The dominant macro driver overnight was the continued fragility of US-Iran ceasefire negotiations, with fresh reports of Iranian strikes against Kuwait and Bahrain and retaliatory US strikes on Iran's Qeshm Island sending WTI crude above $95 per barrel for a third consecutive session — a cumulative gain of more than 7% over two days. The oil supply shock, with the Strait of Hormuz effectively closed for nearly three months, is now feeding directly into US inflation expectations: April CPI printed at 3.8% year-on-year — the fastest pace in nearly three years — while PPI surged 6.0%, the largest jump since December 2022, cementing a global central bank pivot away from the 2025 easing cycle toward an extended hold or outright tightening in 2026. Wall Street snapped a nine-day winning streak, with the S&P 500 falling 0.74% from its record close above 7,600 on Tuesday, as Broadcom's revenue miss and a near-4% drop in Alphabet following its $80 billion stock sale announcement weighed on the Nasdaq. The VIX ticked up to 16.06 while the Nikkei VIX surged 18%, signalling a notable uptick in near-term volatility expectations across the Pacific.
For Asia-Pacific markets opening Thursday, the net read is cautiously negative given Wall Street's reversal, though the region's own session on Wednesday was broadly constructive — the Nikkei 225 surged 2.94%, the CSI 300 climbed 1.52%, the Hang Seng added 2.52%, and the ASX 200 closed near flat at 8,724. The AUD slipped 0.59% to 0.7132 against the dollar, reflecting both the weaker US risk tone and the weight of elevated oil prices on Australia's import costs and inflation outlook ahead of the RBA's June 16 meeting. Copper fell 2.59%, aluminium collapsed 7.91%, and silver dropped 3.33%, signalling broad industrial metals weakness that will weigh on ASX materials names at the open, while the energy sector finds support from oil's continued rally and the strong Wednesday performance of PDN (+11.48%) and NXG (+9.37%) in the uranium space.