Oil tanker attacks in Strait of Hormuz push crude higher

Oil rises over 2% after tanker attacks in the Strait of Hormuz, while AI stock jitters hit global equities.

NEW YORK: Oil prices jumped after three tankers were attacked in the Strait of Hormuz, while jitters about the outlook for the AI sector hit equities.

British maritime security agency UKMTO reported three tankers have been hit by projectiles or drones in the past 24 hours in or near one of the world’s most important energy shipping routes, despite a ceasefire between the United States and Iran and efforts to secure a lasting peace agreement.

“Crude oil rose by more than two percent after renewed attacks on commercial shipping in the Strait of Hormuz reignited concerns over global energy supplies and cast doubt on the durability of the US-Iran agreement,” said Axel Rudolph, chief technical analyst at investing and trading platform IG.

Meanwhile, investors once again turned cold on AI stocks.

The tech-rich Nasdaq Composite shed more than one percent in New York, while the blue-chip Dow closed 0.3 percent lower.

In Europe, Frankfurt and Paris both ended lower.

Seoul once again led losses in Asian stocks as Samsung’s share price tumbled — despite the South Korean chip giant’s eye-watering rise in profit — on fears that the record-breaking AI-fueled rally may have reached the end of the road.

The “ugly reaction to exceptional Samsung earning is a reminder that, in richly valued markets, meeting expectations is no longer enough”, noted Ipek Ozkardeskaya, senior analyst at Swissquote bank.

Samsung said it expected to post a jump in second-quarter operating profit of more than 1,800 percent thanks to sustained demand for memory chips seen as essential to help power the world’s thirst for AI.

However, the company’s shares tumbled by as much as 10 percent at one point before ending with a loss of more than six percent.

Seoul’s Kospi index finished down nearly five percent.

“There’s nothing overly concerning about the trajectory of AI but there is a lot of spending even from Samsung’s perspective that potentially introduces some risks,” warned Angelo Kourkafas of Edward Jones.

Samsung’s update came at the start of a much-anticipated earnings season that will be closely followed for an idea about firms’ outlooks for AI in light of huge sector investment.

“For AI-linked stocks, the market now wants strong earnings, strong guidance and clear evidence that pricing power can last,” said Saxo Markets’ Charu Chanana.

There were losses also for the tech-heavy Tokyo stock market as well as Hong Kong, Shanghai, Sydney, Taipei and Bangkok.

SpaceX shares closed 6.8 percent down in New York.

Traders are meanwhile awaiting the release of minutes from the Federal Reserve’s most recent policy meeting, hoping for fresh clues about its plans for potential US interest rate hikes as it tries to battle elevated inflation.

Key figures around 2010 GMT

New York – Dow: DOWN 0.3 percent at 52,925.15 points (close)

New York – S&P 500: DOWN 0.5 percent at 7,503.85 (close)

New York – Nasdaq Composite: DOWN 1.2 percent at 25,818.69 (close)

London – FTSE 100: UP 0.1 percent at 10,665.88 (close)

Paris – CAC 40: DOWN 0.5 percent at 8,436.24 (close)

Frankfurt – DAX: DOWN 1.4 percent at 25,465.25 (close)

Seoul – Kospi: DOWN 4.9 percent at 7,656.31 (close)

Tokyo – Nikkei 225: DOWN 2.1 percent at 68,256.96 (close)

Hong Kong – Hang Seng Index: DOWN 0.5 percent at 23,496.89 (close)

Shanghai – Composite: DOWN 1.3 percent at 3,990.24 (close)

Brent North Sea Crude: UP 3.0 percent at $74.16 a barrel