Global oil prices climbed on Monday as renewed tensions between the US and Iran unsettled market participants. Simultaneously, a sharp decline in semiconductor stocks caused a significant drop in South Korean equity markets.
Wealth Club strategist Susannah Streeter noted that although oil prices have not reached critical levels, their upward trajectory is fueling anxieties regarding inflation and potential interest rate hikes. This sentiment is visible in bond markets, where yields for US Treasuries and UK gilts are climbing.
The current Middle Eastern instability follows ongoing friction and unsuccessful negotiations regarding the security of the Strait of Hormuz. With the US conducting strikes for consecutive days and Iran responding against regional allies, Brent Crude rose by 3.5 percent, while West Texas Intermediate saw a similar spike.
Tech companies faced substantial selling pressure globally. South Korean chip producer SK hynix dropped over 15 percent, further retreating from its peak last month. Rival Samsung also fell by more than 10 percent. XTB research director Kathleen Brooks highlighted that the South Korean market acts as a primary indicator for the chip industry, causing global impacts when it suffers losses. Consequently, Tokyo-based Advantest and Tokyo Electron also experienced declines.
Investors are now focusing on upcoming earnings reports to gauge the health of the AI sector. Key updates are expected from TSMC, ASML, and major financial institutions like JP Morgan, Bank of America, and Goldman Sachs.
