Oil climbed to the highest level in more than a month and bonds fell as US and Iranian attacks escalated, renewing inflation concerns. Stocks stabilized after a technology-led selloff rattled markets last week. Brent rose as much as 3.8% to $91.42 a barrel, the highest level since June, with back-and-forth strikes that have expanded beyond military targets. Treasury 10-year futures slipped 7/32, with trading in the cash market shut during Asian hours Monday because of a holiday in Japan. Government bonds in Australia and New Zealand also declined on concern that higher oil prices will stoke inflation.
Equities were mixed. Nasdaq 100 futures rose 0.3% after Friday’s selloff, sparked in part by a surprise breakthrough from Chinese AI startup Moonshot AI, which unveiled a model that challenged perceptions of US leadership in artificial intelligence. MSCI’s Asia Pacific equity index fluctuated between small gains and losses, while South Korea’s Kospi index fell 4% as traders returned following a holiday on Friday. The escalation in the Middle East is unsettling markets already rattled by a selloff in tech stocks as investors question whether the artificial-intelligence spending boom can sustain the sector’s rapid gains. Oil’s advance is also bringing inflation back into focus after recent benign US data had eased expectations that the Federal Reserve would need to raise interest rates. Elsewhere, gold extended last week’s slide, falling 0.1% to around $4,000 an ounce. Higher oil prices reinforced expectations that interest rates will stay higher for longer, which makes non-yielding gold less appealing. The dollar was mixed against its major peers. Australia’s 10-year government bond yield rose six basis points to 4.96%. The high-profile Philadelphia Stock Exchange Semiconductor Index fell into a bear market on Friday, jolted by Chinese AI startup Moonshot. Meanwhile, the gains in oil came after US reports last week showed consumer prices dropped in June for the first time in six years, and a key gauge of underlying inflation was little changed. Earlier this month in Sintra, Portugal, Fed Chair Kevin Warsh said price risks have come down in recent weeks and repeated his determination to bring inflation back to the US central bank’s 2% target. With Warsh making clear that the central bank’s priority is to pull down inflation, traders will also look to this week’s data for signs of a resilient US economy to cement expectations of a rate hike in September or October. Forward markets see about two hikes by the first quarter of 2027, and the vocal representation of hawkish members underpins this, Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank, wrote in a client note.
Nikkei Closed Hang Seng +1.59% CSI +0.26% Kospi -4.40% Shanghai -0.40%% Shenzen -2.53%%
Eur$ 1.1441 CNH 6.7724 CNY 6.7720 JPY 162.37 GBP 1.3460 CHF 0.8074 RUB 78.2000 TRY 47.1746 WTI$ 84.20 +0.25% Gold 4,026 +0.19% BTC 64,698 +0.22% ETH 1,875 +0.28%
S&P -0.02% Nasdaq +0.12% EuroStoxx -0.13% FTSE -0.27% Dax -0.18% SMI -0.20%
Macro :
- ECB Stays on War Alert Preparing for Next Rate Hike: Eco Week
- Martin Shkreli Is Back and Primed to Fight ‘To the Bitter End’
- China’s Moonshot Unveils AI Model, Fueling Tech Rout
- Singapore Weighs Hedge Fund Tax Cuts to Be More Competitive: FT
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