South Korea's Kospi Plunges Over 6%; Oil Worries and Chipmaker Shares Rattle Asian Markets
South Korea's Kospi Plunges Over 6%; Oil Worries and Chipmaker Shares Rattle Asian Markets. In Brief: The Kospi index fell more than 6% to below 6,000 points, its lowest level since July 31. Selling of chipmaker shares and concerns over the sustainability of the AI boom weighed on Asian markets. Rising oil prices intensified inflation worries, and investors are now awaiting reports from U.S. banks and [...]
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Asian stock markets fell sharply on Tuesday. A sell-off in tech stocks on Wall Street and worries about rising inflation on the back of rising oil prices weighed on sectors that are highly valued.
South Korea's Caspian Index fell by more than 6% and reached below the level of 6,000 units; Its lowest since July 31. Due to the high weighting of chip companies, this index is more vulnerable to changing investors' views on artificial intelligence. Japan's Nikkei index fell by 2.6 percent. In China, Chinext technology index dropped by 3%, CSI 300 by 1% and 30% and Shanghai index by 1% and 20%.
The decline came after shares fell on Wall Street; While the Nasdaq, heavily weighted by technology companies, was down 0.5 percent in overnight trade, chipmaker shares were under pressure. Investors are increasingly concerned about the sustainability of artificial intelligence-driven growth markets, and the intensification of competition between the United States and China has fueled these doubts. In recent days, concerns about the AI boom have ranged from the speculative behavior of investors to intense competition for processing power and funding.
The energy market has once again become one of the main factors affecting global transactions. The price of Brent oil futures traded close to the highest level of the last two weeks; While investors were evaluating the consequences of the attack on the Saudi oil facilities and the possibility of an increase in the supply of Russian diesel.
One strategist said markets have re-focused on the fact that geopolitical risks are most effective when they fuel inflation. According to him, the resurgence in oil prices has kept pressure on bond yields and reduced the attractiveness of expensive growth stocks. This pressure has been exacerbated by the fragile energy ceasefire between Russia and Ukraine and ongoing threats to supplies in the Middle East.
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The dollar held its strength amid demand for safe-haven assets, adding to pressure on Asian assets.
Investors are now looking at the reporting season of American companies; The results are expected to affect the direction of the markets in the rest of the year. The report from major US banks could provide early indications of the impact of rising bond yields on lending, trading and funding costs. US inflation data due this week will also show whether rising energy prices have spilled over into broader price pressures. Until oil prices stabilize, investors are likely to remain wary of the market's leading growth sectors this year.