Stock markets declined amid worries over tech stock prospects, while oil prices rose after fresh Middle East conflict reduced hopes for quick reopening of the Strait of Hormuz. Asian and European markets fell on Monday following a sharp US tech sell-off late last week, as investors questioned how leading artificial intelligence firms would finance large spending plans. Brent crude rose nearly 5% to $97.60 a barrel on Monday after Iran and Israel exchanged strikes following an Israeli attack on Beirut. Prices later eased to $94.60 after Iran halted operations against Israel, following calls from Donald Trump for both sides to cease fire. In oil-dependent Asia, markets fell sharply. South Korea’s Kospi index dropped almost 9%, briefly halting trade, led by Samsung Electronics and SK Hynix shares falling 9% and 6%. Japan’s Nikkei 225 lost 3%, and Hong Kong’s Hang Seng fell 1.5%. London’s FTSE 100 opened 0.4% lower, with Rolls-Royce and IAG among decliners, while BP and Shell shares rose. German, French and Spanish markets also dropped before recovering after Iran’s announcement. US markets opened higher, with the S&P 500 gaining 1% early as chip stocks recovered. European AI-related firms fell, including Besi down 4.5% and ASML off 3.2%, contributing to a 0.9% Stoxx 600 decline. Aixtron dropped nearly 6% and Nokia fell 5%. The moves followed last week’s steep tech sell-off, when the Nasdaq lost nearly 5% and the S&P 500 dropped 2%, ending nine weeks of gains. Investors grew wary of AI stock valuations amid prospects of higher inflation and rates. Analysts noted markets now price in greater chances of a Federal Reserve rate rise, with concerns over funding for heavy tech capital spending and potential obsolescence of costly investments. Other strategists said investors seek clearer proof of AI earnings and returns, viewing the shift as a reset rather than an end to the AI narrative. Brent’s rise followed the first direct Iran-Israel strikes since an April ceasefire, raising fears of escalation blocking the Strait of Hormuz, through which a fifth of global oil and gas flows.
