Asian markets wobble as $90 Brent turns tech earnings into a stress test

Asian stocks opened lower on Monday as Brent crude climbed above $90 a barrel, reviving inflation fears just as investors prepared for a defining week of technology earnings.

MSCI’s Asia-Pacific gauge outside Japan slipped 0.3%, while South Korea’s chip-heavy Kospi fell another 4.2% after losing almost 9% last week. Chinese blue chips bucked the trend with a 1.4% gain.

Japan was closed for a holiday after the Nikkei shed 6.4% last week. US equity futures were steadier, with S&P 500 contracts little changed and Nasdaq futures edging higher.

Hormuz disruption turns oil into the main macro risk

Brent rose about 3% to above $90, while West Texas Intermediate approached $85, after the US began a ninth consecutive night of strikes against Iran and Tehran retaliated across the Gulf.

Shipping through the Strait of Hormuz has slowed sharply, with only four vessels recorded crossing on Sunday, half the previous day’s total.

The market is still pricing disruption rather than a complete loss of Gulf supply.

Even so, AMP strategist Shane Oliver sees a prolonged closure creating a tail risk of oil approaching $150 as prices rise enough to curb demand.

He does not regard that as the base case, but the warning shows how quickly the conflict could become a global inflation shock.

Tech earnings face a less forgiving market

The oil surge has arrived as investors reassess the AI trade.

The Philadelphia Semiconductor Index dropped 10% last week and is now about 20% below its June peak, following a rally that left valuations dependent on exceptional earnings and spending growth.

Moonshot AI’s launch of its open-weight Kimi K3 model has added to concerns that cheaper models could challenge assumptions behind the industry’s capital-intensive buildout.

Attention now turns to Alphabet and Tesla on Wednesday, followed by Intel on Thursday.

Investors will focus on data-centre spending, AI revenue and whether management can justify another leg of infrastructure investment.

Bank of America strategist Savita Subramanian expects earnings to beat consensus by about 5%, with technology profit growth near 28% and semiconductor earnings rising roughly 130%.

Those forecasts offer a bullish case, but recent reactions to strong chip results show that meeting estimates may no longer be enough.

Higher yields raise the hurdle for equities

Softer US consumer and producer inflation last week initially reduced the threat of an immediate Federal Reserve move.

The oil shock has since pushed markets towards a more hawkish view, with futures implying about 29 basis points of tightening by December and a roughly 60% chance of a September increase.

The shift lifted the 30-year Treasury yield above 5%, increasing the appeal of bonds and raising the discount rate applied to future corporate profits.

The European Central Bank is expected to keep its deposit rate at 2.25% on Thursday, though renewed energy inflation may strengthen the case for another increase later this year.

The week’s question is whether strong technology earnings can offset an oil shock lifting inflation, yields and the cost of capital at the same time.