Shares skid as Gulf conflict sends oil surging

South Korea's .KS11 formerly red-hot KOSPI sank 7.6%, having already lost almost 8% last week, as leveraged bets on semiconductor shares came under pressure. The market has emerged as a key global barometer for chip-sector sentiment and further losses could ripple out more broadly. South Korean chipmaker SK Hynix's 000660.KS U.S.-listed shares jumped almost 14% in their Nasdaq debut on Friday. News that Apple AAPL.O had sued OpenAI and two former employees for trade secrets theft emerged after markets closed. Chip giant Taiwan Semiconductor Manufacturing Co. 2330.TW reports results on Thursday and another record profit is expected. Analysts at BofA warned the AI capex boom was eroding cash generation with hyperscalers having spent $234 billion this year and forward free cash flow expected to turn negative for the first time since at least 2007. "Against that backdrop, many overlooked areas offer materially better value," they said in a note. "Tech continues to screen highly in our models, supported by stand out earnings growth/momentum and attractive valuations," analysts at Citi wrote in a note. "While AI volatility may remain elevated over the coming quarter, we maintain our Overweight stance on global IT and the U.S.," they added. "We pair these growth exposures with over weights in cyclical regions/sectors, including Japan, financials and materials." The spike in oil pushed 2-year Treasury yields US2YT=RR to their highest since early 2025 at 4.2393%, while Fed fund futures 0#FF: slipped 2 ticks, implying 39 basis points of policy tightening by the end of the year. 0#USDIRPR That in turn kept the dollar index =USD firm at 101.13. The euro eased a fraction to $1.1394 EUR=EBS as Europe is far more reliant on foreign oil than the U.S. The dollar added 0.2% on the yen to 161.97 JPY=EBS, regaining some of the ground lost on Friday when Japanese Finance Minister Satsuki Katayama floated an idea to encourage the $1.8 trillion Government Pension Investment Fund (GPIF) and other retirement vehicles to bring some of their money home. "The GPIF currently allocates 50/50 between domestic and offshore and a move back even to the pre-pandemic norm closer to 60/40 would come with a large JPY buying flow," said Taylor Nugent, a senior economist at NAB. "It is worth noting though that while allocations can theoretically be reviewed any time, they tend to be slow moving, and the FY26 investment plan is already in place." The pound eased 0.2% to $1.3383 GBP= ahead of a pivotal week in UK politics as Andy Burnham is expected to be formally anointed as Labour leader on Friday and named as prime minister on July 20. In commodity markets, the rise in yields weighed on non-interest bearing gold, which slipped 1.5% to about $4,060 an ounce XAU=. GOL/ S&P 500 futures ESc1 dipped 0.6%, while Nasdaq futures NQc1 lost 1.3%. In Europe, EUROSTOXX 50 futures STXEc1 fell 0.9%, while DAX futures FDXc1 declined 1.0% and FTSE futures FFIc1 eased 0.3%. Japan's Nikkei .N225 shed 2.2%, having lost 1.7% last week, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS sank 1.8%. Share markets sank in Asia on Monday as fighting intensified in the Gulf and Iran claimed to have closed the vital Strait of Hormuz, sending oil prices surging and rekindling inflation risks globally. The dollar rose with bond yields as investors narrowed the odds of a hike in interest rates from the Federal Reserve, just a day before Chair Kevin Warsh is due to face Congress for the first time in his new role. Inflation figures for June on Tuesday could show some cooling in the headline rate of 4.2% as petrol prices decline, though some of that will reverse now that oil is rising anew. Brent LCOc1 crude climbed 4.3% to reach $79.31 a barrel, up from the recent trough of $70.14, while U.S. crude CLc1 added 4.4% to $74.62 a barrel. O/R U.S. officials said around 20 vessels had been escorted through the strait in the previous 24 hours, though ship tracking sites showed little traffic moving.

Shares skid as Gulf conflict sends oil surging

Chip stocks under pressure

Rates, currencies and commodities

Futures and Asian shares extend retreat

Markets fall as Gulf fighting lifts oil

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