Stocks slip; Samsung’s record profit revives jitters on AI outlook
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LONDON, July 7 : Global stocks fell on Tuesday as technology shares slid despite blockbuster results from Samsung Electronics, with investors remaining concerned about the sustainability of the AI-driven rally, while oil prices rose on renewed Middle East tensions.
Samsung Electronics forecast a 19-fold jump in April-June operating profit to 89.4 trillion won ($58.4 billion), a third straight quarter of record operating profit for the world’s largest memory-chipmaker.
Rather than reassuring investors, the results triggered heavy selling in Samsung and rival SK Hynix shares, weighing on South Korea’s Kospi and other technology-heavy Asian markets. Investors have increasingly questioned whether profit growth linked to artificial intelligence can be sustained if supply bottlenecks in key components such as memory chips ease.
“This is a record for Samsung, but rather than placate the markets, these strong results have led to fears that the AI chip sales boom cannot be sustained,” Kathleen Brooks, research director at XTB, said.
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Morgan Stanley said in a note dated Monday that recent weakness in U.S. semiconductor stocks signalled a broadening of market gains, with investors likely to turn towards AI hyperscalers as well as consumer discretionary, transport and biotechnology shares.
SK Hynix is due to join the Nasdaq this week in a $28 billion listing, one of the world’s largest new share sales, as the chipmaker seeks to capitalise on the AI boom.
Its shares, which were up as much as 350 per cent this year at their peak two weeks ago, have since fallen about 30 per cent amid a broader sell-off in global chip stocks.
In Europe, where exposure to volatile AI-linked stocks is more limited, the STOXX 600 slipped 0.1 per cent, as losses in semiconductor and tech stocks offset gains in in oil and gas shares. Energy stocks got a lift from crude prices edging higher on the back of signs that U.S.-Iran peace talks were losing momentum.
Adding to market concerns, Iran’s Revolutionary Guards fired at least two missiles at commercial ships transiting the Strait of Hormuz on Monday, Axios reported, citing two U.S. officials. The ships suffered significant damage, but there were no casualties, the report said.
Brent crude futures rose about 1 per cent to $72.72 a barrel.
Futures on the S&P 500 were down 0.2 per cent, while those on the Nasdaq 100 slid 1.1 per cent.
NATO MEETING SET TO START IN TURKEY
U.S. President Donald Trump, who has pressed Europe to boost defence spending and clashed with European leaders over the Iran war and Greenland, is due to attend a NATO meeting in Turkey beginning on Tuesday.
Trump said on Monday the U.S. would either reach a deal with Iran or “finish the job,” renewing his threat of military action as Tehran projects defiance following the funeral of supreme leader Ayatollah Ali Khamenei.
In currency markets, the dollar index, which tracks the U.S. currency against six others, was little changed at 100.9. The euro was flat around $1.143, as was the pound at $1.339.
The yen clawed above 40-year lows to trade a touch stronger on the day at 161.9 to the dollar. Traders were alert for intervention given signs of a possible shift in strategy by Japanese authorities.
The yield on benchmark U.S. 10-year notes was up 1 basis point at 4.49 per cent, ahead of the release on Wednesday of the minutes of the Federal Open Market Committee’s latest meeting. These may give investors more of a steer on how new Federal Reserve chair Kevin Warsh is approaching monetary policy.
(Additional reporting by Satoshi Sugiyama in Tokyo; Editing by Mark Potter and Kevin Liffey)
Source: Reuters
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