A potent combination of rising geopolitical risk and growing scepticism over the valuations of artificial intelligence stocks sent shockwaves through global financial markets on Thursday. In New York, the major indices suffered broad declines, driven by a new escalation in US-Iran tensions that pushed oil prices higher and rekindled fears of supply disruptions. At the same time, investors continued to rotate out of high-flying technology shares, worried that the sector’s rally had outpaced fundamentals. The mood was further darkened by the approaching mega initial public offering of SpaceX, which added to concerns about market saturation.

Asian bourses registered a more uneven session, reflecting a partial rebound after the previous day’s rout but also persistent anxiety. Japan’s Nikkei 225 recovered from early losses to eke out a marginal gain, while South Korea’s Kospi posted a modest rise. However, Chinese markets in Hong Kong and Taiwan lost ground, with the Hang Seng slipping as tech stocks remained under pressure. The lack of a clear direction underscored how regional investors were weighing the near-term risks of a broader trade conflict against the underlying strength of some export-oriented sectors.

The tremors were felt acutely in major emerging economies. Brazil’s Ibovespa index tracked Wall Street lower, as the real strengthened only slightly and local interest rates held steady. In India, the Sensex shed 150 points, with analysts in Mumbai citing a cocktail of global headwinds—higher crude prices, continued foreign fund outflows, and a surprisingly strong US inflation print that clouded the outlook for Federal Reserve policy. Jakarta’s composite index gave up early gains to close in negative territory, with heavy selling pressure in the afternoon mirroring the global flight from risk.

The latest flare-up between Washington and Tehran injected a fresh layer of uncertainty into markets already navigating elevated trade frictions and a shifting monetary policy landscape. Viewed from London, the rise in oil prices threatens to feed through into consumer costs, complicating the disinflation narrative that has underpinned recent market rallies. With the SpaceX IPO set to test investor appetite for mega-debuts and key US economic data on the horizon, the path ahead appears choppy. Market participants will be watching closely for any de-escalation in the Gulf or signals from central banks that could stabilise sentiment.