Massive spending plans from Samsung and SK Hynix have sparked investor concern, putting pressure on Asian markets at the start of the week. In other news, reports that the US and Iran agreed to halt mutual attacks after a weekend escalation helped US stock futures rebound.
The KOSPI index saw its losses deepen to 3%. Shares of Samsung Electronics fell 4.7%, while SK Hynix dropped 3.1%. This sharp reaction was triggered by reports that the two chip giants are set to jointly unveil a ten-year investment plan worth up to 1.3 trillion US dollars, raising strong market concerns over the resulting capital expenditure burden. Meanwhile, Japan's Nikkei 225 index initially fell nearly 2% before paring losses to around 0.7%.
In energy markets, renewed military clashes over the weekend between the US and Iran, coupled with stalled negotiations, reignited supply risks around the Strait of Hormuz. West Texas Intermediate crude futures briefly climbed back above the $70 per barrel mark, while international benchmark Brent crude rose 0.78% to $73 per barrel.
Broad Pressure Across Asia-Pacific, Modest Gains for US Futures
Weighed down by these dual negative factors, the broader Asia-Pacific market opened weaker on Monday. Japan's Nikkei 225 index declined by approximately 0.7%, while Australia's S&P/ASX 200 index bucked the trend to gain 0.41%.
Sentiment in US stock futures showed a slight divergence. Futures for the Dow Jones Industrial Average rose about 0.2%, S&P 500 futures gained 0.34%, and Nasdaq 100 futures advanced 0.42%.
On the news front, reports emerged that the US and Iran have agreed to stop mutual attacks and are scheduled to meet in Qatar this Tuesday to resume talks on issues including the Strait of Hormuz and ending the conflict. This development quickly improved sentiment towards US equities. Shoji Hirakawa, Chief Global Strategist at Tokai Tokyo Research Institute, commented, "The market appears to believe that with midterm elections approaching, President Trump has no choice but to make concessions. Investors are viewing the attacks between the US and Iran as a temporary phenomenon and do not believe the situation will escalate into another war."
US stocks had a generally weak performance last week, with tech shares facing notable selling pressure. The S&P 500 and Nasdaq Composite indices fell nearly 2% and 4.6% respectively. Nvidia and Alphabet each dropped more than 8%, while Meta, Apple, and Amazon all declined over 4%. The Dow Jones index, with its smaller exposure to tech, managed a 0.6% gain against the trend.
Ed Yardeni, President of Yardeni Research, attributed this tech sector adjustment to "AI fatigue," suggesting investors are beginning to question whether the massive investments in AI infrastructure by hyperscale cloud companies will ultimately translate into returns.
Spending Plans from Samsung and SK Hynix Fuel Valuation Worries
According to a report, Samsung Electronics and SK Hynix are set to jointly disclose a combined investment plan for the next decade totaling 200 trillion won (approximately 1.3 trillion US dollars) at a government briefing presided over by the South Korean president. The news prompted an immediate decline in both companies' share prices.
Previously, the Samsung Group was to separately announce a ten-year blueprint involving 100 trillion won (about 646 billion US dollars) in investments. This plan covers areas including semiconductor fabrication plants, artificial intelligence data centers, advanced packaging, batteries, and displays. It includes roughly 30 trillion won for a new fab in southwestern Korea, 36 trillion won for the Yongin semiconductor cluster, and over 35 trillion won for AI data center construction.
Although both companies are core beneficiaries of the AI wave—SK Hynix is a key supplier of high-bandwidth memory chips to Nvidia, and Samsung is ramping up investments to close the technology gap with competitors—the sheer scale of these capital expenditure plans has raised investor concerns about near-term profitability, triggering the sell-off.
US-Iran Conflict Escalates Anew, Strait of Hormuz Risks Reignite
The immediate catalyst for the rise in oil prices was the latest military exchange between US and Iranian forces near the Strait of Hormuz. According to US Central Command, US fighter jets struck ten Iranian military targets in and around the strait early Sunday. This action was in response to an attack by an unidentified aerial vehicle on the Panama-flagged tanker M/T Kiku while it was transiting the strait carrying over 2 million barrels of crude oil.
In a social media post, the US President stated, "US warplanes just struck Iranian missile and drone storage facilities and coastal radar sites because they violated the ceasefire again. They will probably never learn! There will come a point when we will no longer show restraint and will be forced to complete by military means the action we have successfully initiated. If it comes to that, the Islamic Republic of Iran will cease to exist!"
According to a Pakistani source involved in the talks, negotiations aimed at ending the conflict have currently stalled, but representatives remain in Switzerland awaiting an opportunity to restart discussions. A US official stated, "The parties will now pause hostilities, and ships can pass freely," adding that technical-level talks would continue within the framework of a memorandum of understanding.
This renewed conflict has stoked fresh market fears of energy supply disruptions from the Middle East, driving the swift rebound in oil prices.
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