Asian Markets Plunge on Tech Sell-Offs and Surging Oil Prices
Asian stock markets plummeted amid tech sell-offs and rising AI investment concerns. Concurrently, escalating Persian Gulf tensions and Saudi attacks drove oil prices above $111 per barrel.
A turbulent trading session hit Asian stock exchanges, marked by sharp declines led by technology shares. Wall Street financial reports failed to calm investor concerns over soaring artificial intelligence investment costs, while escalating tensions in the Persian Gulf and fresh attacks on targets in Saudi Arabia drove oil prices sharply higher.
The MSCI Asia-Pacific index (excluding Japan) plummeted by 1.8% to its lowest level in nearly three months, heading toward its fourth consecutive weekly decline. In Japan, the Nikkei index erased early gains to drop by 2%, South Korea registered a plunge of over 4%, while China's CSI300 index lost 2% and approached a technical bear market. In Hong Kong, the Hang Seng index plummeted by over 3%.
Tech Sector Slump and Oil Surge
Declines were led by regional tech giants: Japanese Tokyo Electron plummeted by over 6%, South Korean SK Hynix and Samsung lost 5.7% and 4.2% respectively, and retail giant Alibaba plunged 6.5% in Hong Kong. The negative trend spilled over to European futures (a 0.9% drop in the Euro Stoxx 50) and U.S. futures (a 0.8% drop in the S&P 500). The Asian downturn comes despite a mildly positive Wall Street close overnight, where Meta Platforms met revenue forecasts. However, concerns over massive AI costs and uncertainty ahead of the Federal Reserve decision renewed investor anxiety.
Simultaneously, oil prices surged by over $2 per barrel. Brent crude climbed 2.59% to $111.64 per barrel—close to a five-month high—while U.S. WTI crude rose 2.31% to $99.39. The surge followed lethal Houthi attacks in Yemen targeting Saudi Arabia, including a strike on a civilian airport in Dammam and a drone attack on a Saudi oil field.
Supply Pressures and Inventory Declines
The pressure on global supply is also reflected in a sharp 3.06 million barrel drop in U.S. crude oil inventories to 412.5 million barrels, exceeding market forecasts. Amid diesel shortages and conflicts involving Iran and Ukraine, the U.S. Department of Energy announced that the Trump administration is proposing to lend nearly a third of the emergency heating oil reserve.
