South Korea's Kospi drops 4.5% as some AI stocks swoon, while oil keeps climbing

HONG KONG — Asian shares were mostly lower on Monday and South Korea’s Kospi fell 4.5 per cent as investors unloaded more stocks linked to artificial intelligence.

Japan’s markets were closed Monday for a holiday. U.S. futures edged lower.

Oil prices jumped as the U.S. and Iran moved closer to resuming an all-out war. Early Monday, the U.S. announced more attacks for a ninth straight night. Iran has been responding to U.S. strikes by hitting U.S.-allies across the Middle East.

Brent crude, the international standard, rose 3.2 per cent to US$90.95 per barrel and benchmark U.S. crude climbed 2.8 per cent to $84.04 per barrel.

“The U.S. and Iran continue to exchange strikes, which are proving to be deadly for both sides,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a commentary Monday. “If this escalation goes unchecked, we could return to an environment of wide-scale attacks across the Persian Gulf.”

Tanker traffic in the Strait of Hormuz, a crucial waterway for global oil transport, have nearly ground to a halt, adding to pressures on supplies, they noted.

In Asian share trading the Kospi, which has benefited substantially from the global AI frenzy, sank 4.5 per cent to 6,516.27. Two of its most valuable stocks booked losses. Samsung Electronics lost 4.7 per cent, while memory chip maker SK Hynix fell 4.5 per cent.

Taiwan’s Taiex, also heavy in AI-related stocks, was 0.5 per cent lower as its leading chipmaker, TSMC, or Taiwan Semiconductor Manufacturing Co., climbed 1.3 per cent. It had fallen 7.3 per cent on Friday after the company announced it plans to spend an additional $100 billion to expand its chipmaking capacity in the U.S.

Hong Kong’s Hang Seng rose 1.7 per cent to 24,984.24, while the Shanghai Composite index edged 0.1 per cent lower, to 3,761.40.

Australia’s S&P/ASX 200 fell 0.1 per cent to 8,791.30.

India’s Sensex slipped 0.7 per cent.

AI-related shares including chipmaking stocks declined on Friday, pulling world markets lower. Pledges of huge spending on AI are fueling worries the sector may be in a bubble, and many investors have opted to sell to lock in profits from recent big gains.

“The return to war in the Strait of Hormuz may start to weigh more heavily on financial markets before too long, especially if even strong tech earnings reports continue to be met with scepticism,” Jonas Goltermann, chief markets economist at Capital Economics wrote in a note Monday.

Markets were also shaken by the rollout of another powerful Chinese AI model, this time by Beijing-based Moonshot AI.

The impact of the new Kimi K3 open-source AI model was similar to when China’s “ DeepSeek moment” rattled world markets in early 2025. It was viewed as another sign of how lower-cost, capable Chinese AI models are increasingly challenging rivals like Anthropic’s Claude and OpenAI’s GPT.

On Wall Street, the benchmark S&P 500 ended the week down 1 per cent at 7,457.69. The Dow Jones Industrial Average fell 0.8 per cent to 52,146.42, while the technology-heavy Nasdaq composite lost 1.4 per cent to 25,520.24.

Chipmaking stocks took a hit, with Nvidia falling 2.2 per cent, while Broadcom and AMD, or Advanced Micro Devices, fell one per cent.

SpaceX, Elon Musk’s rocket company, dropped 5.4 per cent after dropping below its initial public offering price of $135 a share, reaching its lowest point since its stock began public trading on the Nasdaq last month.

In other dealings, the U.S. dollar fell to 162.40 Japanese yen from 162.43 yen. The euro was trading at $1.1437, down from $1.1438.

Chan Ho-him, The Associated Press