South Korea's Kospi drops 4.5% as some AI stocks swoon, while oil keeps climbing

HONG KONG, July 20, (AP): Asian shares were mostly lower on Monday and South Korea’s Kospi fell 4.5% as investors unloaded more stocks linked to artificial intelligence. Japan’s markets were closed Monday for a holiday. US futures edged lower. Oil prices jumped as the US and Iran moved closer to resuming an all-out war. Early Monday, the US announced more attacks for a ninth straight night. Iran has been responding to US strikes by hitting US-allies across the Middle East.

Brent crude, the international standard, rose 3.2% to $90.95 per barrel and benchmark US crude climbed 2.8% to $84.04 per barrel. "The US and Iran continue to exchange strikes, which are proving to be deadly for both sides,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary Monday. "If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Persian Gulf.”

Tanker traffic in the Strait of Hormuz, a crucial waterway for global oil transport, have nearly ground to a halt, adding to pressures on supplies, they noted. In Asian share trading the Kospi, which has benefited substantially from the global AI frenzy, sank 4.5% to 6,516.27. Two of its most valuable stocks booked losses. Samsung Electronics lost 4.7%, while memory chip maker SK Hynix fell 4.5%.

Taiwan’s Taiex, also heavy in AI-related stocks, was 0.5% lower as its leading chipmaker, TSMC, or Taiwan Semiconductor Manufacturing Co., climbed 1.3%. It had fallen 7.3% on Friday after the company announced it plans to spend an additional $100 billion to expand its chipmaking capacity in the U.S. Hong Kong’s Hang Seng rose 1.7% to 24,984.24, while the Shanghai Composite index edged 0.1% lower, to 3,761.40. Australia’s S&P/ASX 200 fell 0.1% to 8,791.30.

India's Sensex slipped 0.7%. AI-related shares including chipmaking stocks declined on Friday, pulling world markets lower. Pledges of huge spending on AI are fueling worries the sector may be in a bubble, and many investors have opted to sell to lock in profits from recent big gains.

"The return to war in the Strait of Hormuz may start to weigh more heavily on financial markets before too long, especially if even strong tech earnings reports continue to be met with scepticism,” Jonas Goltermann, chief markets economist at Capital Economics wrote in a note Monday.