Asian stock markets staged a broad recovery on Thursday following significant declines the previous day, while European markets saw modest gains. U.S. Futures, after a rally on Wednesday, held relatively steady Thursday morning.
The South Korean Kospi index closed up 9.6% after a record sell-off of 12% on Wednesday.
One explanation for the sharp declines in Seoul earlier this week is that “Korean equities have benefited from extreme euphoria recently, perhaps over-speculation, and needed a breather,” stated Thomas Mathews, Head of Asia-Pacific Market Analysis at Capital Economics, on Thursday. “earnings expectations had become stretched.”
The rebound in other Asian stock indices was less pronounced following Wednesday’s slight declines. The STOXX Europe 600, a benchmark European index, rose 0.5% after a larger increase the previous day, following earlier declines earlier in the week.
U.S. Futures pointed to a mixed open on Wall Street. The Dow Jones was on track to open down 0.1%, while futures for the S&P 500 and Nasdaq remained largely unchanged.
More broadly, markets “have remained very sensitive to headlines,” Deutsche Bank noted on Thursday, pointing out that oil prices fell on Wednesday after the New York Times reported that Iran had made indirect contact with the United States to discuss negotiations to conclude their conflict.
Similarly, Mohit Kumar, an economist at Jefferies, wrote on Thursday that the report had helped to “establish a tone for risk-on markets.”
Even so, Brent crude, the global oil benchmark, closed Wednesday’s session higher, settling at its highest level since January 2025. It rose 2.4% Thursday morning to US$83 per barrel, while WTI, the U.S. Oil benchmark, rose 3%.
Frequently Asked Questions
What happened with the Kospi index?
The Kospi index of South Korea fell by a record 12% on Wednesday, but recovered on Thursday, closing up 9.6%.
Why were markets reacting so strongly?
Markets have been sensitive to headlines regarding the conflict involving Iran, and the potential impact on oil prices.
What is the current outlook for U.S. Markets?
U.S. Futures showed a mixed opening on Wall Street, with the Dow Jones expected to open slightly lower, while the S&P 500 and Nasdaq futures were largely unchanged.
Given the ongoing volatility, how might global markets respond to further developments in international affairs?
