline Wong and Shri Navaratnam)