SINGAPORE: Global oil prices declined on Monday but remained above $100 a barrel as markets assessed continued crude shipments from the Middle East despite disruptions linked to tensions around the Strait of Hormuz and attacks by Yemen’s Houthis on key Saudi oil facilities.
The latest pullback came amid reports that oil supplies were continuing to leave the region despite Iran’s restrictions on the strategic waterway. Brent crude had previously recorded a cumulative gain of 4.9%, according to the report.
Meanwhile, Asian stock markets mostly declined as investors reacted to a technology-led sell-off on Wall Street, driven by growing concerns over the sustainability of the artificial intelligence investment boom.
Technology companies, particularly chipmakers and businesses associated with AI, remained under pressure amid concerns about rising inflation, escalating costs and uncertainty over when massive investments in the sector would generate sufficient returns.
Optimism generated by Nvidia chief executive Jensen Huang’s reassuring remarks about CoreWeave’s financial position faded as trading resumed at the start of the week.
Investors are also preparing for next week’s US Federal Reserve interest rate decision. Expectations of a second consecutive rate increase have strengthened following inflation figures that exceeded forecasts.
Higher interest rates could weigh on technology companies, many of which depend on borrowing to finance costly investments in data centres, semiconductor production and related infrastructure.
On Wall Street, all three major indexes closed sharply lower, with the Nasdaq falling more than 2%. Heavy losses among major technology companies, including Microsoft, Nvidia, AMD and Amazon, contributed to the decline.
Rodrigo Catril of National Australia Bank said the US market downturn reflected growing doubts about the financial foundations of the AI investment surge rather than simply weaker expectations for consumer demand.
Investors are increasingly questioning whether future revenues will be sufficient to justify the substantial capital and financing needed for data centres, chips and power infrastructure, he said.
The downturn spread across Asian markets, with Tokyo stocks dragged lower by SoftBank, a major technology investor, as well as chip-testing equipment maker Advantest and semiconductor equipment manufacturer Tokyo Electron.
South Korean markets also weakened amid further losses for chipmakers SK hynix and Samsung Electronics.
Markets in Taipei, Shanghai, Sydney, Singapore and Wellington recorded declines, while Hong Kong’s stock market remained closed for a public holiday.
Investors also assessed fresh economic data from China showing that the country’s economy expanded by 4.5% in the third quarter. The growth figure came in slightly above expectations in an AFP survey, but it failed to provide an immediate boost to regional markets.
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