Global stock markets fell on Monday as concerns over tech firms’ spending on artificial intelligence and renewed conflict in the Middle East weighed on investor sentiment. Oil prices surged nearly 5% before retreating after Iran announced it was halting military operations against Israel.
Asian markets were hit hard, with South Korea’s Kospi index slumping almost 9%, forcing a brief trading halt. Japan’s Nikkei 225 dropped 3%, and Hong Kong’s Hang Seng fell 1.5%. In Europe, London’s FTSE 100 opened 0.4% lower, with Rolls-Royce and British Airways’ parent IAG among the biggest fallers, while oil giants BP and Shell rose. Germany, France and Spain also saw losses before partially recovering.
European chip firms at the heart of the AI boom suffered sharp declines: Besi fell 4.5%, ASML dropped 3.2%, Aixtron sank almost 6%, and Nokia lost 5%. This followed a steep sell-off in US tech stocks last Friday, when the Nasdaq lost nearly 5% and the S&P 500 fell 2%, ending nine weeks of gains. Investors are increasingly nervous about AI valuations amid rising inflation and interest rates.
Susannah Streeter of Wealth Club noted that markets now see a greater likelihood of a Federal Reserve rate rise, while tech giants seek fresh funding for “eye-watering” capital expenditure. Charu Chanana of Saxo said the market is becoming more selective on AI, demanding clearer proof of earnings. US markets opened higher on Monday, with the S&P 500 up 1%, as chip shares led a recovery. Meanwhile, tensions in the Middle East, including airstrikes between Iran and Israel, raised fears over the Strait of Hormuz, though oil prices eased after Iran’s halt and Donald Trump’s call for peace.
