Key Highlights

  • Oil prices climbed above $90 per barrel as U.S. and Iran exchanged strikes, tightening flows through the Strait of Hormuz.
  • South Korea’s Kospi index dropped 4.5%, marking its steepest decline in over a year amid heightened geopolitical tensions.
  • U.S. stock-index futures remained little changed despite the escalation, signaling cautious sentiment ahead of corporate results.

Oil prices surged past $90 per barrel on Monday as military clashes between the U.S. and Iran intensified, raising concerns over supply disruptions in the Strait of Hormuz. Stock-index futures held steady ahead of a critical week for tech earnings.

The divergence underscored how geopolitical risks are reshaping sectoral performance, with energy gaining ground even as broader equity sentiment wavered.

Clashes Escalate, Hormuz Flows Under Pressure

The latest round of strikes between U.S. and Iranian forces targeted key infrastructure near the Strait of Hormuz, a chokepoint for roughly one-fifth of global oil shipments. While no immediate disruptions were reported, traders priced in heightened risk premiums, pushing Brent crude above $90 per barrel for the first time in three months.

The move reversed a weeks-long lull in oil markets, where softening demand forecasts had kept prices rangebound.

Asian Markets Bear the Brunt of Risk Aversion

South Korea’s Kospi index led losses in the region, dropping 4.5% as investors fled risk assets. The decline, described as nearly 5% in some reports, reflected broader unease over the Middle East conflict’s potential to disrupt global trade routes. Technology stocks bore the brunt of the selloff, with AI-related equities retreating amid profit-taking ahead of earnings from major U.S.

chipmakers. The Kospi’s underperformance contrasted with muted moves in U.S. futures, where traders appeared to be holding fire until corporate results provided clearer direction.

Tech Earnings in Focus as Geopolitics Weighs

With earnings season in full swing, attention is shifting to this week’s reports from leading semiconductor and software firms. The pullback in AI stocks suggests investors are trimming exposure ahead of potential guidance cuts, particularly if geopolitical tensions persist. Analysts warned that prolonged disruptions in the Strait of Hormuz could inflate input costs for tech manufacturers, squeezing margins in an already competitive environment.

The sector’s performance may hinge on whether companies can offset higher energy expenses with strong demand for AI-driven solutions.

Oil’s Rally Tests Demand Resilience

The jump in oil prices above $90 per barrel poses a fresh challenge to central banks grappling with sticky inflation. While the Federal Reserve has signaled a willingness to cut rates later this year, higher energy costs could delay policy easing if they filter into broader price pressures. Emerging markets, already sensitive to dollar strength, face additional headwinds as import bills rise.

For now, the market’s focus remains on whether the U.S. and Iran can de-escalate before supply chains face further strain.

This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial adviser before making investment decisions.