GLOBAL MARKETS-Asian stocks sink, bonds struggle as oil spike stokes rate risks

Markets bet central banks will have to turn more hawkish, with a one-in-three chance of a rate hike from the Federal Reserve as soon as next week — a sea change from merely a week ago — while a move in September is more than fully priced in. The European Central Bank left rates unchanged overnight but a September rate hike is about 70% priced in. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MISX00000PUS dived 2.3%, trimming this week's gain to 0.7%. Japan’s Nikkei .N225 slid 2.8%, also heading for a weekly rise of 0.7%. South Korea's KOSPI .KS11 tumbled 4.8% and was set for a fifth straight week of declines with a 1% drop. Hong Kong's Hang Seng index .HSI fell 1.1%. Adding to the gloom, Alphabet GOOGL.O and Tesla TSLA.O, the first two of the so-called "Magnificent Seven" megacap tech companies to report this season, spooked investors as both burned through cash in their most recent quarter for their big spending on AI infrastructure. Tesla TSLA.O shares tumbled around 14% on Wall Street after it posted its first cash burn in two years. Alphabet GOOGL.O fell about 7%, with the Google parent also burning through cash as it ramped up AI spending. In bond markets, the benchmark 10-year U.S. yield US10YT=RR hit an over 18-month high of 4.7035%, having climbed nearly 17 basis points this week. The yield on 30-year bonds was steady at 5.17%, not far from a 19-year peak of 5.201%. Higher Treasury yields helped the U.S. dollar, with the dollar index =USD holding at 101.40 after a 0.3% rise overnight to the highest level this month. The beleaguered yen was pinned near 40-year lows at 163.82 per dollar JPY=, drawing a warning from the U.S. Treasury that excess volatility in the currency was undesirable. Japan's finance minister has repeatedly issued verbal warnings about a possible intervention in the currency market, after carrying out yen-buying operations in April and May, with the yen weakening beyond the 160 level. Precious metals took a hit, with gold XAU= off 0.5% at $4,027 an ounce after falling 2% overnight. Silver XAG= slipped 0.2% at $57.51 an ounce after a decline of 3.4% overnight. Asian shares sank on Friday as a near 40% rise in oil prices this month due to the intensifying conflict in the Gulf revived inflation fears, rattling bond markets and stoking rate hike expectations globally. European bourses, however, are headed for a steady open after losses a day earlier. Nasdaq futures NQc1 slipped 0.3% as bumper results from Intel INTC.O offered little support in the face of broader worries about oil and rates, while investors grew increasingly uneasy about how much cash the AI boom is burning. Brent crude LCOc1 slipped 0.4% to $100.3 a barrel, after surging 7% overnight to a two-month high of $102. Attacks by Iran-aligned Houthis on Saudi tankers in the Red Sea risk choking off a second crucial Middle East artery for global oil supplies, alongside Iran's near-closure of the Strait of Hormuz. President Donald Trump threatened "major military punishment" for Iran and its Houthi allies, with the U.S. military striking Iran late Thursday and early Friday in the 13th consecutive night of attacks. "Two of the world’s busiest shipping corridors are under threat in the same month, and markets are only just beginning to work out what that means," said Nigel Green, CEO of deVere Group, a financial advisory firm. "With that ceasefire now collapsed and oil back above $100, the drop which gave the Fed room to relax may already be reversing ... This looks less like a short-lived spike and more like a genuine reopening of the inflation question." News that the U.S. administration will impose higher tariffs on goods from 60 trading partners also did not help the inflation picture, with 30-year Treasury yields marching towards their highest levels since 2007 and benchmark European borrowing costs climbing to highs last seen in 2011.

GLOBAL MARKETS-Asian stocks sink, bonds struggle as oil spike stokes rate risks

Rate-hike bets rise as Asian equities weaken

Yields climb, the dollar gains and the yen stays weak

Asian stocks slide as oil spike revives inflation fears

Oil, tariffs and shipping risks keep inflation worries alive

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