Brent Tops $85, Rate-Hike Bets Rise Before US CPI: Markets Wrap
(Bloomberg) — Oil advanced for a second day as the standoff between the US and Iran intensified, reigniting inflation concerns and boosting bets on an interest-rate hike. Asian equities edged higher after a volatile session for semiconductor stocks.
Brent rose as much as 2.8% to $85.64 a barrel after President Donald Trump reinstated the US blockade of Iranian ships transiting the Strait of Hormuz. Trump also demanded a 20% reimbursement on all other cargo shipped through the waterway.
Treasuries and the dollar steadied as traders awaited Tuesday’s US consumer price index data. Money markets priced in about 50% odds of a Fed rate hike in July as Governor Christopher Waller said officials may need to raise rates to tame price pressures.
MSCI’s gauge of Asia Pacific shares edged up 0.2% after volatile trading as South Korea’s Kospi Index swung between gains of as much as 2.5% and losses as steep as 5.3%. Equity-index futures indicated a weak start for European shares, while contracts for the S&P 500 Index were little changed.
The latest wave of attacks between the US and Iran dashed hopes for a near-term normalization of traffic through the Strait of Hormuz. The escalation adds another layer of uncertainty ahead of a pivotal week for markets, with earnings season kicking off alongside US inflation data and Fed Chair Kevin Warsh’s congressional testimony, both seen as key to the outlook for interest rates.
“Surging oil prices and yields are already speaking clearly to a worsening inflation outlook,” said Hebe Chen, senior market analyst at Vantage Global Prime. “That uncertainty helps explain today’s wavering sentiment rather than a full-scale flight from risk, with investors increasingly alert to the deteriorating backdrop, but not yet pricing in the worst-case scenario.”
The flare-up comes as investors are increasingly questioning whether the enormous sums being poured into artificial intelligence will generate commensurate returns.
An AI-fueled stock rout in South Korea on Monday spilled over into the US market, underscoring concerns that the boom has become overextended. The Philadelphia Semiconductor Index slumped 4.8%.
Attention remained on the Asian chip sector, with SK Hynix Inc. shares rising as much as 4.5%, having slumped 9% earlier in the day. South Korea’s Kospi Index also climbed over 1% after earlier hitting the lowest since April.
“Uncertainty around the Middle East continues, but we think the AI wave is what will drive markets over the next few weeks, especially as earnings season kicks off,” said Sonu Varghese at Carson Group.
In other corners of the market, gold rebounded from two days of losses to trade near $4,020 an ounce. Silver climbed 0.5%.
What Bloomberg’s Strategists Say…
“Monday’s sharp slide in US semiconductor shares owed far more to the leveraged unwind in Korean equities than the advance in crude. However, if oil volatility continues to surge, it threatens to disrupt what has otherwise been a remarkably calm cross-asset environment.”
— David Savage, Macro Squawk. Click here for the full analysis.
Elsewhere, the yen rose against the dollar and Japanese government bonds advanced across the curve, after Finance Minister Satsuki Katayama’s comments fueled expectations that the government is stepping up efforts to attract cash to domestic markets.
Meanwhile, Fed’s Waller said on Monday that policymakers may need to raise rates in the near term if underlying inflation continues to signal broad price pressures.
In data due Tuesday, the consumer price index is expected to slow to 3.8% in the year through June, from 4.2% in May, according to a Bloomberg survey of economists. Warsh will also make his first appearance before Congress as Fed chair.
Corporate News:
Shein Global Holdings Ltd. is seeking to list in Hong Kong as soon as in August after securing approval from China’s securities regulator, according to people familiar with the matter. A unit of billionaire Kumar Mangalam Birla’s conglomerate agreed to buy Shell Plc’s renewable energy assets in India for an enterprise value of 172 billion rupees ($1.8 billion) in one of the largest clean energy deals in the country. Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 2:21 p.m. Tokyo time Nikkei 225 futures (OSE) rose 0.7% Japan’s Topix rose 0.8% Australia’s S&P/ASX 200 fell 0.1% Hong Kong’s Hang Seng rose 0.2% The Shanghai Composite rose 0.4% Euro Stoxx 50 futures fell 0.5% Currencies
The Bloomberg Dollar Spot Index fell 0.1% The euro rose 0.1% to $1.1394 The Japanese yen was little changed at 162.28 per dollar The offshore yuan was little changed at 6.7817 per dollar Cryptocurrencies
Bitcoin rose 1% to $62,740.99 Ether rose 1.3% to $1,788.47 Bonds
The yield on 10-year Treasuries was little changed at 4.62% Japan’s 10-year yield declined 5.5 basis points to 2.730% Australia’s 10-year yield advanced four basis points to 4.90% Commodities
West Texas Intermediate crude rose 2% to $79.69 a barrel Spot gold rose 0.5% to $4,022.18 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Elaine Lai.
©2026 Bloomberg L.P.
