Key facts
- The dollar advanced as Middle East tensions intensified, with Brent crude crossing $90 a barrel.
- Rising oil prices have revived inflation concerns, influencing Federal Reserve rate hike expectations.
- Investors are also focused on a week of major tech earnings, which could test valuations.
- Asian share markets showed hesitancy due to the geopolitical situation and looming earnings reports.
Asian share markets showed hesitancy on Monday as escalating conflict in the Gulf lifted oil prices and revived inflation fears. Brent crude climbed 3% to cross $90 a barrel for the first time in over a month amid ongoing U.S. attacks against Iran. This jump in fuel costs has increased concerns about inflation, even after recent U.S. consumer price data surprised on the downside. Futures markets now price in a higher probability of Federal Reserve rate hikes by year-end, with yields on 30-year Treasuries rising back above 5.0%. This environment is testing investor confidence in high-valued chip and AI stocks, which saw the Philadelphia Semiconductor Index shed 10% last week. Adding to market concerns, Chinese AI firm Moonshot announced a new open-weight model. Investors are now looking ahead to a busy week of earnings reports from major tech companies, including Alphabet, Intel, and Tesla, with analysts forecasting strong growth, particularly in the semiconductor sector.