Asian Markets Tumble as Oil Surges on US-Iran Tensions, Fed Concerns Loom
Asian equities fell as oil prices hit multi-month highs following escalated U.S.-Iran strikes, fueling inflation fears. The tech sector also weakened on AI leadership doubts, while the Fed's rate path remains uncertain.
Asian markets declined sharply on Monday as a surge in oil prices—Brent crude briefly topping $91/barrel and WTI above $84—sparked fresh inflation worries. The escalation in U.S.-Iran military strikes added to an already cautious global outlook. South Korea's Kospi index dropped over 1%, while Nasdaq 100 futures saw a modest recovery after Friday's tech-led selloff.
Investor sentiment remains fragile as geopolitical tensions compound concerns over the sustainability of the AI investment boom. The semiconductor sector continued its slide after Chinese AI startup Moonshot AI challenged perceptions of U.S. dominance in AI, pushing the Philadelphia Semiconductor Index into bear market territory.
Rising oil prices, a stronger dollar, and higher bond yields are prompting a defensive shift. All eyes are on the Federal Reserve, which remains focused on inflation despite resilient U.S. data. Higher energy costs have reinforced expectations that interest rates could stay higher for longer. In a bright spot, TSMC announced a $100 billion investment in Arizona to expand chip production and meet AI-driven demand.
Source: First Squawk