DATA & FIGURES
The Kospi index slumped 9%, triggering a market-wide trading suspension, while the MSCI Asia Pacific Index dropped by 2.2%. The yield on 10-year Treasuries rose by 1 basis point to 4.575%, and the two-year Treasury yields touched their highest level since early 2025. Oil prices surged, with Brent crude rising by 3.4% to around $78.50 a barrel, while Bitcoin is sinking.
THE SCENARIO
The escalating US-Iran conflict and the crash in South Korean stocks have created a perfect storm of uncertainty in the global market. The market is awaiting key US inflation readings, major bank earnings, and AI updates from ASML and TSMC, which are expected to bring significant volatility to the market. The sustainability of the AI trade is under question, and investors are bracing for potential disappointments in the earnings reports.
DIRECT QUOTE
"The sharp selloff in Korean equities from the June peak is raising questions with some investors regarding the sustainability of the AI trade more broadly" — Daniel Murray, EFG Asset Management
BBN INSIGHT
The Positive Side: The recent surge in oil prices may benefit energy stocks and companies with exposure to the energy sector. The Negative Side: The escalating US-Iran conflict and the crash in South Korean stocks may lead to a broader market downturn, affecting not only the tech sector but also the overall economy. The sustainability of the AI trade is under question, and investors may need to reassess their portfolios to mitigate potential risks. The impact on everyday people may be significant, particularly those invested in the stock market or dependent on the tech industry for employment.
MARKET REACTION
The price of Brent crude has surged by 3.4% to around $78.50 a barrel, while US equity futures are lower. The Nasdaq 100 futures slid by 1%, and the S&P futs are down by 0.4%. The yen slumped back below 162, and the dollar is barely budged.