Key facts
- Brent crude oil surpassed $90 a barrel for the first time since early June.
- 30-year Treasury yields rose above 5.0%, a level historically associated with poor stock performance.
- Investors are increasing bets on a Federal Reserve rate hike in September.
- Tech companies including Alphabet, Intel, and Tesla are set to report earnings this week.
- Geopolitical tensions in the Middle East have escalated, impacting oil prices and shipping.
- South Korea's chip-heavy market has seen significant declines.
Geopolitical tensions in the Middle East have escalated, with the U.S. striking Iranian targets for the ninth consecutive day and Iran retaliating against U.S. bases and Gulf shipping, resulting in at least three U.S. soldier deaths. This has led to a significant slowdown in traffic through the Strait of Hormuz and a rise in Brent crude prices above $90 per barrel for the first time since early June. The futures market now suggests a two-thirds probability of a Federal Reserve rate hike in September, contributing to a rise in 30-year Treasury yields above 5.0%, a level historically linked to poor stock performance. Investors are now turning their attention to the upcoming earnings season, with major tech companies like Alphabet, Intel, and Tesla scheduled to report. High-flying U.S. chip stocks have already seen a 10% drop last week and are down 20% from their June highs. South Korea's chip-heavy market declined by 3.0% on Monday, adding to a month-long drop of 25%. Despite these headwinds, U.S. futures showed slight gains, and European Central Bank is expected to hold rates steady, though forward guidance will be closely watched.