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Stocks fall on Iran fears

Asian equity markets extended Wednesday’s risk-off mood into Thursday as renewed tensions between the US and Iran, together with Broadcom’s disappointing AI outlook, weighed on sentiment. US stocks had closed lower on Wednesday, while European equities also finished in the red. Gold was trading 0.8% higher, around USD 4470 per ounce on Thursday, while the US dollar was little changed overall, and bitcoin continue its recent fall, trading around USD 64,000. US Treasury yields were slightly lower, with the two-year yield around 4.1% and the ten-year yield near 4.5%.

  • Date
  • Author Shane Strowmatt, Senior Investment Writer
  • Reading time 5 minutes

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Asian equity markets declined on Thursday as weaker technology shares and persistent concerns over the conflict between the US and Iran weighed on sentiment across the region. Japan’s Nikkei 225 fell 1.3%, under pressure after Bank of Japan Governor Kazuo Ueda said on Wednesday that policymakers should discuss the case for higher interest rates as inflation risks rise amid the energy shock. South Korea’s Kospi dropped 1%, with chipmakers pressured by profit-taking and Broadcom’s disappointing AI outlook from Wednesday. Australia’s ASX 200 slid 1.1%, Hong Kong’s Hang Seng Index fell 1.6%, while mainland China’s CSI 300 was 0.6% lower.

US stocks retreat on Middle East fears

US stock indices fell on Wednesday as renewed fighting between the US and Iran, along with fresh tariff threats from US President Donald Trump, damped investor sentiment and pushed oil prices higher. The Dow Jones Industrial Average dropped 1.2% to 50,687.07 points, the S&P 500 lost 0.7% to 7553.68 points, and the Nasdaq 100 slipped 0.3% to 30,571.24 points after touching another record earlier in the session. Broadcom shares sank nearly 12% in after-hours trading on Wednesday after the US chip designer forecast third-quarter AI chip sales of USD 16 billion, below market expectations, despite reporting second-quarter revenue of USD 22.19 billion and earnings per share of USD 2.44.

US private hiring beats forecasts

The pullback in US stocks came despite what appeared to be resilience in the US labour market. US private employers added 122,000 jobs in May, up from 105,000 in April, according to ADP data released on Wednesday, with hiring stronger than the market had expected. Job creation was more broadly spread across sectors than in recent months, led again by education and health services, while trade, transportation and utilities also posted solid gains. ADP said smaller companies drove much of the increase, and its chief economist said the labour market was maintaining momentum heading into the summer hiring season. Pay growth for workers staying in their jobs was unchanged at 4.4%, while wage gains for people changing jobs eased to 6.5%.

US services growth slows further

US services activity slipped to 50.7 in May from 51.0 in April, S&P Global data released on Wednesday showed, signalling only marginal expansion as higher fuel and energy costs weighed on demand and business activity. New business returned to growth, but remained weak, while employment fell for the second time in three months and at the fastest pace since May 2020. Business confidence dropped to its lowest level since October 2022, with firms citing uncertainty over inflation and the economic recovery. Input cost inflation accelerated to its fastest pace of 2026 so far, prompting companies to raise selling prices more quickly.

Euro-area private activity contracts further

Private sector activity in the eurozone fell for a second straight month in May, with the S&P Global composite PMI slipping to 48.5 from 48.8 in April, according to data released on Wednesday, while the services index rose to 47.7 from 47.6 but remained in contraction territory. Demand weakened again, with export orders falling at the fastest pace of 2026 so far, while job losses picked up and backlogs were cleared at the sharpest rate in 14 months. S&P Global said Germany and France drove the downturn, while Italy and Spain continued to post marginal growth. Inflation pressures intensified further, with input costs rising at the fastest rate in three-and-a-half years and output price inflation reaching a 38-month high. European stock indices ended lower on Wednesday. The Euro Stoxx 50 lost 0.9%, while Germany’s DAX fell 1.3% and France’s CAC 40 declined 0.7%. Switzerland’s Swiss Market Index also closed 0.7% lower.

Corporate and economic calendar

Corporate news in focus: There is no major corporate news scheduled today.

Economic data in focus: Swiss Consumer Price Index (08:30), Swiss unemployment rate (09:00), European Central Bank President Christine Lagarde speaks (10:00), EU retail sales (11:00), US weekly initial jobless claims (14:30).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.