Oil prices surge after new US-Iran clashes; Seoul stocks slump on tech losses
Oil prices rose more than 4% on Monday after renewed hostilities between the United States and Iran threatened a fragile truce in West Asia. Meanwhile, South Korean stocks plunged as technology firms faced another rout.
The escalation followed an exchange of fire last week and came as negotiators struggled to reach a lasting peace deal to keep the Strait of Hormuz open. The US military launched strikes on Sunday after renewed fighting over the waterway, which saw several of Washington's Gulf allies targeted.
Both main oil contracts, which had fallen after the announcement of a preliminary agreement, spiked up to 4.5%. This raised concerns that inflation, already high due to the wider conflict, could prompt central banks to raise interest rates.
The renewed fighting began after an Iranian attack on a commercial ship in the strait early on Sunday. The crew abandoned the vessel after it caught fire. Iran's Revolutionary Guards said the strait would be closed until further notice, according to state news agency IRNA. The US Central Command countered that the strait remained open to all vessels seeking lawful transit.
Analysts noted that while the resumption of hostilities pushed crude prices higher, another spike to the levels seen after the initial outbreak of war in February was unlikely. Demand remains slow to recover, and increased supply from stranded tanker releases and OPEC+ output quota expansion is adding to an oversupplied outlook.
On equity markets, Seoul's Kospi index fell as much as 9% as tech shares came under renewed selling pressure. The decline was driven by weeks of volatility over stretched valuations and questions about massive investments in artificial intelligence. Market heavyweight SK Hynix plunged over 15%, extending a recent sell-off that has seen the chipmaker lose nearly 40% since a record last month. Rival Samsung fell more than 10%.
Losses were also seen in Tokyo, where tech firms Advantest and Tokyo Electron tumbled. Other Asian markets were mixed: Shanghai, Singapore, Wellington, Manila, Mumbai and Jakarta dropped, while Hong Kong, Taipei, Bangkok and Manila rose. European markets were mostly flat to lower.
Investors are also preparing for the upcoming earnings season, which will be scrutinised for insights into the AI industry. This week includes reports from Taiwanese chip giant TSMC and Dutch firm ASML, as well as several Wall Street banks.
