New York (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 led major US indices lower while European stock markets were little changed.
Oil prices shot up more than nine percent as President Donald Trump announced the reimposition of a US naval blockade on Iranian ports while threatening that the US would charge a 20 percent rate on all cargo shipped through the Strait of Hormuz, a critical waterway for petroleum shipments. Iran’s military warned on Monday that it would not allow the United States to “interfere” in the management of the Strait of Hormuz, while Iranian Foreign Minister Abbas Araghchi mocked Trump’s threatened levy. Iran on Monday fired “warning shots” at two ships attempting to pass through the Strait of Hormuz, state television reported, as Tehran and Washington battle for control of the strategic waterway.
Analysts said the renewed sparring would reduce shipping in the key waterway. “But in addition, the market is trying to assess what President Trump means by charging 20 percent on all cargo shipped through the strait and how that might impact not only crude oil prices but other commodities and container ships,” said Andy Lipow of Lipow Oil Associates. “The market is looking and saying, ‘Do we need to pay Iran for protection or are we going to be paying the United States for protection? And how much is that going to be?'” The heightened uncertainty over the Middle East also weighed on US equities, with the Nasdaq falling about 1.5 percent. “A weekend of hostilities between the US and Iran is triggering a risk-off day on Wall Street,” said Jose Torres of Interactive Brokers. “The renewed attacks are generating growing worries about the feasibility of a longer-term truce in which both nations commit to peace, as significant disagreements regarding control of the Strait, sanctions relief and Tehran’s nuclear program remain sticking points,” he said.
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 companies Advantest and Tokyo Electron tumbled. Shares in US chipmakers were also hit, with Micron, AMD, and Marvell all losing more than four 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 2020 GMT include:
– Brent North Sea Crude: UP 9.6 percent at $83.30 a barrel
– West Texas Intermediate: UP 9.4 percent at $78.14 a barrel
– New York – Dow: DOWN 0.3 percent at 52,498.64 (close)
– New York – S&P 500: DOWN 0.8 percent at 7,515.34 (close)
– New York – Nasdaq Composite: DOWN 1.6 percent at 25,873.18 (close)
– London – FTSE 100: FLAT at 10,498.29 (close)
– Paris – CAC 40: UP 0.3 percent at 8,364.65 (close)
– Frankfurt – DAX: UP 0.2 percent at 25,114.25 (close)
– 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: DOWN at $1.1384 from $1.1416 on Friday
– Pound/dollar: DOWN at $1.3353 from $1.3404
– Dollar/yen: UP at 162.43 yen from 161.68 yen
– Euro/pound: UP at 85.25 pence from 85.20 pence
© 2024 AFP
