Bangkok: Oil prices jumped and Asian shares were mostly lower Monday after the US carried out airstrikes and Iran retaliated.
The price of Brent crude, the international standard, gained 3.6 per cent to USD 78.76 per barrel, while US benchmark crude added 3.5 per cent to USD 73.97 per barrel.
Prices for both types of crude oil recently had slipped back to around the levels they were at before the war with Iran began after the two sides set an interim agreement on ending the conflict and ships resumed transporting oil through the Strait of Hormuz.
However, the United States launched several waves of strikes on Iran into Monday morning over an Iranian attack on a container ship in the strait that set it ablaze and left a crew member missing over the weekend. Iran retaliated by targeting countries across the Middle East.
US stock futures fell, with the contract for the S&P 500 down 0.4 per cent and that for the Dow nearly unchanged. The Nasdaq composite future lost 1.2 per cent.
In Asian trading, Tokyo’s Nikkei 225 index lost 1.9 per cent to 67,242.73, while in Seoul, the Kospi declined 9 per cent to 6,806.93. It’s now at its lowest level since April.
Shares in South Korean memory chipmaker SK Hynix, which soared 13 per cent in their debut Friday on Wall Street, slumped 15.4 per cent in Seoul. Its bigger rival Samsung Electronics sank 10.7 per cent.
Elsewhere in Asia, Hong Kong’s Hang Seng edged 0.2 per cent higher, to 24,212.36, and the Shanghai Composite index shed 2.1 per cent to 3,913.79.
In Australia, the S&P/ASX 200 was nearly unchanged at 8,808.50.
US stocks ticked higher Friday after investors showed sustained appetite for winners of the artificial-intelligence boom. The S&P 500 rose 0.4 per cent and the Dow Jones Industrial Average added 0.3 per cent. The Nasdaq composite climbed 0.3 per cent.
SK Hynix’s shares jumped immediately after trading began in the midday hours after it raised roughly USD 26.5 billion by selling American depositary shares at a price of USD 149 each.
SK Hynix’s stock in Seoul had already surged more than 600 per cent over the last year thanks to euphoria around AI. The boom has created real profits due to surging demand for computer memory. But it has also raised worries that AI stock prices have shot have too high and that all the world’s spending on chips and data centres won’t be able to produce enough productivity and profit growth to make it worth it.
“The reason why this stock, along with other memory chipmakers, has gone parabolic is that AI demand has somehow created the perception that a sector historically defined by boom-and-bust cycles could remain permanently in the boom phase,” Ipek Ozkardeskaya of Swissquote said in a commentary.
SK Hynix plans to double its production capacity, or possibly more, to keep up with demand. However, “Technological breakthroughs, more efficient AI models or simply a slowdown in AI infrastructure investment could quickly turn the market into one of oversupply,” she said.
Similar concerns apply to many AI stocks as they’ve grown into some of Wall Street’s most influential because of their huge valuations. Nvidia was the strongest single force lifting the S&P 500 Friday after rising 4 per cent.
Beyond the uncertainty about AI, the focus on Wall Street is shifting to the upcoming reporting season for companies’ profits during the spring.
Companies across industries will need to produce big growth in profits to justify the big moves for their stock prices, which are broadly near records. Next week will feature earnings reports from many of the biggest US banks, including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs and Wells Fargo on Tuesday alone.
Worries about how continued fighting with Iran will affect the global flow of crude are clouding the outlook both for energy costs and overall inflation.
High bond yields have been weighing on financial markets worldwide since more expensive oil and high inflation could push the Federal Reserve and other central banks to raise interest rates.
Higher rates can keep a lid on inflation, but they also slow the economy and hurt prices for all kinds of investments.
In other dealings early Monday, the US dollar rose to 162.15 Japanese yen from 161.
