Oil prices retreated from multi-month highs on Thursday and gold eased from a record peak after US President Donald Trump calmed market anxiety over potential US military action against Iran.
A selloff in tech stocks extended into Asian trading, following declines on Wall Street, as investors rotated out of high-flying chip and artificial intelligence-related names while searching for bargains in other parts of the market.
Currencies paused for breath after the yen dropped to its weakest point since July 2024 against the US dollar overnight and then bounced back sharply amid warnings of possible intervention by Japanese authorities, Reuters said.
Japanese bond yields eased back from record peaks following a spike driven by speculation - which was later confirmed - that the government will call snap elections, a scenario that is expected to lead to bigger fiscal stimulus.
Brent crude futures dropped 3.4% to $64.25 and Nymex futures sank 3.4% to $59.89, after vaulting as high as $66.82 and $62.36, respectively, in the previous session.
Trump said on Wednesday afternoon that he had been told that killings in Iran's crackdown on nationwide protests were subsiding and he believed there was currently no plan for large-scale executions.
Gold fell 0.5% to around $4,598 per ounce. On Wednesday, it reached an unprecedented $4,642.72.
Stocks in Asia were mixed, but tech shares were met with more selling.
In Japan, the tech-heavy Nikkei eased 0.9% after hitting an all-time peak in the previous session, though the broader Topix extended its own record high on Thursday with a 0.8% advance.
Taiwan's TAIEX sank 0.4% and Hong Kong's Hang Seng slipped 0.5%, with tech shares weighing.
Chinese blue chips edged 0.1% lower, while South Korea's KOSPI added as much as 1.3% to a fresh record high. The Bank of Korea left interest rates unchanged on Thursday, as expected by economists, and signaled an end to its current easing cycle to prioritize financial stability.
FTSE futures pointed 0.6% higher, suggesting the cash index would open with an extension of its record high from Wednesday. Pan-European STOXX 50 futures tacked on 0.3%.
S&P 500 E-mini futures were flat after the cash index sank 0.5% overnight. The tech-focused Nasdaq Composite dropped 1%.
"There’s a rotation playing out on Wall Street that’s ultimately weighing on indices but indicates that the internals of the market are holding up reasonably well," said Kyle Rodda, an analyst at Capital.com.
"The strength in cyclicals, in no small part due to the positive outlook for the US economy, is propping up stocks and providing constructive signals to market participants of broadening market strength."
The US dollar was steady against its major peers on Thursday, with the dollar index up very slightly at 99.137.
It was unchanged at 158.44 yen after surging as high as 159.45 yen on Wednesday before pulling back sharply.
Japanese Finance Minister Satsuki Katayama issued another verbal warning on Wednesday, saying officials would take "appropriate action against excessive FX moves without excluding any options."
Prime Minister Sanae Takaichi plans to dissolve parliament's lower house next week and call a snap parliamentary election as early as February 8.
Expectations of bigger fiscal stimulus on an improved mandate have spurred investors to sell the yen and government bonds, sending longer-dated yields to record highs in recent days.
Japan's 20-year yield shed 2.5 basis points on Thursday to 3.135% after vaulting to an unprecedented 3.165% in the prior session.
