Tokyo, Japan – Oil prices eased from multi-month highs on Thursday, while gold pulled back from record levels, as U.S. President Donald Trump reassured markets that the risk of a large-scale military confrontation with Iran had diminished. The comments helped relieve investor anxiety over the potential escalation of tensions in the Middle East.

The market response was also marked by a rotation away from high-flying technology and semiconductor stocks, particularly artificial intelligence (AI)-related equities, as investors shifted focus toward cyclical sectors and safer assets.

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Oil and Gold Prices React to Iran Developments

• Brent crude futures fell 3.4% to $64.25 per barrel, after reaching $66.82 in the previous session.
• Nymex WTI crude dropped 3.4% to $59.89 per barrel, down from a high of $62.36.
• Gold prices eased 0.5% to $4,598 per ounce, retreating from Wednesday’s record peak of $4,642.72.

Trump stated that he had been informed “on good authority” that the killings of protesters in Iran were subsiding and that there were currently no plans for mass executions. His remarks helped ease concerns of a sudden spike in Middle East geopolitical risk, which had previously driven oil and precious metal prices higher.

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Asian Markets See Tech Stock Sell-Off

Markets across Asia reacted to the combination of geopolitical relief and profit-taking in technology shares:

• Japan: The tech-heavy Nikkei 225 fell 0.9% after reaching an all-time high, while the broader Topix index gained 0.8%, extending its record peak.
• Taiwan: The TAIEX dropped 0.4%, pressured by semiconductor and AI-related stock declines.
• Hong Kong: The Hang Seng Index fell 0.5%, weighed down by technology sector weakness.
• China: The CSI 300 edged 0.1% lower, showing mild volatility amid global risk sentiment.
• South Korea: The KOSPI rose 1.3% to a new record high, supported by a stable interest rate policy from the Bank of Korea.

The Bank of Korea maintained its interest rate, signaling the end of its current monetary easing cycle, prioritizing financial stability while supporting economic growth.

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U.S. Markets and Global Futures

Following a modest downturn on Wall Street, U.S. investors continued a rotation from growth-focused tech stocks to cyclical sectors:

• Dow Jones Industrial Average: down fractionally
• S&P 500: slipped 0.5%
• Nasdaq Composite: dropped 1%

Futures suggested a mixed start for European and U.S. markets:

• FTSE futures: up 0.6%
• Pan-European STOXX 50 futures: up 0.3%
• S&P 500 E-mini futures: largely unchanged

Kyle Rodda, an analyst at Capital.com, noted, “There’s a rotation playing out on Wall Street that’s weighing on indices, but the underlying market internals remain healthy. Strength in cyclical sectors and a positive U.S. economic outlook are providing constructive signals for investors.”

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Yen Volatility Amid Japan Snap Election Speculation

The Japanese yen rebounded sharply after hitting its weakest level against the U.S. dollar since July 2024:

• The dollar/yen rate stabilized at 158.44 yen, after surging to 159.45.
• Japanese bond yields eased slightly from record highs, with the 20-year yield falling 2.5 basis points to 3.135%, after previously hitting 3.165%.

Finance Minister Satsuki Katayama warned that authorities would take “appropriate action against excessive FX moves without excluding any options,” as expectations grew for a snap parliamentary election, potentially slated for 8 February 2026. The upcoming election is expected to lead to bigger fiscal stimulus, which had earlier pressured the yen and pushed yields to historic highs.

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Key Takeaways

• Oil prices fall after Trump calms fears of U.S.-Iran conflict.
• Gold retreats from record highs amid reduced geopolitical risk.
• Asian tech shares slide, while cyclicals see rotation-driven strength.
• Japan’s yen and bond yields show volatility ahead of snap elections and potential fiscal stimulus.
• U.S. markets show a rotation from AI and chip-focused tech to cyclical sectors, reflecting broader investor positioning.