HK stocks slip as tech woes, oil spike weigh on region

Asian equities experienced a sharp decline on Tuesday as technology shares were hit hard. This decline was fueled by the escalating conflict in the Middle East, which drove oil prices higher and bolstered the US dollar. Hong Kong's Hang Seng Index opened 99 points, or 0.41 percent, lower at 24,172. The China Enterprises Index dropped 32 points, or 0.39 percent, to 8,136, while the Tech Index fell 39 points, or 0.96 percent, to 4,129.

The Shanghai Composite Index fell 36 points, or 0.96 percent, to 3,760, and the Shenzhen Component Index plunged 221 points, or 1.79 percent, to 12,163. The ChiNext Index also saw a significant drop of 64 points, or 2.18 percent, to 2,899. Energy prices are once again driving global markets as investors grapple with geopolitical developments in the Middle East and the Russia-Ukraine situation.

Brent crude futures reached US$105.9 per barrel, nearing a two-week high. Oil markets have been volatile due to supply risks from attacks on Saudi Arabia and the possibility of additional diesel supplies from Russia. Analyst Charu Chanana from Saxo in Singapore noted that geopolitical factors play a crucial role when they impact inflation.

The renewed increase in oil prices is putting pressure on yields and casting a shadow on expensive growth stocks, particularly as the Russia-Ukraine energy truce appears fragile and Middle East supply risks persist. In Tokyo, the Nikkei opened 466 points, or 0.67 percent, lower at 68,564 before falling further to 1,915 points by noon.

Seoul's Kospi index dropped 198 points, or 3.1 percent, at 6,186, with tech-heavy stocks suffering losses, particularly chip counters, before the lunch break. Analyst Kyle Rodda of Capital.com attributed much of the decline to the tech selloff on Wall Street overnight, which is now affecting Asia. On Wall Street, the tech-heavy Nasdaq slipped 0.5 percent, led by chipmakers amid concerns over the sustainability of the AI stock rally due to heightened competition between the United States and China.

The cautious sentiment contributed to the US dollar approaching an 18-month high. The euro traded at US$1.1157, and the yen was at 158.50 per US dollar.