Turmoil in the Gulf Raises Inflation Concerns and AI Sector Volatility

Share markets in Asia dropped significantly due to intensified Gulf conflicts causing oil prices to soar and rekindling global inflation fears. The dollar surged with bond yields as interest rate hike expectations increased. Investors remain focused on earnings, particularly in the AI sector, amidst these turbulent conditions.

Share markets across Asia experienced notable declines on Monday, driven by escalating tensions in the Gulf region. Iran's claim of closing the strategic Strait of Hormuz sent oil prices soaring, thus reigniting inflationary concerns worldwide.

As a result, the dollar appreciated alongside rising bond yields as investors began to anticipate an interest rate hike by the Federal Reserve. This speculation intensified as Kevin Warsh prepared to address Congress for the first time in his new role as Chair. Inflation data expected on Tuesday may indicate some easing due to lower petrol prices, though recent spikes may reverse this trend.

Meanwhile, equity investors are closely monitoring the upcoming earnings season, with high expectations for profits driven by AI advancements. Major banks will lead the announcements from Tuesday, with companies like Netflix and General Electric also set to report. Despite potential AI sector volatility, analysts maintain a positive outlook on global IT and the U.S. markets.