Global Markets Slump Amid U.S.-Iran Conflict and AI Selloff

Global equity markets declined between July 16 and July 17, 2026, driven by a severe technology sector selloff and escalating military conflict between the United States and Iran. Donald Trump authorized six consecutive nights of airstrikes against Iranian bridges, port infrastructure, and tankers to secure control of the Strait of Hormuz. Iran retaliated with missile and drone attacks targeting U.S. military bases in the Gulf, as well as Kuwait and Bahrain, pushing Brent crude prices toward $87 per barrel.

The geopolitical instability coincided with a widespread retreat from artificial intelligence and semiconductor stocks. Investors questioned whether AI productivity justifies current valuations, leading to significant losses for Nvidia, Broadcom, and Samsung Electronics. Despite reporting record second-quarter profits, Taiwan Semiconductor Manufacturing Company saw its shares drop after announcing a $100 billion investment in U.S. fabrication plants, which analysts viewed as a risk to spending discipline.

Regional markets were hit hard, with South Korea's Kospi sinking 6.4% following the Bank of Korea's first interest rate hike since 2023 to combat war-driven inflation. Japan's Nikkei 225 plummeted as much as 4.4%, while Wall Street's Nasdaq and S&P 500 faced declines. Conversely, Hong Kong's Hang Seng rose after China approved Apple Intelligence for domestic use, benefiting Alibaba Group. By July 17, oil prices remained volatile as the market balanced fears of shipping disruptions against hopes for a diplomatic resolution.