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July 20, 2026 - 03:47
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(Bloomberg) — Oil climbed to the highest level in more than a month and bonds fell as US and Iranian attacks escalated, renewing inflation concerns. Stocks stabilized after a technology-led selloff rattled markets last week.Brent rose as much as 3.8% to $91.42 a barrel, the highest level since June, with back-and-forth strikes that have expanded beyond military targets. Treasury 10-year futures slipped 7/32, with trading in the cash market shut during Asian hours Monday because of a holiday in Japan. Government bonds in Australia and New Zealand also declined on concern that higher oil prices will stoke inflation.Equities were mixed. Nasdaq 100 futures rose 0.2% after Friday’s selloff, as Moonshot AI told investors it plans to go public within six months after its latest model challenged perceptions of US leadership in artificial intelligence. MSCI’s Asia Pacific equity index was little changed, while South Korea’s Kospi index fell 2.8% as traders returned following a holiday on Friday.The escalation in the Middle East is unsettling markets already rattled by a selloff in tech stocks as investors question whether the artificial-intelligence spending boom can sustain the sector’s rapid gains. Oil’s advance is also bringing inflation back into focus after recent benign US data had eased expectations that the Federal Reserve would need to raise interest rates.“Asia’s risk backdrop continues to deteriorate,” Wee Khoon Chong, a macro strategist at BNY in Hong Kong, wrote in a note to clients. “The correction in technology shares, firmer US dollar, higher oil prices and persistent geopolitical tensions all argue for a more defensive stance.”Elsewhere, gold extended last week’s slide, falling 0.4% to around $4,000 an ounce. Higher oil prices reinforce expectations that interest rates will stay higher for longer, which makes non-yielding gold less appealing. The dollar was mixed against its major peers.Australia’s 10-year government bond yield rose six basis points to 4.96%.The high-profile Philadelphia Stock Exchange Semiconductor Index fell into a bear market on Friday, jolted by Chinese AI startup Moonshot.The gains in oil came after US reports last week showed consumer prices dropped in June for the first time in six years, and a key gauge of underlying inflation was little changed.Earlier this month in Sintra, Portugal, Fed Chair Kevin Warsh said price risks have come down in recent weeks and repeated his determination to bring inflation back to the US central bank’s 2% target.With Warsh making clear that the central bank’s priority is to pull down inflation, traders will also look to this week’s data for signs of a resilient US economy to cement expectations of a rate hike in September or October.Forward markets see about two hikes by the first quarter of 2027, and the vocal representation of hawkish members underpins this, Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Bank, wrote in a client note.“Potentially compounding the pain in markets is the unwavering hawkish bets on the Warsh Fed,” he said.Corporate Highlights:Taiwan Semiconductor Manufacturing Co. is adding $100 billion to its investments in Arizona to meet strong demand from US customers and to ward off ambitious rivals, a senior executive said this week. Samsung Biologics Co. has agreed to acquire Switzerland’s PolyPeptide Group AG in an all-cash deal that values the contract drugmaker’s equity at about 1.46 billion Swiss francs ($1.8 billion), expanding its manufacturing capabilities. Some of the main moves in markets:StocksS&P 500 futures were little changed as of 10:45 a.m. Tokyo time Nikkei 225 futures (OSE) rose 1.2% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng rose 2% The Shanghai Composite rose 1.3% Euro Stoxx 50 futures were little changed CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1433 The Japanese yen was little changed at 162.36 per dollar The offshore yuan was little changed at 6.7760 per dollar CryptocurrenciesBitcoin rose 0.3% to $64,683.76 Ether rose 0.3% to $1,871.65 BondsThe yield on 10-year Treasuries was little changed at 4.55% Japan’s 10-year yield was unchanged at 2.705% Australia’s 10-year yield advanced six basis points to 4.96% CommoditiesWest Texas Intermediate crude rose 2.4% to $84.47 a barrel Spot gold fell 0.4% to $4,002.09 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Matthew Burgess.©2026 Bloomberg L.P.
