Threats to close the Strait of Hormuz pushed oil higher and sent markets into risk off mode, raising inflation concerns ahead of Fed testimony and a heavy earnings schedule.<\/p>\n
Asian shares fell on Monday amid the flare-up of tensions in the Persian Gulf: Iran announced the closure of the crucial Hormuz Strait, which pushed oil prices higher and once again added inflation risks on a global scale.<\/p>\n
The dollar strengthened, and yields on government bonds jumped as investors pared the probability of a rate hike by the Federal Reserve ahead of the regulator\u2019s chairman Kevin Warsh\u2019s testimony before Congress.<\/p>\n
Expectations for global financial dynamics remain influenced by rising tensions in the oil market and uncertainty about how inflationary pressures will unfold.<\/p>\n
Investors in stocks will also have to navigate the upcoming earnings season, where expectations for AI-related profits remain high. The first public reports are due from banks, Netflix, and General Electric as the reporting season unfolds.<\/p>\n
The tech sector continues to score highly in our models, supported by notable earnings growth and momentum, as well as attractive valuations.<\/p>\n
\u2013 Citi analysts<\/p>\n
European futures on major indices were down, and Asian derivatives reflected the pressure on stock markets after reports of escalating regional crisis.<\/p>\n
S&P 500 futures declined by about 0.6%, and Nasdaq futures by around 1.3%. European contracts were also in the red: EUROSTOXX 50 about 0.9%, German DAX about 1.0%, FTSE about 0.3%.<\/p>\n
The Japanese Nikkei fell 2.2%, and the MSCI All-Country Asia ex Japan index declined 1.8%.<\/p>\n
Chip Market Status Check<\/p>\n
South Korea, whose chip market is a global barometer of sentiment, continued to slide: the KOSPI fell about 7.6%, after earlier declines on the exchange. Meanwhile, SK Hynix shares trading on NASDAQ jumped sharply after Friday\u2019s close on news about releases from Apple and other tech giants.<\/p>\n
Taiwan Semiconductor Manufacturing Co. is expected to publish results on Thursday, and analysts anticipate another record profit.<\/p>\n
Bank of America analysts warned that AI CAPEX spending is draining cash flow at much faster rates than previously anticipated, as global hyperscale companies have already spent over $234 billion this year, and projected free cash flows could fall for the first time since 2007.<\/p>\n
Against this backdrop, many undervalued sectors offer significantly better value.<\/p>\n
\u2013 Bank of America analysts<\/p>\n
Rising oil prices pushed the two-year note yield to the highest level since early 2025 \u2013 about 4.2393%, and fed funds futures fell by about two basis points, pricing in about 39 basis points of monetary policy tightening by year-end.<\/p>\n
\u2013 Taylor Nugent, senior economist at NAB<\/p>\n
The dollar index remained firm at around 101.13, while the euro weakened to about $1.139 per euro. The pound stayed around $1.338 after a busy week during which political events in the UK were shaping up, including the anticipated appointment of a Labour Party leader and a possible prime minister in July.<\/p>\n
On the commodity market, gold assets declined as yields rose, but remain an important asset attracting investors amid volatility in oil and currency markets.<\/p>\n
Overall, analysts expect that the upcoming earnings season will show how deeply the tech sector can capitalize on growing attention to artificial intelligence, and how crisis factors in the Persian Gulf region will affect global oil prices and investor sentiment. At the same time, markets remain attentive to further news from energy and macroeconomic sectors that will shape the direction in the coming weeks.<\/p>\n","protected":false},"excerpt":{"rendered":"Threats to close the Strait of Hormuz pushed oil higher and sent markets into risk off mode, raising…\n","protected":false},"author":2,"featured_media":203925,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[26],"tags":[59780,17265,43347,5171,7045,42,14190,39],"class_list":["post-203924","post","type-post","status-publish","format-standard","has-post-thumbnail","category-persian-gulf","tag-asian-stocks-fall","tag-bond-yields","tag-earnings-season","tag-gulf-tensions","tag-inflation-risk","tag-news","tag-oil-prices-rise","tag-persian-gulf"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@iran\/116911646026780223","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/203924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/comments?post=203924"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/posts\/203924\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media\/203925"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/media?parent=203924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/categories?post=203924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/iran\/wp-json\/wp\/v2\/tags?post=203924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}