Oil Prices Jump, Chip Stocks Slump as Geopolitical Risks Rattle Markets

Global markets began the week on a cautious footing as escalating military actions between the U.S. and Iran pushed crude oil prices higher, while a sharp sell-off hit Asian semiconductor stocks. Investors are bracing for a pivotal week that includes the start of the second-quarter earnings season and a key U.S. inflation report.

Geopolitical Tensions Drive Oil Higher

Oil prices rose sharply Monday after the U.S. conducted another series of strikes on Iranian targets over the weekend, prompting retaliatory attacks from Tehran on U.S. facilities in the region, according to a Reuters report. Brent crude, the international benchmark, jumped to nearly $80 per barrel before trimming gains to trade around $78.

The conflict has renewed uncertainty over the critical Strait of Hormuz, a key chokepoint for global oil shipments. While Iran claimed to have closed the strait, the U.S. stated it remained open. Ship-tracking data from Kpler appeared to support Tehran's assertion, showing a significant drop in traffic:

• Only six vessels transited the waterway on Sunday, the lowest number in five weeks.
• The data indicates that transits fell dramatically last week and remained low over the weekend.

Semiconductor Sell-Off Hits Asia

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In equity markets, the semiconductor sector extended recent losses, with South Korea's chip-heavy KOSPI index plunging nearly 9% on Monday. The index fell below the 7,000 mark for the first time since early May and officially entered a bear market, now trading 25% below its June 22 peak.

The slide was exacerbated by a more than 15% single-day plunge in shares of memory chipmaker SK Hynix, its largest on record. The drop followed a more than 12% jump in its U.S.-listed shares during their Nasdaq debut last Friday, highlighting significant volatility in the sector.

Markets Brace for Key US Data and Earnings

The risk-off sentiment was widespread, with Wall Street futures pointing to a lower open and European shares declining in early trading. Investor focus is now shifting to domestic catalysts, including the second-quarter corporate earnings season, which begins in earnest this week with reports from major banks on Tuesday.

Also on Tuesday, the U.S. will release consumer price inflation (CPI) data for June. The core measure will be closely watched by investors for signs of underlying price pressures, particularly after the Federal Reserve's recent hawkish shift reaffirming its commitment to price stability.