Asian stocks rebounded, with South Korean stocks leading the gains after experiencing their worst plunge in history. Initial market volatility was triggered by the Middle East conflict, but sentiment subsequently showed signs of recovery.

The South Korean KOSPI index rose 8.6%, and Japanese stocks gained 2.7%, pushing the MSCI Asia Pacific index higher for the first time in four days. Strong economic data eased concerns about inflation, boosting Wall Street and other Asia-Pacific markets.

Chinese stocks opened higher despite China setting its 2026 GDP growth target at 4.5% to 5%, the lowest since 1991. China also set its 2026 consumer price index target at around 2%.

Despite the temporary rebound in stock sentiment, oil prices continued to rise due to concerns about a protracted conflict, and gold prices also extended their gains. U.S. Treasury prices held onto losses from the previous session, and the dollar stabilized after falling in the previous trading day.

Goldman Sachs CEO David Solomon, in an interview with Bloomberg Television, stated, “I think market participants are watching and trying to judge, ‘How will things develop? What will the final outcome be?’ As they gather more information in the next few days, a week or two, I think that will impact risk premiums.”

Support in U.S. stocks provided some respite for Asian traders, easing the widespread declines in regional markets on Wednesday. Investors are still assessing the impact of the war on economic growth and inflation. To maintain the rebound momentum, investors may need a clearer understanding of the duration of the conflict and its impact on inflation.

Uncertainty surrounding the duration of the Iranian conflict is forcing investors to refer to recent history to judge market direction. Many investors are re-examining trades made after Russia’s 2022 invasion of Ukraine, betting that this week’s surge in energy prices will push up inflation, thereby strengthening the dollar and causing bonds and stocks to weaken.

Traders remain focused on the oil market, where the surge in oil prices following the Iranian war could exacerbate inflation. Crude oil prices climbed as traders assessed the escalating impact of the U.S.-Israel war against Iran, with both sides vowing to continue this energy-market-disrupting conflict.

West Texas Intermediate crude oil prices climbed above $76.50 a barrel, after rising about 11% in the first three days of the week, while Brent crude approached $83 a barrel. In other commodities, gold prices rose as the dollar remained largely unchanged. Gold has been a preferred safe-haven asset for investors since the outbreak of the war.

Gold prices were near $5,170 an ounce in early trading on Thursday, after rising 1% in the previous session. Earlier this year, gold and silver rose in tandem with the stock market. In other market sectors, U.S. Treasuries maintained their losses from the previous session, with the benchmark 10-year Treasury yield at 4.10%.

Meanwhile, despite the continued uncertainty surrounding the timeline for military action, President Donald Trump expressed confidence in military action against Iran. Tehran attacked Israel and Gulf states, while Israeli and U.S. forces fulfilled their commitment to bomb targets inside Iran. The U.S. sank an Iranian warship in international waters.

Tehran also refuted reports that it had contacted the United States to seek an end to the conflict, calling them “pure lies.” Meanwhile, China will send a special envoy for Middle East affairs to the region for mediation.

One of the key focuses for Asian traders is South Korea—as a bellwether for artificial intelligence investment, the South Korean stock market has surged to become the world’s second-best performing stock market.

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