Japan's Nikkei 225 index surged 2.4% to 68,355.81 in early Thursday trading, driven by investor appetite for technology stocks despite persistent geopolitical tensions in Iran. The rally in Tokyo contrasted sharply with the broader Asian market, where shares were mixed as traders weighed economic data against the risk of a prolonged conflict.
The strength in the Japanese benchmark was fueled by gains in companies expected to benefit from robust demand in computer chips and artificial intelligence growth. Advantest Corp., Tokyo Electron, and SoftBank Group Corp. all rose during the session, reflecting a broader sectoral rotation toward technology-related issues.
Other Asian markets showed less enthusiasm. Australia's S&P/ASX 200 index fell 1.7% to 8,638.10. In East Asia, South Korea's Kospi index edged up 0.5% to 6,873.06, while Hong Kong's Hang Seng index added 0.4% to 24,613.27. The Shanghai Composite gained a marginal 0.3% to finish at 3,842.19.
The movement in Asia followed a volatile week for U.S. equities, which ended Wednesday with mixed results despite signs of a resilient economy. The S&P 500 slipped 0.3% to close its third losing month in the last four, dropping 19.30 points to 7,651.54. The Dow Jones Industrial Average fell 443.87 points, or 0.9%, to 50,906.05, while the Nasdaq composite bucked the trend by adding 63.52 points to reach 26,861.06.
U.S. inflation data provided a mixed signal for monetary policy. The cost of living for U.S. consumers rose 3.4% year over year in August, a figure lower than the 3.7% expected by economists but still above the Federal Reserve's 2% target.
Energy markets remained volatile as traders monitored the state of negotiations between the United States and Iran. Benchmark U.S. crude oil prices fell 0.56% to $89.91 a barrel, and Brent crude dropped 0.35% to $97.69 a barrel.
Uncertainty over when the flow of crude through the Strait of Hormuz will be fully restored continues to drive price swings. Iranian officials stated Wednesday that they have received an official U.S. response to Tehran's latest proposal to end the seven-month war, though they did not disclose the content of the response or whether it constituted a rejection.
President Donald Trump had publicly rejected a previous Iranian proposal just days earlier that sought to reopen the Strait of Hormuz within one week conditional on certain U.S. actions.
Bond yields continued their upward trajectory, reflecting persistent inflation concerns and growth expectations. The yield on the 10-year Treasury rose to 5.29% from 5.26% late Tuesday, a level last seen in 2002. The 30-year Treasury yield climbed to 5.64% from 5.59%, incorporating long-term inflation and economic growth expectations.
In currency markets, the U.S. dollar strengthened against major counterparts, rising to 158.17 Japanese yen from 157.33 yen. The euro softened slightly, costing $1.1328 compared with $1.1334 earlier.