Global stock markets faced a downturn on Thursday, primarily driven by a continued sell-off in technology shares and increasing tensions between the United States and Iran, which dampened investor sentiment. Oil prices hovered near their highest levels in a month, reflecting concerns over the Middle East’s stability.
Both Asian and European markets struggled to maintain the momentum seen on Wall Street a day prior. South Korea’s Kospi index experienced a significant drop of over 6%, largely due to SK hynix’s substantial 11% decline. Investors are beginning to worry that the surge in semiconductor stocks, fueled by artificial intelligence, might be waning. This unease has led to a broader retreat from memory-chip and semiconductor stocks, as the hefty investments in AI raise questions about the sustainability of high valuations in the tech sector.
Despite the market’s overall bearish trend, Taiwan Semiconductor Manufacturing Company (TSMC) reported a record-breaking quarterly profit. The chipmaker’s net income soared by more than 77% in the second quarter, driven by robust demand for AI hardware. TSMC also revealed its ambitious plan to invest an additional $100 billion in expanding its manufacturing presence in Arizona.
Contrasting with the general market decline, Hong Kong’s stock market rose over 1%, buoyed by gains in Chinese semiconductor firms. In the U.S., major indices closed higher on Wednesday, thanks to advances in major tech companies. Investor confidence was bolstered by a 0.3% decrease in U.S. producer prices in June, largely due to reduced energy costs. This development has led to speculation that the Federal Reserve might refrain from hiking interest rates in the near future. Nonetheless, analysts cautioned that the escalating tensions between Washington and Tehran could lead to increased market volatility.
In other corporate news, a significant deal emerged as German food-delivery company Delivery Hero agreed to a €12.7 billion ($14.6 billion) takeover by ride-hailing giant Uber. This announcement resulted in a rise in Delivery Hero’s share price during Frankfurt trading.