World shares mixed, South Korea's Kospi drops 4.5% as AI stocks fall

Global stock markets showed mixed results on Monday, with South Korea's benchmark Kospi index plunging 4.5% as some artificial intelligence-related stocks suffered sharp declines. The sell-off in Seoul was driven by a rout in AI-linked shares, reflecting growing investor concerns about valuations and the sustainability of the sector's recent rally.

The Kospi's drop was the most dramatic among major Asian indexes, hitting technology and semiconductor stocks particularly hard. The broader impact was felt across global markets, with U.S. stock futures edging higher in early trading as oil prices turned lower, while investors awaited a busy week of corporate earnings reports from Big Tech companies. The mixed performance highlights the tension between geopolitical risks, such as the Iran conflict, and optimism around upcoming earnings.

South Korea's market is heavily weighted toward tech and chipmakers, making it especially sensitive to shifts in sentiment around AI stocks. The 4.5% decline in the Kospi underscores how quickly enthusiasm for AI can reverse, as traders reassess whether high-flying stocks have outpaced their fundamental prospects. The losses in Seoul contributed to a cautious mood across Asia, though other markets were more subdued.

Investors are now focusing on earnings reports from major U.S. technology firms, which are expected to provide clues about the health of the AI sector and the broader economy. The upcoming results could either calm or exacerbate the current volatility. Meanwhile, oil prices retreated after recent gains linked to geopolitical tensions, offering some relief to markets worried about inflation.

Background: The recent AI stock surge had propelled indexes like the Kospi to multi-year highs, but the pullback suggests a correction may be underway. The Iran conflict has added another layer of uncertainty, keeping energy prices elevated and complicating the outlook for central banks. Next steps will likely hinge on how Big Tech earnings land and whether geopolitical risks escalate further.