Korea Leads Rebound in Asian Stocks, Dollar Gains: Markets Wrap

(Bloomberg) — Asian equities rebounded, with South Korea leading gains after its worst rout on record, as markets regained some composure following a surge in volatility sparked by the Middle East conflict.

South Korea’s Kospi Index surged 10% to lift the broader MSCI Asia Pacific Index 2.7%, the first increase in four sessions. The rally tracked Wall Street’s gains on Wednesday after stronger economic data soothed inflation concerns. The advance appeared tentative, with equity-index futures for the US and Europe edging lower, while the dollar — reasserting its role as a haven in times of crisis — strengthened.

Chinese shares also traded higher even as the country set its 2026 gross domestic product target at 4.5% to 5%, the lowest growth objective since 1991. China also set its 2026 CPI target at about 2%.

While sentiment in equities market rebounded, crude oil continued its advance. Gold and silver extended their gains amid concerns the conflict could be drawn out. Treasuries were also a touch weaker, with the yield on the 10-year rising by two basis points to 4.11%.

“I think that market participants are looking and trying to say, ‘How is this going to play out? What’s the end game?’” David Solomon, Goldman Sachs Group Inc. chief executive officer, said in an interview on Bloomberg TV. “As they have more information in the coming days, the coming week or two, I think that will have an impact on risk premiums.”

Support from US stocks offered Asian traders a partial reprieve from Wednesday’s broad regional declines, as investors continued to assess the war’s impact on growth and inflation. For the rebound to be sustained, investors will likely need greater clarity on the duration of the conflict and the extent to which it will fan inflation.

Uncertainty about how long the conflict could last is forcing investors to look to recent history as a guide for markets. Many are revisiting trades enacted after Russia’s 2022 invasion of Ukraine, betting that this week’s spike in energy prices will stoke inflation, sparking lasting strength in the dollar as well as weakness in bonds and stocks.

“Whether or not the ‘feel good’ sentiment of today can last depends on what headlines we get out of the Middle East over coming days,” said Tim Waterer, chief market analyst at KCM Trade. “Market sentiment can shift on a dime depending on whether escalation or de-escalation seems the more likely path at any given point.”

Traders remained focused on oil as the spike in prices following the Iran war threatened to accelerate inflation. Crude climbed as traders assessed the widening fallout from the US-Israeli war against Iran, with the combatants vowing to press on with the conflict that’s upending energy markets.

West Texas Intermediate climbed above $77 a barrel, after spiking about 11% in the first three days of the week, while Brent traded close to $84.

Elsewhere, China’s government told the country’s largest oil refiners to suspend exports of diesel and gasoline as the escalating conflict disrupts the arrival of crude from one of the world’s largest producing regions.

With virtually no oil or fuel making its way out of the Persian Gulf since US and Israeli attacks began at the weekend, refiners from Japan to Indonesia and India have begun cutting back run rates and suspending exports.

Meanwhile, President Donald Trump expressed confidence in the military campaign against Iran even as the timeline for operations remained unclear. Tehran targeted Israel and Gulf states while Israeli and American forces followed through on pledges to bomb targets in the Islamic Republic. The US sank an Iranian warship in international waters.

Tehran also dismissed a report it had reached out to the US to negotiate an end to the conflict as “pure falsehood.” China, meanwhile, will dispatch its special envoy on Middle East affairs to the region to conduct mediation efforts.

One key focus for traders in Asia is South Korea — a bellwether for artificial intelligence investments that has rallied to become the world’s second-best-performing equities market.

“Korean stocks are likely to remain in a volatile situation depending on the oil price, making it difficult to time an entry,” said Hiroshi Namioka, chief strategist at T&D Asset Management. “When volatility is high, the investment appeal deteriorates on a risk-return basis.”

Corporate Highlights:

Morgan Stanley is laying off around 3% of its workforce or about 2,500 people, according to people familiar with the matter. Nvidia Corp. Chief Executive Officer Jensen Huang doesn’t see his company’s investments in OpenAI reaching $100 billion — the maximum amount that the chipmaking giant had once pledged to spend on the startup. Broadcom Inc. Chief Executive Officer Hock Tan said the company expects its AI chip sales to top $100 billion next year. Investors are boosting short positions in Blue Owl Capital Inc., betting the stock has more room to fall despite wiping out nearly one-third of its value this year. Anthropic PBC chief Dario Amodei has resumed discussions with the Pentagon about the way its AI models are used by the US military. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.1% as of 1:50 p.m. Tokyo time Japan’s Topix rose 2.5% Australia’s S&P/ASX 200 rose 0.5% Hong Kong’s Hang Seng rose 0.8% The Shanghai Composite rose 0.8% Euro Stoxx 50 futures fell 0.2% Currencies

The Bloomberg Dollar Spot Index rose 0.2% The euro fell 0.2% to $1.1607 The Japanese yen was little changed at 157.11 per dollar The offshore yuan was little changed at 6.8958 per dollar Cryptocurrencies

Bitcoin fell 0.6% to $72,885.6 Ether fell 0.7% to $2,136.13 Bonds

The yield on 10-year Treasuries advanced two basis points to 4.11% Japan’s 10-year yield advanced 4.5 basis points to 2.155% Australia’s 10-year yield advanced five basis points to 4.79% Commodities

West Texas Intermediate crude rose 3.4% to $77.21 a barrel Spot gold rose 0.6% to $5,170.19 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Bernadette Toh, Gabrielle Ng and Aya Wagatsuma.

©2026 Bloomberg L.P.