Asia shares shaky as oil climbs, earnings loom

Asian share markets slipped on Monday as the escalating conflict in the Gulf lifted oil prices and fanned fears of inflation, while a packed week of major tech earnings will further test investor faith in the AI trade. Brent crude climbed above $90 a barrel for the first time in more than a month as the U.S. military started a ninth straight day of attacks against Iran, which in turn struck targets across the region. Just a handful of ships transited the Strait of Hormuz on Sunday and one was reported to be on fire. "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 to bring demand down to match the hit to supply," said Shane Oliver, head of investment strategy at fund manager AMP. "This is not our base case but it's a high risk again." Brent LCOc1 duly added 2.6% to $90.40 a barrel, while U.S. crude CLc1 rose 2.3% to $84.39. Japan's Nikkei .N225 was closed for a holiday, having shed 6.4% last week in a tech-led rout. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.3%, while Chinese blue chips rose 1.4%. South Korea's .KS11 chip-heavy market lost a further 4.2%, after diving almost 9% last week in wild trade as retail investors were squeezed out of leveraged positions. The latest spike in oil will be a headache for the European Central Bank which meets on Thursday and is considered likely to hold rates at 2.25% following June's hike. Attention will be on policy makers' guidance with markets almost fully priced for a rise at its September meeting and rates of 2.75% early next year. 0#EURIRPR The euro was flat at $1.1433 EUR=EBS, having spent more than a week trading between $1.1377 and $1.1482. The dollar was steady at 162.39 yen JPY=EBS, just below the recent 40-year peak of 162.84 as Japanese authorities flag the threat of intervention should the yen weaken quickly. Sterling held at $1.3449 GBP= as bond markets waited for Britain's incoming Prime Minister Andy Burnham to name a new treasurer. In commodity markets, the rise in yields pressured non-interest-paying gold which fell 0.5% to $3,998 an ounce XAU=. GOL/ The shift has come just as investors question sky-high valuations for chip and AI stocks, which have seen the Philadelphia Semiconductor Index shed 10% last week to leave it 20% down from June's record high. LOFTY EXPECTATIONS FOR EARNINGS Markets took an added blow on Friday when Chinese AI firm Moonshot said it had a new open weight model, Kimi K3, that it says delivers performance approaching U.S. giant Anthropic's frontier Fable model. All of which raises the stakes for this week's rush of profit results, which include Alphabet GOOGL.O, Intel INTC.O and Tesla TSLA.O. BofA analyst Savita Subramanian remains upbeat on the earnings outlook, tipping a 5% beat versus consensus, or 28% growth. Tech is expected to drive over half of growth, with semiconductors expected to rise around 130% year-on-year. Such forecasts helped S&P 500 futures ESc1 hold steady, while Nasdaq futures NQc1 edged up 0.1%. In Europe, EUROSTOXX 50 futures STXEc1 were little changed, while DAX futures FDXc1 and FTSE futures FFIc1 eased 0.1%. The jump in fuel costs has revived worries about inflation even as U.S. consumer price data surprised on the downside last week, leading futures markets to price in 29 basis points of Federal Reserve rate hikes by year-end. 0#USDIRPR "Our forecast is for a more gradual turn toward a Fed hike in 2027, but the balance of risks is shifting in the direction of an earlier hike than expected," said Bruce Kasman, chief economist at JPMorgan, noting a recent hawkish tilt in Fed policy rhetoric. Futures imply a 60% chance of a rate rise as early as September, pushing yields on 30-year Treasuries US30YT=RR back above the psychological 5.0% barrier. This is a level that tends to attract funds away from equities and toward fixed income, while lifting the valuation bar for future corporate earnings.

Asia shares shaky as oil climbs, earnings loom

Asia shares slip as oil prices jump

Regional markets, currencies and commodities

Tech valuations and earnings take center stage

Inflation worries and Fed expectations lift yields

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