Asian stocks drop as South Korean chipmakers tumble

Kospi Index dropped more than 5%, after surging a record 18% on Jul 31

Asian stocks dropped as South Korean chipmakers tumbled, while oil declined on optimism that Iran and the U.S. will reach a deal to reopen the Strait of Hormuz.

Brent for October slipped 7.3% to $81.55 a barrel.

Oil was also weighed down by another small increase by major Opec+ nations to their production quotas.

The yen firmed for a fourth day, building on its intervention-led gains late last week.

The currency added 1.4% to 155.23 per US dollar with traders remaining on alert for further intervention.

Monday’s market gyrations came after days of escalating tensions in the Middle East.

A supply squeeze triggered by the war drove up fuel costs, stoking fears of another inflation spike and unsettling investors.

Focus is also returning to the artificial intelligence theme after a week of strong swings culminated in a sharp rebound for chip stocks after a rout in chip stocks earlier.

If we get something concrete on a peace deal, or more importantly the reopening of the strait of Hormuz, then we could see some strong relief rallies across the market, said Nick Twidale, chief market analyst at Global Markets.

For now it feels we will continue to see volatility across different markets, especially as AI trade remains the dominant theme for equities, Twidale said.

A gauge of chip stocks dropped 1.2% as Samsung Electronics and SK Hynix both declined more than 8%, offsetting gains in Japanese semiconductor companies such as Renesas Electronics and Kioxia.

Alibaba Group advanced 6.5% in Hong Kong after releasing its latest flagship artificial intelligence model.

On Friday, China’s DeepSeek rolled out a public beta application programming interface, or API, for its flagship AI model, V4 Flash, touting advancements in agentic abilities.

Kospi Index, a bellwether for AI investments, dropped more than 5%, after surging a record 18% on Jul 31. With the Nikkei 225 Stock Average also sliding, the broader MSCI gauge of Asian shares shed 0.6%.

Topix declined 1.2%, the Shanghai Composite shed 0.6%, while S&P/ASX 200 and Hang Seng were both little changed.