Oil prices surged and global stocks showed mixed trading on Monday following U.S. airstrikes and Iran’s counteractions. In early European trading, Germany’s DAX rose by 0.2%, reaching 25,105.55, while the CAC 40 in Paris increased by 0.1% to 8,347.26. Britain’s FTSE 100 also saw a minor rise of 0.1%, settling at 10,506.86.
U.S. stock futures exhibited mixed movements, with a 0.3% decrease for the S&P 500 and the Dow remaining largely unchanged. Nasdaq Composite futures fell by 0.9%. Brent crude oil, the global benchmark, climbed nearly 5% early Monday before retreating, standing at 77.72 dollars per barrel, up by 2.3% in Europe. The U.S. crude reference also gained 2.1%, priced at 72.92 dollars per barrel.
Recently, the prices of both crude types had returned to pre-conflict levels between the U.S. and Iran, following a provisional agreement to cease hostilities and resume oil shipments through the Strait of Hormuz. Despite this development, the U.S. launched several airstrikes against Iran due to an Iranian attack on a container ship in the Strait, which led to a fire and left one crew member missing over the weekend. Iran retaliated by attacking countries across the Middle East.
In Asian markets, Tokyo’s Nikkei 225 dropped 1.9% to 67,242.73, while Seoul’s Kospi declined 9% to 6,806.93, marking its lowest level since early May. Shares of South Korean memory chip maker SK Hynix, which surged 13% on Friday in Wall Street, plummeted by 15.4% in Seoul. Larger competitor Samsung Electronics fell by 10.7%. In other Asian markets, Hong Kong’s Hang Seng rose 0.2% to 24,212.36, and Shanghai’s composite index fell 2.1% to 3,913.79. Australia’s S&P/ASX 200 remained virtually unchanged at 8,808.50.
U.S. stocks rose slightly on Friday as investors maintained interest in AI industry leaders. The S&P 500 edged up by 0.4%, the Dow Jones Industrial Average gained 0.3%, and the Nasdaq Composite saw a 0.3% increase. SK Hynix shares soared immediately upon the opening session, raising approximately 26.5 billion dollars by selling American depositary shares priced at 149 dollars each.
The stock of SK Hynix in Seoul had already skyrocketed over 600% last year due to AI-related enthusiasm. This boom has resulted in significant profits due to increased demand for computer memory, but concerns are rising that AI-related stock prices might be overinflated and worldwide investments in chips and data centers may not generate sufficient productivity growth to support them.
Swissquote’s Ipek Ozkardeskaya commented that demand for AI has created perceptions that a historically cyclical sector could remain in a prolonged boom phase. SK Hynix plans to double its production capacity, potentially more, to keep up with demand. However, technological advances, more efficient AI models, or a slowdown in AI infrastructure investment could swiftly turn the market into one of oversupply.
Similar concerns apply to many AI-linked stocks, which have become highly influential on Wall Street due to their significant valuations. Beyond this, investors are focusing on earnings reports to assess if corporate profits are growing fast enough to justify high stock prices near historic peaks.
This week, many major U.S. banks, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo, will report earnings on Tuesday. Meanwhile, ongoing conflicts with Iran are clouding the outlook for global oil flow, affecting energy costs and general inflation.
High bond yields are putting pressure on global financial markets, as more expensive oil and rising inflation might compel the Federal Reserve and other central banks to raise interest rates. Higher rates can curb inflation but also slow the economy and hurt investment prices.
In other operations early Monday, the U.S. dollar increased to 162.01 Japanese yen from 161.72 yen. The euro climbed to 1.1435 dollars from 1.1408 dollars.
Leave a Reply