Asian Chip Stocks Plunge Amid Inflation Fears While Oil Prices Drop on Diplomatic Optimism
Asian stock markets opened mixed on July 1, 2026, with sharp declines in Northeast Asia amid macroeconomic concerns and global negative sentiment. Japan's Nikkei index fell 1.5%, South Korea's Kospi plunged 5%, and China's Shanghai Composite dropped 1.3%. In contrast, Hong Kong's Hang Seng rose 0.6%, buoyed by strong electric vehicle sales from Chinese companies BYD and Xiaomi. South Korea's steep losses were driven by a June inflation surge to 3.2%, the highest in two and a half years, increasing pressure on the central bank to raise interest rates in mid-July. Additionally, a wave of profit-taking in semiconductor stocks on Wall Street spilled over into Asia, wiping billions from tech giants' market values. Samsung and SK Hynix shares dropped over 7% and 9%, respectively, while Japan's Kioxia slumped more than 13%.
In the US, futures edged slightly higher after a volatile June 30 session that saw investors rotate from hot tech stocks to more stable Dow Jones names. The Dow hit an intraday record of 52,742.66 points before closing flat, while the Nasdaq experienced heavy profit-taking, especially in chip stocks like Micron (-9%) and Sandisk (-10%). Meta bucked the trend with a nearly 10% jump following a cloud services expansion announcement. Meanwhile, Shutterstock shares plunged 29% after its $3.7 billion merger with Getty Images collapsed due to UK regulatory opposition.
US Treasury yields rose, with the 10-year note climbing 7 basis points to 4.49%, reflecting investor caution ahead of the June employment report due at 15:30 local time. Expectations are for a slowdown in job growth to around 114,000-115,000 new positions, with unemployment steady at 4.3% and wage growth near pre-pandemic levels. Federal Reserve Chair Kevin Warsh emphasized data-driven policy decisions and rejected political pressure to cut rates, signaling a continued focus on curbing inflation.
Oil prices extended their sharp June declines, with Brent crude down about 1% to $70.87 per barrel and WTI falling 1.1% to $67.87. Brent lost 21% in June, its worst monthly drop since March 2020, amid renewed optimism over US-Iran indirect talks in Qatar. The US delegation, including Jared Kushner and Steve Witkoff, is negotiating with Iranian representatives via Qatari intermediaries after Tehran refused direct meetings. Despite recent tensions in the Strait of Hormuz, shipping activity is gradually resuming, tempering fears of supply disruptions. ING strategists warn that increased tanker movements could cap oil price gains.
In alternative assets, Bitcoin rose 0.6% to around $60,443, while gold slipped 0.2% to $4,073 per ounce. Market participants await the US employment data for clearer signals on economic momentum and Fed policy direction.
