Global stocks and bonds edged lower while oil prices climbed as persistent tensions in the Middle East and mixed signals from the United States and Iran over ceasefire talks dampened investor sentiment.
The MSCI Asian share benchmark declined by 0.9 per cent, snapping a two-day rally as rising energy costs threatened to fuel inflation and slow economic growth.
Futures tied to equity indexes in both the United States and Europe also pointed to modest losses, indicating cautious trading across major global markets.
The MSCI All Country World Index was heading for its first drop of the week, suggesting that earlier market optimism may be fading as diplomatic negotiations between the United States and Iran remain uncertain with no clear end to the conflict in sight.
Oil prices moved higher as investors reacted to geopolitical risks. Brent Crude rose by 1.9 per cent to around $104 per barrel, recovering from losses recorded earlier in the week.
The rebound came after the United States maintained that negotiations were still ongoing, while Iran reportedly rejected diplomatic outreach from Donald Trump.
Crude prices have remained volatile throughout the week, often swinging between losses and gains as markets respond to developments in the region.
The increase in oil prices also reflected in the bond market, where yields on the US Treasury 10-year note rose by two basis points to 4.35 per cent.
Market analysts say the combination of geopolitical uncertainty and rising energy costs could continue to pressure global financial markets if tensions persist.
