London (AFP) – World oil prices surged Monday as a fresh flare-up between the United States and Iran rattled investors, while a selloff in chipmakers sent South Korea’s stock market plunging. Wall Street’s tech-heavy Nasdaq Composite slid at the start of New York trading, as did the broad S&P 500, as shares in US chipmakers tumbled. European equities were mixed in afternoon trading. The dollar traded mixed against main rivals.
“The roller-coaster ride continues, both with respect to the US-Iran conflict and the semiconductor trade,” said Briefing.com analyst Patrick O’Hare. “Each is on a downhill swing today, which isn’t a comfortable situation for the stock market,” he added.
Renewed Middle East hostilities followed last week’s exchange of fire and came as negotiators struggle to reach a lasting peace deal to keep the crucial Strait of Hormuz open. The United States struck Iran for the second day Monday, prompting Tehran to retaliate against US allies in the Gulf, as the two sides battle over the status of the strategic waterway. President Donald Trump said the United States would be taking over the Strait of Hormuz. “We’ll become the guardian of the Strait,” Trump told Fox News.
Brent North Sea crude, the international benchmark, rallied as much as five percent Monday, before paring gains to trade around 3.3 percent higher. The main US contract, West Texas Intermediate, also spiked. “While (oil) prices are still not at crisis levels, the creep upwards will ignite fresh inflationary worries and concerns about how far higher interest rates could move,” noted Susannah Streeter, chief investment strategist at Wealth Club. “That’s being reflected in the bond markets, with yields on gilts and US Treasuries rising,” she added. Higher interest rates could fuel equity volatility, Briefing.com’s O’Hare warned. “The higher rates go, the more turbulent the turns will get, but if they come down, so will the market’s anxiety level,” he said.
On equity markets, tech firms came under renewed pressure after weeks of volatility fuelled by concerns about stretched valuations and questions over the vast sums pumped into the AI sector. South Korean chip titan SK hynix plunged more than 15 percent, extending a recent bout of selling that has seen the market heavyweight lose nearly 40 percent since hitting a record last month. The loss came after the firm’s US-listed shares soared almost 13 percent on their New York debut following a record $26.5 billion share sale. Rival Samsung was down more than 10 percent by Monday’s close.
“The South Korean market is now considered a key barometer of sentiment towards the chip sector, so when it declines it can have ripple effects across the world,” said Kathleen Brooks, research director at trading group XTB. There were also losses in Tokyo, where tech firms Advantest and Tokyo Electron tumbled. Shares in US chipmakers were also hit, with Micron and Marvell both down more than six percent. Investors are gearing up for the latest earnings season, which will be pored over for an idea about the outlook for the AI industry. This week sees reports from Taiwanese chip giant TSMC and Dutch firm ASML, which produces chipmaking equipment, while US tech firms begin reporting next week. A number of Wall Street banks are lined up to report earnings this week, including JP Morgan, Bank of America, and Goldman Sachs.
– Key figures around 1330 GMT –
Brent North Sea Crude: UP 3.3 percent at $78.51 a barrel
West Texas Intermediate: UP 3.2 percent at $73.67 a barrel
New York – Dow: UP less than 0.1 percent at 52,668.55 points
New York – S&P 500: DOWN 0.3 percent at 7,552.17
New York – Nasdaq Composite: DOWN 0.7 percent at 26,093.46
London – FTSE 100: DOWN 0.1 percent at 10,486.51
Paris – CAC 40: UP less than 0.1 percent at 8,345.72
Frankfurt – DAX: UP 0.2 percent at 25,104.00
Seoul – Kospi: DOWN 9.0 percent at 6,806.93 (close)
Tokyo – Nikkei 225: DOWN 1.9 percent at 67,242.73 (close)
Hong Kong – Hang Seng Index: UP 0.2 percent at 24,213.72 (close)
Shanghai – Composite: DOWN 2.1 percent at 3,913.79 (close)
Euro/dollar: UP at $1.1425 from $1.1415 on Friday
Pound/dollar: DOWN at $1.3395 from $1.3397
Dollar/yen: UP at 162.13 yen from 161.72 yen
Euro/pound: UP at 85.30 pence from 85.20 pence
© 2024 AFP
