Markets shifted towards a hawkish outlook, pricing a one-in-three chance of a Federal Reseve hike next week and a September move. (EPA Images pic)SYDNEY: Asian shares fell on Friday as oil prices stormed back above US$100 a barrel amid an intensifying conflict in the Gulf, rattling bond markets and reviving fears of a fresh inflation shock.Brent crude held at US$100.85 a barrel, after surging 7% overnight to a two-month high of US$102 as attacks by Iran-aligned Houthis on Saudi tankers in the Red Sea choked off a second crucial Middle East artery for global oil supplies, alongside Iran's near-closure of the Strait of Hormuz.Two weeks since the effective collapse of an interim truce meant to end the war, the US military launched air strikes on Iran into Friday morning while Tehran fired at neighbouring Arab countries that host US bases. With the conflict showing little signs of abating, Brent has soared nearly 40% this month alone."Two of the world’s busiest shipping corridors are under threat in the same month, and markets are only just beginning to work out what that means," said Nigel Green, CEO of deVere Group, a financial advisory firm."With that ceasefire now collapsed and oil back above US$100, the drop which gave the Fed room to relax may already be reversing ...
This looks less like a short-lived spike and more like a genuine reopening of the inflation question."News that the US administration will impose higher tariffs on goods from 60 trading partners also did not help the inflation picture, with 30-year Treasury yields nearing their highest levels since 2007 and benchmark European borrowing costs climbing to highs last seen in 2011.Markets bet central banks will have to turn more hawkish, with a one-in-three chance of a rate hike from the Federal Reserve as soon as next week - a sea change from merely a week ago - while a move in September is more than fully priced in.The European Central Bank left rates unchanged overnight but a September rate hike is about 70% priced in.In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1% and Japan’s Nikkei slid 2.9%. South Korea's KOSPI dropped 3.7%.Nasdaq futures NQc1 were last up 0.1% as bumper results from Intel offered only fleeting support in the face of broader worries about oil and rates.Wall Street fell overnight after Alphabet and Tesla, the first two of the so-called "Magnifice…
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