Equities fell as the US weighs the potential for direct conflict with Iran, and Federal Reserve Chair Jerome Powell warned of meaningful inflation ahead. MSCI’s regional gauge of shares slumped about 1%, with stocks in Hong Kong falling more than 2%.
US equity futures edged lower after the S&P 500 Index closed little changed in the previous session. The dollar was stronger against most major currencies. Cash trading in Treasuries is closed Thursday for a US holiday.
Sentiment turned more cautious following a Bloomberg report that senior US officials are preparing for a possible strike on Iran in the coming days.
Markets were already on edge after the Fed downgraded its estimates for growth this year and projected higher inflation, underscoring how tariff-driven uncertainties are complicating the central bank’s bid to ease policy.
“We’re cautious at the moment, we’re focusing on asset classes that are less correlated to rates, less correlated to what the US president is doing,” Gareth Nicholson, Nomura’s head of discretionary portfolio management, said on Bloomberg TV. “But there’s not many that are out there that are uncorrelated.”
