Volkswacht Bodensee - Tech stocks tank on AI jitters, oil falls further

The sell-off overshadowed a further drop in oil prices after US President Donald Trump signalled optimism about a deal to end Middle East hostilities.

"The AI powered rollercoaster has taken another lurch downwards, with chip stocks falling sharply, as investors reassess rising competition and future demand," said Susannah Streeter, chief investment strategist at Wealth Club.

South Korea's Kospi stocks index plunged almost 11 percent after a report of a breakthrough in China's chip industry compounded worries about the longevity of the AI boom.

"Just as geopolitical tensions appear to be easing slightly, there's been a refocus on the runners and riders of the tech revolution, with a new kid on the chip block causing mayhem," Streeter added.

Chipmakers led losses after tech news outlet The Information reported that China's Shanghai Yuliangsheng had started mass production of a chipmaking technology long dominated by Dutch firm ASML.

The losses extended a recent sell-off in tech stocks following an eye-watering rally over the past two years that sent several indexes and companies to record highs.

Seoul-listed SK hynix sank 14.7 percent and Samsung more than 13 percent. Both firms have shed nearly 50 percent of their market value since hitting all-time highs last month.

Tokyo's Nikkei tanked four percent as Kioxia, Advantest and Tokyo Electron shares all tumbled.

Taipei also fell more than four percent as market heavyweight TSMC took a hit.

Investors are now awaiting earnings this week from SK hynix, Samsung and Kioxia, as well as US titans Microsoft, Meta, Apple and Amazon.

The rest of Asia was also mostly down, though there were gains in Hong Kong.

London, Paris and Frankfurt all traded higher in midday deals, supported by corporate earnings and lower oil prices.

British consumer goods giant Unilever jumped seven percent to top London's FTSE 100 index, after lifting its full-year outlook.

Barclays slid five percent, however, after the bank's upgraded full-year group income target disappointed investors.

Markets also responded to renewed optimism over the US-Iran crisis, with both sides pausing tit-for-tat strikes that were sparked by a breakdown in diplomacy over the Strait of Hormuz.

Trump expressed hope that renewed diplomacy could bring an end to the war that began in late February.

"I have a lot of patience... We'll see what happens," he said aboard Air Force One. "I think there is a good chance that something could happen."

Reports said Oman and Iran were trying to reach an agreement to restart shipping through Hormuz, a route which normally carries around a fifth of global oil and LNG.

Hopes for a deal sent both main oil contracts sharply lower.

- Key figures around 1100 GMT -

Brent North Sea Crude: DOWN 2.2 percent at $86.40 per barrel

West Texas Intermediate: DOWN 2.0 percent at $81.00 per barrel

London - FTSE 100: UP 0.5 percent at 10,839.86 points

Paris - CAC 40: UP 0.3 percent at 8,432.36

Frankfurt - DAX: UP 0.4 percent at 25,451.59

Seoul - Kospi: DOWN 10.8 percent at 6,023.66 (close)

Tokyo - Nikkei 225: DOWN 4.0 percent at 62,364.92 (close)

Hong Kong - Hang Seng Index: UP 0.4 percent at 25,310.85 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,813.31 (close)

Euro/dollar: DOWN at $1.1363 from $1.1371 on Monday

Pound/dollar: DOWN at $1.3281 from $1.3293

Euro/pound: UP at 85.57 pence from 85.54 pence

Dollar/yen: UP at 163.94 yen from 163.72 yen

R.Braegger--VB