By Rocky Swift TOKYO, March 5 (Reuters) - Asian shares rallied on Thursday with a decline in U.S. Treasuries pointing to a tentative recovery in risk appetite that has been hammered by the escalating
Asian shares surge, led by KOSPI; Treasuries fall as traders weigh war impact
Market Reactions to Middle East Conflict
By Rocky Swift
Asian Equities Rebound
TOKYO, March 5 (Reuters) - Asian shares rallied on Thursday and U.S. Treasuries declined, pointing to a tentative recovery in risk appetite that has been hammered by the escalating war in the Middle East.
South Korea's KOSPI gauge recovered its steep losses in the prior session following a rebound on Wall Street. The dollar resumed its advance, while oil and gold traded higher.
China and U.S. Political Developments
Chinese shares climbed as party elites in Beijing unveiled their wide-ranging economic and development targets. The U.S. Senate backed President Donald Trump's military campaign against Iran, suggesting no quick resolution to a war that has roiled financial markets, transportation networks, and energy production.
Expert Insights on Geopolitical Risks
"Geopolitical risk can flare up again very quickly, so any early gains we see this morning across Asia-Pacific region share markets may not last," Paco Chow, dealing manager at Moomoo Australia and New Zealand, said in a note. "The outlook will remain cautious until we see oil flows return to normal."
Regional Market Performance
MSCI's broadest index of Asia-Pacific shares outside Japan jumped 3.9%. South Korea's KOSPI led regional benchmarks with a 11.2% surge, recovering from a historic plunge, while Japan's Nikkei jumped 2.5%.
The yield on benchmark U.S. 10-year notes rose 3.9 basis points to 4.121%. while the 30-year yield advanced 4.4 basis points to 4.7607%. Yields move inversely to bond prices.
Escalation in Middle East Tensions
Iran launched a wave of missiles at Israel early on Thursday, just hours after moves to halt the U.S. air assault were blocked in Washington.
Impact on Energy and Global Economy
U.S. Energy Secretary Chris Wright told Fox News on Wednesday that the impact of the conflict on energy markets would be a "bump on the road" and a "small price" to pay for U.S. military goals. But International Monetary Fund Managing Director Kristalina Georgieva warned that the world was potentially in a long period of flux as the hostilities tested economic resilience.
Commodity and Currency Movements
Concerns about energy supply continued to drive up oil prices, which have gained about 16% since the start of the war. U.S. crude rose 3.94% to $77.60 a barrel on Thursday, and Brent climbed to $84.25 per barrel, up 3.5%.
Spot gold rose 0.78% to $5,175.47 an ounce.
Market Volatility Outlook
"The market continues to trade on headlines, and we're likely to see further volatility ahead," Henry Russell, a London-based economist for ANZ, said on a podcast. "We're seeing energy supply still facing constraints with production facilities going offline and more likely to follow if this conflict persists any longer."
China's Economic Targets and Market Response
China set its economic growth target for 2026 at 4.5%-5%, a slight downgrade from the 5% pace achieved last year, leaving room for efforts to curb industrial overcapacity and rebalance the economy. Beijing also released its 15th five-year plan, pledging investments in innovation, high-tech industries, and a "notable" increase in household consumption.
China's blue-chip CSI300 Index gained 1.4%, while the Shanghai Composite Index added 1%.
Currency and Cryptocurrency Updates
The greenback resumed gains after a breather in the previous session. The dollar index, which measures the greenback against a basket of currencies, rose 0.19% to 98.99. The euro fell 0.21% to $1.1609, while the yen weakened 0.06% to 157.15 per dollar.
In cryptocurrencies, bitcoin fell 0.73% to $72,807.71, and ether declined 0.66% to $2,136.43.
(Reporting by Rocky Swift; Editing by Sonali Paul and Edwina Gibbs)
