TLDR
- Brent crude topped $90 as Gulf fighting raised inflation concerns across global markets on Monday.
- South Korea’s Kospi fell 4.1% after leveraged retail positions faced fresh selling pressure.
- Fed futures priced a 60% chance of a September rate increase after yields rose.
- Alphabet, Intel and Tesla earnings will test investor confidence in the AI trade.
- Semiconductor stocks fell 10% last week, leaving the index 20% below June highs.
Brent crude climbed 2.4% to $90.18 a barrel after fresh U.S. strikes against Iran and reported Iranian retaliation across the region. U.S. crude rose 2.1% to $84.18, keeping energy markets focused on supply risks.
Shipping activity through the Strait of Hormuz appeared limited on Sunday, adding concern about possible disruption to global oil flows. Tehran also claimed it had hit two ships, raising attention on one of the world’s most important energy routes.
Shane Oliver, head of investment strategy at AMP, warned that a longer disruption could push prices far higher. He said, “The longer the strait remains closed and the war escalates, the greater the risk that oil prices will have to rise to around $150/barrel.”
The oil jump revived inflation concerns after U.S. consumer price data recently came in softer than expected. Traders still increased bets on Federal Reserve tightening, with futures pricing about 29 basis points of hikes by year-end.
Fed Rate Bets Pressure Stocks and Bonds
U.S. Treasury yields rose as markets raised the odds of a September Fed rate increase to about 60%. The 30-year Treasury yield moved back above 5.0%, a level that can make bonds more attractive than stocks.
JPMorgan chief economist Bruce Kasman said, “The balance of risks is shifting in the direction of an earlier hike than expected.” His comment followed a more hawkish tone from Fed officials.
Higher yields also pressured gold, which slipped 0.1% to $4,013 an ounce. The dollar held steady near 162.36 yen, close to a recent 40-year high, while Japan’s authorities continued to warn against sharp yen weakness.
European markets also faced policy uncertainty ahead of the European Central Bank meeting. The ECB is expected to hold rates at 2.25%, while traders are almost fully priced for another increase in September.
AI Earnings Test Market Confidence
Investors are now watching earnings from Alphabet, Intel, and Tesla after a sharp pullback in AI-linked stocks. The Philadelphia Semiconductor Index fell 10% last week and stood about 20% below its June record high.
Chinese AI firm Moonshot also drew attention after saying its Kimi K3 model neared the performance of Anthropic’s Fable model. The update added pressure to the debate around AI valuations and U.S. technology leadership.
S&P 500 futures stayed steady, while Nasdaq futures rose 0.2%. European futures were mixed, with EUROSTOXX 50 little changed and DAX and FTSE futures down 0.1%.
South Korea’s Kospi fell another 4.1% after losing almost 9% last week. The chip-heavy market remained under pressure as retail investors faced losses from leveraged positions
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