BANGKOK – The price of oil surged and global stocks traded mixed on Monday following U.S. airstrikes and Iran’s response. In early European trading, Germany’s DAX increased by 0.2% to 25,105.55, while the CAC 40 in Paris rose 0.1% to 8,347.26. The UK’s FTSE 100 also edged up 0.1%, reaching 10,506.86.
U.S. stock futures showed mixed results, with the S&P 500 dropping by 0.3% and the Dow remaining nearly unchanged. The Nasdaq Composite future fell by 0.9%. The international benchmark Brent crude price spiked almost 5% at the beginning of Monday before retreating. Early morning in Europe, Brent crude increased by 2.3% to $77.72 per barrel, and the U.S. benchmark crude moved up by 2.1% to $72.92 per barrel.
Both crude prices had recently fallen to levels near those seen before the U.S.-Iran conflict, after a provisional agreement led to resumed oil shipping through the Strait of Hormuz. However, U.S. airstrikes were launched following an Iranian attack on a container ship in the strait, which caught fire and left a crew member missing over the weekend. Iran retaliated by striking targets across the Middle East.
In Asian markets, Tokyo’s Nikkei 225 dropped 1.9%, settling at 67,242.73, and Seoul’s Kospi plunged 9% to 6,806.93, hitting its lowest since early May. Shares of South Korean memory chip maker SK Hynix fell 15.4% in Seoul, after a 13% surge during its debut Friday on Wall Street. Samsung Electronics, a larger competitor, decreased by 10.7%.
Elsewhere in Asia, Hong Kong’s Hang Seng rose 0.2%, reaching 24,212.36, while Shanghai’s Composite Index dropped 2.1% to 3,913.79. In Australia, the S&P/ASX 200 remained nearly unchanged at 8,808.50. U.S. stocks saw slight gains on Friday due to investor interest in artificial intelligence (AI) leaders, with the S&P 500 climbing 0.4%, the Dow rising 0.3%, and the Nasdaq Composite moving up 0.3%.
SK Hynix shares surged immediately after U.S. session opened, raising approximately $26.5 billion by selling American Depositary Shares (ADS) at $149 each. The company’s stock in Seoul had climbed over 600% in the last year amidst the AI excitement, driven by increased demand for computer memory. However, concerns over inflated share prices and insufficient productivity growth have arisen.
Swissquote’s Ipek Ozkardeskaya commented that the perception of a permanent boom in a traditionally cyclical sector is fueling the surge of memory chip makers like SK Hynix. SK Hynix plans to double or increase production capacity further to meet demand. Yet, technological advancements, more efficient AI models, or a slowdown in AI infrastructure investment could quickly lead to oversupply.
Similar concerns surround many AI-related stocks, which have gained influence on Wall Street due to their high valuations. Investors will pay close attention to corporate earnings reports to see if growth can support these elevated stock prices, mostly approaching historical highs.
Key financial reports from major U.S. banks including Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, and Wells Fargo are expected this week, particularly on Tuesday. Meanwhile, ongoing U.S.-Iran hostility is clouding the global crude flow, impacting energy costs and broader inflation outlooks.
Bond yields have been exerting pressure on global financial markets, as higher oil prices and inflation might compel the Federal Reserve and other central banks to raise interest rates. While rate hikes can curb inflation, they also slow economic growth and affect investment prices. Early Monday trading saw the U.S. dollar rise to 162.01 Japanese yen from 161.72 yen, and the euro climbed to $1.1435 from $1.1408.