Key figuresCrude jumps on fresh Mideast flare-up, tech rout deepens

AFP

Update: 29.07.2026 06:20

SK hynix tanked 10 percent as earnings results fell short of expectations

Oil prices spiked Wednesday after a fresh flare-up of fighting in the Middle East that revived fears over supplies through the Strait of Hormuz, while chip firms continued to bleed as nervous investors unwound their bets on the AI boom.

Traders are also keeping a nervous watch on the Federal Reserve's policy decision later in the day, with some observers warning the US central bank could provide a hawkish surprise.

Volatility returned to the crude market after US and Saudi warplanes carried out strikes Tuesday against Iran-backed militants in Iraq who launched more than two dozen drone attacks in recent days, the US military said.

The strikes targeted "Iran-aligned terrorists that the Islamic Revolutionary Guard Corps (IRGC) directed to attack US forces and Saudi energy infrastructure", US Central Command announced in a statement.

CENTCOM had said earlier that Tehran launched multiple ballistic missiles in an "attempted surprise attack on US forces based in the Middle East", but they were all intercepted.

Iran on Wednesday said it had halted three oil tankers in the strait, through which a fifth of global crude and gas usually pass.

The strikes ended three days of calm after the US and Iran held off attacks, following almost two weeks of nightly US strikes on Iran, and repeated missile and drone salvos targeting Washington's allies around the Gulf.

Both main oil contracts rose more than four percent Wednesday. Brent has swung wildly this month -- surging from around $72 at the start of July to more than $100 last week, before the three-day pause.

The latest developments highlight the fragility of any efforts to find a lasting peace, even though US President Donald Trump this week said there was a "good chance" of a deal.

In equity markets, the tech sector once again came under assault as traders fret over the mesmerising sums being pumped in the AI sector, with investors questioning whether firms' lofty expectations will be met.

Compounding the worries was a report by The Information tech news outlet saying China's Shanghai Yuliangsheng had started mass production of a chipmaking technology long dominated by Dutch firm ASML.

Seoul was again on the frontline, with the Kospi plunging more than six percent to extend Tuesday's near-11 percent collapse as chipmakers SK hynix and Samsung were hammered 10 percent and six percent respectively.

SK hynix's selloff came after its April-June operating profit and revenue came in below expectations, even as net profit soared a forecast-beating 1,242 percent. The firm's shares have tanked more than 50 percent since hitting a record high a month ago.

The firm is a specialist supplier of high-bandwidth memory chips to US industry behemoth Nvidia, and a pillar of South Korea's tech-led economy.

Josh Gilbert, of eToro, said: "When you're the dominant supplier of the high-bandwidth memory that powers Nvidia's chips, the AI boom lands directly on your bottom line.

"That means the market is unlikely to focus on the headline numbers alone. The bigger question is whether margins and guidance can justify its recent performance."

Tokyo was also hit, with tech firms Kioxia, Advantest and Tokyo Electron dragged into the bloodbath. Taipei gave up nearly three percent with market heavyweight chipmaker TSMC in retreat.

But while Shanghai also fell, the rest of Asia enjoyed gains, with Sydney, Singapore, Wellington, Manila and Jakarta all up.

Samsung is due to report Thursday, while Kioxia and US titans Microsoft, Meta, Apple and Amazon are also set to announce.

Wednesday also sees the Fed conclude its two-day meeting, and while most traders expect it to hold interest rates, there are concerns it could spring a surprise.

Uncertainty has been fuelled by new boss Kevin Warsh's refusal to publicly share his views on the economic outlook, part of his proposed reforms to reduce the amount of forward guidance the central bank offers.

Investors remain on edge, even after recent data suggested inflation was easing, the jobs market was softening and oil prices have come down.

"Assuming the Fed leaves rates unchanged as expected, traders will be on the lookout for a potentially stronger description of inflation risks and/or possible wording to signal conditional tightening," said Matt Weller at City Index.

But he said "Warsh has expressed scepticism toward such forward-looking comments in the past".

"Crucially, at least a couple of FOMC members are likely to favor an immediate interest rate increase, dissenting against the majority if necessary," he added.

"A third (or fourth) dissent in favour of hiking rates now would certainly represent a credible hawkish surprise and could boost the US dollar at the expense of risk assets."