Technology shares trigger market decline
Global stock markets fell on Monday as a sharp sell-off in technology stocks spread across Asia and weighed on investor sentiment worldwide.
South Korea’s stock market was forced to suspend trading for 20 minutes after the benchmark Kospi index plunged nearly 9% shortly after opening. The index later closed down 8.3%, while Japan’s Nikkei fell 3.8%.
European markets also opened lower, although losses were less severe than those seen across Asia.
The downturn follows a sharp decline on Wall Street on Friday, when a technology-led sell-off pushed the Nasdaq down by around 4%, marking its biggest single-day fall in more than a year.
Investors reassess artificial intelligence boom
Analysts say the latest decline reflects growing concerns that some investments linked to artificial intelligence may have become overvalued following months of strong gains.
According to Saxo chief investment strategist Charu Chanana, investors are repositioning their portfolios amid uncertainty over whether rising demand for artificial intelligence is translating into sustainable profits.
Markets such as South Korea’s Kospi and Japan’s Nikkei are particularly vulnerable to shifts in technology sentiment because of the large number of tech companies listed on those exchanges.
South Korean technology giants were among the hardest hit. Shares in Samsung fell 10%, while chipmaker SK Hynix also recorded significant losses.
Taiwan’s Taiex index declined sharply after shares in semiconductor manufacturer TSMC dropped 3%. The company is a key supplier to Nvidia, whose chief executive Jensen Huang described the recent weakness in technology stocks as a potential buying opportunity.
Susannah Streeter, chief investment strategist at Wealth Club, said investors are increasingly favouring companies with stronger and more predictable revenue streams.
“There are undercurrents of worry about the surge in tech stock prices,” she said.
Middle East tensions fuel inflation concerns
Pressure on global stock markets was intensified by a sharp rise in oil prices following renewed military exchanges between Iran and Israel.
The price of Brent crude jumped 4.6% to $97.34 a barrel during Asian trading, while US crude rose 4.3% to $94.40.
The latest increase came after Iran and Israel exchanged strikes for the first time since a ceasefire was agreed between the two countries and the United States in April.
Tehran said the attacks were a response to what it described as repeated violations of the ceasefire agreement and warned that further strikes could continue.
Israel subsequently launched attacks against military targets in Iran despite calls from US President Donald Trump for restraint.
“We are very close to a final deal with Iran. It is going to be a good deal. I don’t want it to blow up because of what is happening now,” Trump told Axios.
Oil market volatility returns
Analysts say it remains too early to determine whether the latest strikes represent a full escalation of the conflict.
However, investors have begun pricing additional risk into energy markets amid fears that further instability could disrupt global oil supplies.
Associate Professor Jiajia Yang of James Cook University said traders are once again focusing on risks to energy flows and shipping routes in the region.
The conflict has already disrupted oil and gas shipments from the Gulf, particularly following Iranian threats against vessels travelling through the Strait of Hormuz, one of the world’s most important energy trade corridors.
Oil prices have remained volatile since US and Israeli strikes on Iran in February and have continued to fluctuate throughout the ceasefire period.
Interest rate concerns add pressure
In addition to geopolitical tensions, investors are also responding to concerns over future US interest rate policy.
A stronger-than-expected labour market and persistently elevated inflation have reduced expectations that the US Federal Reserve will cut rates in the near future.
Higher borrowing costs typically place additional pressure on growth-oriented sectors such as technology, further contributing to the recent market weakness.
Global markets remain on edge
While Asian markets recorded the steepest declines, European indices also traded lower.
Germany’s DAX fell 0.9%, while London’s FTSE 100 slipped 0.2%.
Market analysts say investors are currently facing a combination of challenges, including concerns about technology valuations, geopolitical instability and rising energy prices.
As a result, global stock markets are expected to remain volatile until there is greater clarity on both corporate earnings and developments in the Middle East.
Source: BBC
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