Seoul’s Kospi stock index fell more than eight percent on Monday and fell across Asia as technology companies suffered and strong U.S. jobs data fueled challenges to a Federal Reserve interest rate hike.
News of Iran and Israel attacking each other fueled concerns about an escalation of the Middle East crisis, adding to the gloomy mood on trading floors and sending oil prices up more than three percent.
The technology sector suffered losses on Monday as investors cashed in following a breathtaking rally in recent months driven by a bet on all things artificial intelligence.
The sell-off came after a closely watched report on Friday showed that more than twice as many U.S. jobs were created in May as expected, while sharply revised higher in the previous two months.
Analysts said the world’s top economy showed resilience in the face of rising prices, but the central bank stepped up challenges to raise interest rates.
U.S. Treasury yields rose as investors anticipated higher rates, while the dollar strengthened against its major rivals.
All three major indexes on Wall Street fell on Friday, with the Nasdaq falling four percent.
That higher sell-off extended to Asia, where technology-rich markets felt the pain the most.
Seoul — which has hit several records this year — fell 8.8 percent at one point as chipmaker Samsung lost nine percent and rival SK Hynix lost six percent.
Taipei sank more than five percent and Tokyo more than four percent.
Hong Kong, Shanghai and Singapore also suffered major losses.
Just before Donald Trump’s election, Bitcoin was hovering around $63,000 after plunging below $60,000 on Friday, its lowest level since October 2024.
“Stronger-than-expected labor market data rekindled concerns that the Federal Reserve may be preparing to begin a new tightening cycle,” said Stephen Innes of SPI Asset Management.
“Energy markets were on edge as hopes for progress in Middle East peace talks faded, and disappointing guidance updates from a handful of major tech companies turned into an increasingly one-way AI trade,” he said.
Investors were already worried about expanded valuations in the AI sector, overshadowing worries about the Middle East crisis, which has been a key catalyst for the global market rally over the past two years.
US chipmaker Broadcom’s lower-than-forecast earnings outlook for the third quarter added to those concerns.
Crude oil prices rose sharply after Israel said on Monday it had struck targets in western and central Iran amid fears Iran’s war could escalate, and Iranian state television reported explosions in the cities of Tehran, Tabriz and Isfahan.
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