Chipmakers led losses in Asian stocks on concerns the AI-driven rally in global equities had run ahead of itself. Oil rose as the standoff between the US and Iran intensified.South Korea’s Kospi index tumbled as much as 5.3 per cent to the lowest level since April, extending declines from its intraday high set in June to more than 30 per cent. SK Hynix slipped 5 per cent, following its record 15 per cent tumble the day before. Kioxia Holdings fell 3 per cent, while Taiwan Semiconductor Manufacturing Co lost 1.6 per cent.Meanwhile, oil rose for a second day, reigniting inflation concerns and boosting bets for a Federal Reserve interest-rate hike. Brent jumped as much as 2.8 per cent to $85.64 after US president Donald Trump reinstated the US blockade of Iranian ships transiting the Strait of Hormuz. Trump also demanded a 20 per cent reimbursement on all other cargo shipped through the waterway.Treasuries and the dollar steadied as traders awaited Tuesday’s US consumer price index data. Money markets priced in about 50 per cent odds of a Fed rate hike in July as governor Christopher Waller said officials may need to raise rates to tame price pressures.Investors are increasingly questioning whether the enormous sums being poured into artificial intelligence can justify the record rally in equities this year. That adds another layer of uncertainty ahead of a pivotal week for markets, with earnings season kicking off alongside US inflation data and Fed chair Kevin Warsh’s congressional testimony, both seen as key to the outlook for interest rates.“Uncertainty around the Middle East continues, but we think the AI wave is what will drive markets over the next few weeks, especially as earnings season kicks off,” said Sonu Varghese at Carson Group.An AI-fueled stock rout in South Korea on Monday spilled over into the US market, underscoring concerns that the boom has become overextended. The Philadelphia Semiconductor Index slumped 4.8 per cent.SK Hynix’s drop in Asian hours followed a 9.3 per cent slump in its American depositary receipts on Wall Street Monday, erasing much of the gains from their July 10th debut.The selloff in US AI hardware stocks was broad, driven by concerns that spending and valuations have run too far, too fast. But SK Hynix’s swings are also a reminder of its volatility even before the ADR debut, a setup that may create a round-the-clock trading echo between the shares on both continents.The Fed’s Waller said on Monday that policymakers may need to raise rates in the near term if underlying inflation continues to signal broad price pressures.Treasury two-year yields, which are relatively sensitive to changes in Fed policy expectations, held at 4.28 per cent, after touching the highest since February 2025.The surge in short-term yields reflects growing expectations that the Fed will need to raise rates sooner to rein in price pressures from the rebound in global energy prices and signs of a resilient US economy.In data due Tuesday, the consumer price index is expected to slow to 3.8 per cent in the year through June, from 4.2 per cent in May, according to a Bloomberg survey of economists. Warsh will also make his first appearance before Congress as Fed chair.“Surging oil prices and yields are already speaking clearly to a worsening inflation outlook,” said Hebe Chen, senior market analyst at Vantage Global Prime. - Bloomberg