Oil prices rise as Asian markets slip, AI-linked stocks retreat

Oil prices rose on Wednesday after a brief dip, reflecting renewed friction between the United States and Iran following an attack on a U.S. base. Brent crude gained 0.6% to $88.60 a barrel and U.S. benchmark crude was up 0.3% at $84.70.

In Asian markets, most indices traded lower. South Korea's Kospi slipped 1.2% to 5,593.56 after falling 10.8% on Tuesday and nearly 6% on Wednesday, extending a 16% decline over two days. The drop was led by AI-related shares, with SK Hynix falling 5.6% despite reporting a record quarterly profit that missed analysts' expectations. Samsung Electronics edged down 0.7% after posting a record operating profit.

Tokyo's Nikkei 225 rose 0.7% to 61,867.43, helped by a 4.5% gain in Tokyo Electron, while SoftBank Group fell 2.5%. In Taiwan, the Taiex closed 0.3% lower, though TSMC edged up 0.2%. Hong Kong's Hang Seng inched up 0.2%, and Shanghai's Composite slipped 0.7%.

Analysts noted that volatility in AI-focused stocks across South Korea, Taiwan and Japan reflects concerns over the sustainability of large AI-related capital expenditures. > "The recent realization of China’s AI as a serious competitor to the current AI market leaders has triggered and aggravated these concerns again," said Chi Lo, senior market strategist for Asia-Pacific at BNP Paribas Asset Management.

U.S. equity markets also fell, with the S&P 500 down 1.5%, the Dow Jones Industrial Average down 2.2% and the Nasdaq Composite down 1.7%. Major chipmakers Nvidia, AMD and Broadcom each posted losses. The Federal Reserve left interest rates unchanged, and Chairman Kevin Warsh emphasized a focus on returning inflation to 2% while providing limited guidance on future policy moves.

In the bond market, the yield on the 10-year U.S. Treasury rose to 4.68%. The U.S. dollar strengthened to 163.60 yen, and the euro slipped to $1.1443.