Middle East Tensions Spark Oil Price Surge Amid Tech Rout Concerns
Oil prices surged on Wednesday after a fresh outbreak of fighting in the Middle East led to concerns over supplies through the Strait of Hormuz. The US and Saudi warplanes carried out strikes against Iran-backed militants in Iraq, who had launched multiple drone attacks in recent days. The strikes targeted 'Iran-aligned terrorists' that directed attacks on US forces and Saudi energy infrastructure.
The development comes as investors are already wary of the tech sector, which has seen a rout due to worries over AI boom expectations. Chip firms like SK hynix and Samsung have been hammered, with shares plummeting by 10% and 6%, respectively. This is partly due to concerns that companies' lofty expectations may not be met.
The market remains on edge as the Federal Reserve's policy decision later in the day is expected to provide some clarity on interest rates. While most traders anticipate no change, there are concerns that the Fed could spring a surprise with a hawkish move. This would boost the US dollar at the expense of risk assets.