The Japan Times - Stocks, oil, precious metals plunge on volatile start to the week

Investors resumed Friday's rollercoaster ride on trading floors, as they assessed geopolitical developments, the latest batch of earnings from market heavyweights and the prospect for US interest rate cuts.

After a strong start to the year fuelled by fresh hopes for artificial intelligence, stocks went into reverse last week as traders again questioned the wisdom of the vast sums of cash pumped into the sector and worries about when they will see returns.

That has also raised fears of a tech bubble that could soon pop after a surge to record highs last year.

The latest round of selling came after Microsoft announced a surge in spending on AI infrastructure, which revived concerns that companies could take some time before seeing a return on their investments.

Seoul, which has hit multiple records this year thanks to its big tech weighting, plunged more than five percent, with chip giant SK hynix shedding eight percent and market heavyweight Samsung off more than five percent.

Tokyo, also home to several big-name tech firms, shed more than one percent, while Taipei --where chip giant TSMC is listed -- lost more than two percent.

Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila and Bangkok also tumbled.

Jakarta tanked more than five percent, extending last week's rout after index compiler MSCI called on regulators to look into ownership concerns and a warning it would hold off adding Indonesian stocks to its indexes or increasing their weighting.

There are concerns it could announce a downgrade from emerging market to frontier market, which could spark an outflow of foreign capital.

Oil prices also tanked on easing US-Iran tensions.

Both main crude contracts shed more than four percent as Donald Trump said he was hopeful of reaching a deal with Tehran after it warned that any attack on the Islamic republic would trigger a regional conflict.

Washington has hit out at the country's leadership in recent weeks over its deadly response to anti-government protests last month, with Trump threatening military action while ordering the dispatch of an aircraft carrier group to the Middle East.

He has also pushed for an agreement over Iran's nuclear programme.

- Trump Fed pick -

Supreme leader Ayatollah Ali Khamenei on Sunday likened the recent protests to a "coup" and warned that a US attack would trigger a broad, regional conflict.

Asked about the Iranian leader's warning, Trump told reporters on Sunday: "Of course he is going to say that.

"Hopefully we'll make a deal. If we don't make a deal, then we'll find out whether or not he was right," he said.

Oil's drop was helped by a stronger dollar, which came on the back of news that Trump had tapped Kevin Warsh to take the helm at the US central bank.

The president said Warsh, a former Morgan Stanley investment banker and Fed governor, "will go down as one of the GREAT Fed Chairmen, maybe the best".

Traders regard Warsh as the toughest inflation fighter among the final candidates, raising expectations of monetary policy that would underpin the greenback.

The choice also eased recent concerns about the Fed's independence following a series of attacks on incumbent Jerome Powell over his reticence to cut rates as quickly as the president wanted.

The dollar surged, having plunged most of last week on concerns the White House was happy to see it weaken.

"Warsh emerged as one of the more hawkish voices during his time at the Fed, at times opposing rate cuts during the 2008 (global financial crisis) out of concern on inflation risks," wrote Brian Levitt at Invesco.

"At first glance, his monetary policy track record would seem to conflict with Trump's desire for lower rates, although his tone has shifted in recent months."

Warsh was "currently in favour of greater policy easing in 2026, driven by a view that productivity gains could boost US economic growth without driving higher inflation", he added.

The announcement sent dollar-priced precious metals plunging Friday, with gold losing as much as 12 percent and silver more than 30 percent at one point.

And the losses mounted on Monday, with gold shedding as much as six percent to touch $4,586, while silver briefly lost around 11 percent to $75. Both bounced back slightly but were well down from their record highs of $5,595 and $121 touched last week.

The easing of Iran tensions added to the selling pressure on the safe havens.

- Key figures at around 0430 GMT -

Tokyo - Nikkei 225: DOWN 0.7 percent at 52,961.62

Hong Kong - Hang Seng Index: DOWN 2.4 percent at 26,730.78 (break)

Shanghai - Composite: DOWN 1.3 percent at 4,063.54 (break)

Euro/dollar: UP at $1.1867 from $1.1856 on Friday

Pound/dollar: DOWN at $1.3686 from $1.3688

Dollar/yen: UP at 154.96 yen from 154.64 yen

Euro/pound: UP at 86.71 pence from 86.63 pence

West Texas Intermediate: DOWN 4.7 percent at $62.15 per barrel

Brent North Sea Crude: DOWN 4.5 percent at $66.20 per barrel

New York - Dow: DOWN 0.4 percent at 48,892.47 (close)

London - FTSE 100: UP 0.5 percent at 10,223.54 (close)

H.Hayashi--JT