Kospi Hits Lowest Since April, Oil Extends Gains: Markets Wrap

(Bloomberg) — Chipmakers led losses in Asian stocks on concern the AI-driven rally in global equities had run ahead of itself. Oil rose as the standoff between the US and Iran intensified.

South Korea’s Kospi index tumbled as much as 5.3% to the lowest level since April, extending decline from its intraday high set in June to more than 30%. SK Hynix Inc. slipped 5%, following its record 15% tumble the day before. Kioxia Holdings Corp. fell 3%, while Taiwan Semiconductor Manufacturing Co. lost 1.6%.

Meanwhile, oil rose for a second day, reigniting inflation concerns and boosting bets for a Federal Reserve interest-rate hike. Brent jumped as much as 2.8% to $85.64 after President Donald Trump reinstated the US blockade of Iranian ships transiting the Strait of Hormuz. Trump also demanded a 20% reimbursement on all other cargo shipped through the waterway.

Treasuries and the dollar steadied as traders awaited Tuesday’s US consumer price index data. Money markets priced in about 50% odds of a Fed rate hike in July as Governor Christopher Waller said officials may need to raise rates to tame price pressures.

Investors are increasingly questioning whether the enormous sums being poured into artificial intelligence can justify the record rally in equities this year. That adds another layer of uncertainty ahead of a pivotal week for markets, with earnings season kicking off alongside US inflation data and Fed Chair Kevin Warsh’s congressional testimony, both seen as key to the outlook for interest rates.

“Uncertainty around the Middle East continues, but we think the AI wave is what will drive markets over the next few weeks, especially as earnings season kicks off,” said Sonu Varghese at Carson Group.

An AI-fueled stock rout in South Korea on Monday spilled over into the US market, underscoring concerns that the boom has become overextended. The Philadelphia Semiconductor Index slumped 4.8%.

SK Hynix’s drop in Asian hours followed a 9.3% slump in its American depositary receipts on Wall Street Monday, erasing much of the gains from their July 10 debut.

The selloff in US AI hardware stocks was broad, driven by concerns that spending and valuations have run too far, too fast. But SK Hynix’s swings are also a reminder of its volatility even before the ADR debut, a setup that may create a round-the-clock trading echo between the shares on both continents.

What Bloomberg’s Strategists Say…

“Crude’s 9% jump on Monday delivered some pain to other assets, but the read across was still rather modest with equities. A key reason for that dynamic is the way that market-based inflation expectations signal an enduring assessment that energy costs won’t sustainably feed through into the real world.”

— Garfield Reynolds, Markets Live team leader. For more on the analysis, click here.

Fed’s Waller said on Monday that policymakers may need to raise rates in the near term if underlying inflation continues to signal broad price pressures.

Treasury two-year yields, which are relatively sensitive to changes in Fed policy expectations, held at 4.28%, after touching the highest since February 2025.

The surge in short-term yields reflects growing expectations that the Fed will need to raise rates sooner to rein in price pressures from the rebound in global energy prices and signs of a resilient US economy.

In data due Tuesday, the consumer price index is expected to slow to 3.8% in the year through June, from 4.2% in May, according to a Bloomberg survey of economists. Warsh will also make his first appearance before Congress as Fed chair.

“Surging oil prices and yields are already speaking clearly to a worsening inflation outlook,” said Hebe Chen, senior market analyst at Vantage Global Prime.

Corporate News:

Shein Global Holdings Ltd. is seeking to list in Hong Kong as soon as in August after securing approval from China’s securities regulator, according to people familiar with the matter. A unit of billionaire Kumar Mangalam Birla’s conglomerate agreed to buy Shell Plc’s renewable energy assets in India for an enterprise value of 172 billion rupees ($1.8 billion) in one of the largest clean energy deals in the country. Some of the main moves in markets:

Stocks

S&P 500 futures fell 0.3% as of 12:57 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.1% Japan’s Topix rose 0.3% Australia’s S&P/ASX 200 fell 0.5% Hong Kong’s Hang Seng fell 0.6% The Shanghai Composite fell 0.7% Euro Stoxx 50 futures fell 1% Currencies

The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1394 The Japanese yen was little changed at 162.28 per dollar The offshore yuan was little changed at 6.7836 per dollar Cryptocurrencies

Bitcoin rose 0.6% to $62,492.6 Ether rose 0.9% to $1,781.16 Bonds

The yield on 10-year Treasuries was little changed at 4.62% Japan’s 10-year yield declined 4.5 basis points to 2.740% Australia’s 10-year yield advanced five basis points to 4.91% Commodities

West Texas Intermediate crude rose 1.8% to $79.57 a barrel Spot gold rose 0.4% to $4,016.54 an ounce This story was produced with the assistance of Bloomberg Automation.

–With assistance from Elaine Lai.

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