Stock markets in Asia and Europe fell sharply on Monday, following a steep sell-off in US tech stocks last week, as investors grew concerned about how firms at the forefront of the artificial intelligence boom would fund their massive spending plans. The declines were compounded by rising oil prices after Iran and Israel exchanged strikes, though Brent crude later retreated after Iran announced a halt to military operations.
In Asia, South Korea's Kospi index slumped nearly 9% at one point, triggering a brief trading suspension, led by chip makers Samsung Electronics and SK Hynix. Japan's Nikkei 225 fell 3%, and Hong Kong's Hang Seng dropped 1.5%. In London, the FTSE 100 opened down 0.4%, with Rolls-Royce and IAG among the biggest fallers, while BP and Shell shares rose on higher oil prices.
European tech stocks also suffered, with BE Semiconductor Industries down 4.5%, ASML falling 3.2%, and Aixtron dropping almost 6%. The pan-European Stoxx 600 index fell nearly 0.9% before recovering some losses after Iran's announcement. US markets opened higher on Monday, with the S&P 500 gaining 1% in early trading, led by chip shares.
The sell-off followed a 5% weekly loss for the tech-heavy Nasdaq and a 2% drop for the S&P 500, ending nine weeks of gains. Analysts cited growing nervousness over AI stock valuations amid rising inflation and interest rate expectations. Susannah Streeter of Wealth Club noted that markets are pricing in a greater likelihood of a Federal Reserve rate rise, while Charu Chanana of Saxo said investors now demand clearer proof of earnings and monetisation from AI firms.
Oil prices seesawed as Brent crude rose nearly 5% to $97.60 a barrel before falling back to $94.60 after Iran halted military operations against Israel. The initial spike followed the first direct strikes between Iran and Israel since a ceasefire in April, raising fears of an escalation that could prevent the reopening of the Strait of Hormuz, a key shipping channel for global oil and gas supplies.
