Oil surges, Seoul stocks plunge as war fears return

Renewed US airstrikes on Iran-backed militants in Iraq sent oil prices surging on Wednesday, while South Korean stocks suffered a devastating sell-off as investors fled tech shares amid growing jitters over the artificial intelligence boom. The Kospi index plunged more than 12% at one point, extending a near-11% collapse the previous day, as chipmaking giants SK hynix and Samsung took a beating.

Oil markets jolted by renewed hostilities

US and Saudi warplanes carried out strikes Tuesday against Iran-aligned targets in Iraq, the US military said, ending a brief three-day pause in hostilities. The strikes targeted what US Central Command described as “Iran-aligned terrorists” responsible for recent drone attacks on US forces and Saudi energy infrastructure. Iran responded by halting three oil tankers in the Strait of Hormuz, through which about a fifth of global crude and gas typically transit. Brent crude jumped 3.4% to $86.94 a barrel, while US West Texas Intermediate rose 3.7% to $82.17, reversing recent calm. The volatility underscores the fragility of peace efforts, even as US President Donald Trump recently expressed hope for a deal.

Tech rout deepens in Seoul and beyond

South Korea’s benchmark index took the hardest hit in Asia, with SK hynix crashing nearly 20% after already plunging 14% on Tuesday. The stock has now lost more than half its value from a record high a month ago. Samsung Electronics tumbled more than 12%. The losses followed a disappointing earnings report from SK hynix, a key supplier of high-bandwidth memory chips to Nvidia, whose April-June operating profit and revenue fell short of expectations. Net profit still soared 1,242%, but investors focused on margins and future guidance. Tokyo’s Nikkei fell about 3%, with chipmaker Kioxia down 13% and Tokyo Electron 12% lower. Taipei’s Taiex shed 5% as TSMC dropped 4%.

AI boom under scrutiny as earnings disappoint

The sell-off reflects a broader reassessment of the artificial intelligence frenzy that has driven equity markets to record highs over the past two years. Investors are questioning whether the massive capital spending on AI will pay off, particularly for chipmakers whose valuations have soared. “When you're the dominant supplier of the high-bandwidth memory that powers Nvidia's chips, the AI boom lands directly on your bottom line,” said Josh Gilbert of eToro. “That means the market is unlikely to focus on the headline numbers alone. The bigger question is whether margins and guidance can justify its recent performance.”

Mixed signals across Asia as investors recalibrate

Despite the tech bloodbath, other Asian markets showed gains. Hong Kong’s Hang Seng rose more than 1%, led by its tech sector, which suffered a painful first half. Sydney, Singapore, Wellington, Manila, and Mumbai also advanced. Shanghai and Jakarta fell, but the overall picture was one of divergence as investors rotated away from high-flying tech names. The sell-off is not limited to Asia; US tech giants Microsoft, Meta, and Apple are also due to report earnings soon, and their results could set the tone for the next phase of the AI trade.

Looking ahead, Samsung is set to report quarterly earnings on Thursday, followed by results from Kioxia and US tech titans. The market remains on edge as geopolitical tensions in the Middle East flare up again, and the sustainability of the AI rally is tested. With oil prices volatile and tech stocks swinging, investors face a treacherous path through the rest of the year.