Oil prices surged Monday following renewed conflict in the Middle East, with both the United States and Iran claiming control of the Strait of Hormuz. This critical waterway, essential for global oil shipments from the Persian Gulf, has seen tankers unable to pass, driving up fuel prices worldwide. Brent crude, the international standard, climbed 4.7% to $79.59 a barrel, while US crude added 4.11% to $74.36 a barrel. This spike in oil prices also led to a rise in bond yields, with the 10-year Treasury climbing to 4.59% from 4.56% late Friday, reflecting concerns about inflation and potential interest rate hikes.
Simultaneously, AI-related tech stocks experienced a significant downturn. South Korea's Kospi index dropped 8.9%, with SK Hynix's stock plunging 15.4% in Seoul, its worst performance since 1997. This follows a 13.1% jump on Friday as its US-listed shares debuted after a $26.5 billion share sale. Micron Technology sank 4.1%, cutting into its impressive 243.1% year-to-date gain. Nvidia, the largest stock on Wall Street by value due to AI euphoria, fell 1%, becoming the heaviest weight on the S&P 500, which itself declined 0.2%. The Nasdaq composite was down 0.8%.
Despite the broader tech slump, some bright spots emerged. Taiwan Semiconductor Manufacturing Co. (TSMC), a key chipmaker, saw its shares in Taiwan rise 1% after reporting a nearly 68% jump in June revenue from a year earlier, bringing its first-half revenue growth to 35.6%. However, TSMC's US-listed shares fell 0.4%. Analysts are forecasting strong overall earnings for S&P 500 companies, with an expected 23.6% growth from a year earlier, according to FactSet, marking the second consecutive quarter of growth exceeding 20%.
