Stocks fell on Friday with bonds as rising oil prices deepened concern about inflation and as investors questioned the longevity of the artificial intelligence trade.MSCI’s Asian share index dropped 1.2 per cent, while US equity-index futures slipped 0.3 per cent on speculation energy costs will stay elevated for longer. European shares were set to drop 1 per cent at the start, while the dollar, the haven of choice since the Middle East war broke out in late February, rose for a fifth day.The inflation concerns weighed on government bonds, with the Treasury two-year yield climbing three basis points to 4.05 per cent and the 10-year yield adding the same amount to 4.51 per cent. Japan’s 10-year yield jumped as much as seven basis points after data showed producer prices in the nation rose at the fastest annual pace since 2023.Brent crude extended gains to more than 1 per cent to trade above $107 per barrel after US president Donald Trump said the US doesn’t need to reopen the Strait of Hormuz. Hours later though, he said country wanted the key waterway open.The loss of momentum in equities came after strong corporate earnings and a resilient US economy drove global stocks to successive record highs in recent weeks on bets that spending on AI will fuel profit growth. The rally has also overshadowed mounting concerns that oil above $100 a barrel will reignite inflation, reducing the scope for interest-rate cuts and potentially reviving the risk of further tightening.“This looks more like a pause, potentially driven by profit taking and rebalancing by investors after a meaningful rally over the course of US earnings season,” said Anna Wu, a cross asset strategist at Van Eck Associates Corp. “We could see a slowdown in Asia tech rally, in the absence of meaningful new headlines.”Elsewhere, the pound dropped for a fifth day after a new challenge to the leadership of UK prime minister Keir Starmer.Meanwhile, first-quarter S&P 500 profits likely grew about 27 per cent from a year ago, marking a sixth straight quarter of double-digit expansion, according to data compiled by Bloomberg Intelligence.“It’s clear that corporate America has become very skilled at adapting to a wide range of economic environments,” according to Clark Bellin at Bellwether Wealth. For investors who missed the opportunity to put new money to work during the war-driven slide in March, he said: “it’s not too late.”“Stocks are still climbing the wall of worry, and we don’t think there is euphoria in markets just yet,” Bellin said. “In fact, there is still plenty of skepticism, which suggests this bull market has more room to run.”Meanwhile, China agreed to buy 200 Boeing planes, Trump said, in a multibillion-dollar deal that would mark the nation’s first purchase of US-made commercial jets in nearly a decade.Nvidia’s major server assembly partner Hon Hai Precision Industry reported a stronger-than-expected increase in quarterly profit, highlighting sustained spending on hardware essential for AI.Gautam Adani and his nephew Sagar agreed to pay a total of $18 million to settle Securities and Exchange Commission allegations they made false and misleading representations about Adani Green Energy. – Bloomberg