Global stock markets experienced a downturn on Thursday, primarily driven by a continued decline in technology shares and rising tensions between the United States and Iran. Investor sentiment was further dampened by these geopolitical concerns, even as oil prices hovered near one-month highs due to apprehensions about Middle East stability.
Asian and European markets struggled to maintain the momentum of Wall Street’s previous gains. Notably, South Korea’s Kospi index fell over 6%, with significant losses seen in chipmaker SK hynix, which dropped more than 11%. This decline reflects investor worries that the recent artificial intelligence-fueled surge in semiconductor stocks might be tapering off. The substantial capital inflows into the AI sector have led to questions about whether current high valuations of many technology companies are justified, prompting a broader retreat in memory-chip and semiconductor stocks.
Despite this sector-wide sell-off, Taiwan Semiconductor Manufacturing Company (TSMC) reported a record quarterly profit, with net income increasing by over 77% in the second quarter, bolstered by strong demand for AI hardware. In response to this growth, TSMC announced plans for a significant $100 billion investment in additional manufacturing facilities in Arizona, showcasing its commitment to expanding production capabilities.
Contrary to the general trend, Hong Kong’s stock market rose by more than 1% as Chinese semiconductor companies made gains. Meanwhile, in the United States, major indexes ended Wednesday on a positive note, buoyed by advances in major technology firms. The drop in US producer prices by 0.3% in June, aided by decreased energy costs, helped improve investor confidence, with hopes that the Federal Reserve might hold off on any immediate interest rate hikes. However, analysts cautioned that any escalation in hostilities between Washington and Tehran could lead to increased market volatility.
In corporate developments, the German food-delivery service Delivery Hero witnessed a surge in its shares on the Frankfurt exchange after agreeing to a takeover by ride-hailing giant Uber. The deal, valued at €12.7 billion ($14.6 billion), marks a significant consolidation in the food delivery and ride-sharing sectors.