Chip AI Shares Fall Sharply, Global Markets Not Yet Calm Even as Iran-US Tensions Ease

Illustration of global market movements. Shares of AI chips in Asia fell sharply even though Iran-US tensions eased and oil prices weakened. Illustration photo: Pexels.

JAKARTA - The easing of tensions between the United States and Iran has not been enough to make the global market move in the same direction. Oil prices fell, US and European stock markets strengthened, but chip and AI stocks in Asia were sharply depressed.

Anadolu Agency, quoted on Monday, August 3, reported that global markets were moving in a variety of ways at the start of the week. Investors weighed expectations of a new deal in the Middle East, Asian economic data, bond yields, and concerns about overvaluation in the semiconductor sector.

Pressure in Asia was evident in South Korean technology stocks. Shares of AI memory chipmaker SK Hynix fell 8 percent, while Samsung Electronics fell 8.4 percent.

Concerns about overvaluation in the global semiconductor sector continued at the start of the week. The sentiment covered the optimism that emerged after geopolitical tensions in the Middle East eased slightly.

US President Donald Trump said negotiations with Tehran would resume on Monday. He is optimistic that an agreement can be reached to reopen the Strait of Hormuz and Iran's nuclear disarmament.

The Strait of Hormuz is an important sea route in the Persian Gulf. Developments in this area are also of concern to the oil market.

Perceptions of geopolitical risk have eased slightly. Brent crude oil prices for October delivery fell 5.1 percent to $83.4 per barrel.

However, news from the Middle East does not erase concerns in the technology sector. China's progress in the manufacture of advanced chips and artificial intelligence or AI increases concerns over the profitability and growth of semiconductor businesses.

In the US, the Personal Consumption Expenditures or PCE price index fell from 4.1 percent to 3.7 percent in June. PCE is one of the inflation measures that the Fed pays attention to.

The decline reduces the chances of several rate hikes by the Fed. Markets still expect at least one rate hike by the end of the year.

The probability of a rate hike is estimated at 67 percent for September and 96 percent for October. The US non-farm employment data released this week is expected to shape market expectations of the Fed.

The foreign exchange market also came under the spotlight after US Treasury Secretary Scott Bessent confirmed intervention against the Japanese yen.

Bessent said the intervention on July 31 had contained the irregular movement of the yen. He also opened the door to additional joint market intervention if necessary.

Analysts assess that the sharp depreciation of the Japanese yen could disrupt capital flows and trigger volatility in global financial markets.

Depreciation is a weakening of the value of the currency. Volatility is a condition when the price or value moves sharply up and down in a short time.

The yield on US government bonds moved down slightly. The yield on 30-year bonds started the week at 5.24 percent, down about four basis points on Monday, after last week hitting a 19-year high.

The yield on 10-year US bonds opened at 4.7 percent, down five basis points.

The U.S. Dollar Index fell to 99 last week for the first time since June 17. The U.S. dollar started trading Monday at 99.7.

Gold prices rose 0.6 percent to $4,070 an ounce. The rise came as geopolitical tensions eased and the chances of multiple rate hikes receded.

US stock indexes started the week on a positive note. In Europe, markets also opened stronger as falling energy prices gave room for a change in inflation and growth expectations.

According to analysts, the decline in oil prices is important for the European economy which depends on imported energy.

European investors' attention this week is focused on producer inflation data and the Purchasing Managers' Index or sectoral PMI. PMI is an indicator that reads business activity through surveys of business actors.

According to money market forecasts, the European Central Bank's chances of raising the policy rate in September reached 87 percent.

In Asia, economic data has not provided a strong boost. Japan's final manufacturing PMI reached 54.5 in June. The figure fell slightly from the previous month, but still showed strong momentum.

This situation has triggered concerns that the Bank of Japan may tighten monetary policy further.

China's manufacturing PMI was at 50.9, below expectations. The data adds to concerns about China's economic growth.

Anadolu Agency noted that ahead of Monday's closing, Japan's Nikkei 225 fell 1.2 percent, South Korea's Kospi fell 5.4 percent, and China's Shanghai Composite weakened 0.7 percent. Hong Kong's Hang Seng was flat.