World stocks drop, oil jumps

MSCI’s gauge of stocks across the globe declined 0.65%

World stocks dropped and oil prices climbed on Wednesday as hopes for a swift end to the Iran war faded, with renewed hostilities dampening risk appetite.

The ​pan-European STOXX 600 index slipped 0.66%.

MSCI’s gauge of stocks across the globe declined 0.65%.

U.S. stock market’s three main indexes pulled back from recent record highs, dragged by technology and financial stocks, while ‌energy shares tracked the rise in crude. The Dow Jones Industrial Average shed 1.21%, the S&P 500 declined 0.74%, and the Nasdaq Composite dropped 0.89%.

Tensions in the Middle East escalated after Iranian attacks, while U.S. attacked targets near the Strait of Hormuz. Diplomatic efforts to halt the war showed little progress.

The broad market and the tech sector have led this strong, ‌strong rally for the past several sessions, ⁠and today’s taking a breather, said Wasif Latif, chief investment officer at Sarmaya Partners. The headline coming out of the Middle East with the Iran war continuing to escalate, de-escalate, escalate, ⁠and then de-escalate again. That’s the reason for the market selloff today.

Oil prices neared $100 a barrel, with Brent crude settling up 1.89% at $97.81.

Investor enthusiasm over AI continued to support equities.

In Asia, stock indexes jumped to record highs in Japan and Taiwan.

Shares in ​Marvell ​Technology added 3.73%, extending gains from a record high on Tuesday.

Our view continues to be that this strong run-up in semiconductors and data-centre demand is a lot of pulling forward of future demand and consumption, and that’s helping the economy, Latif added.

Currency markets were jittery after the dollar firmed to the 160 yen level, a threshold that often heightens concerns ‌about potential intervention by Japanese authorities.

The Japanese yen softened 0.11% against ​the U.S. currency to 160.05 per dollar.

The decline in the yen prompted ​warnings from the finance minister on Wednesday.