Morning Note: A Round-up of Global Financial Market News.

Market News

Brent crude climbed above $90 a barrel, extending last week’s gains as escalating hostilities between the US and Iran raised fears of further disruptions to oil flows from the Middle East. Iran declared that its ceasefire with the US had effectively collapsed and said over the weekend that it intercepted four vessels transiting the Strait of Hormuz. Meanwhile, the US military reported the death of a third US service member in the past two days amid ongoing exchanges of attacks with Tehran.

Oil prices have now surged about 30% from their July lows, raising the risk that central banks may tighten monetary policy to contain inflation. Meanwhile, Cleveland Fed President Beth Hammack joined a growing number of Fed officials warning about persistent inflation. Markets are now pricing in about a 53% chance of a rate hike in September. The yield on the US 10-year Treasury is 4.57%, while gold is holding above $4,000 an ounce.

The semiconductor sell-off that began last week continued this morning with chip stocks entering bear-market territory after falling 20% from their record high. In Asia, the Korean Kospi fell 4.5%, while Japan was closed for a holiday. US equities are currently expected to open slightly higher this afternoon.

The FTSE 100 is currently 0.6% lower at 10,537, with gains in the oil sector helping to reduce losses elsewhere. UK property company SEGRO has rejected a third offer from US peer Prologis. The 993p a share proposal represents a 9.7% premium to SEGRO’s 30 June NAV and a 33% premium to the closing price prior to the commencement of the offer period, which values SEGRO at £13.5bn.

Andy Burnham will become the UK’s prime minister today. He will face immediate pressure to ease the cost of living for UK households but has refused to say who he will appoint to key cabinet positions including Chancellor of the Exchequer. Sterling trades at $1.3460 and €1.1770, while the 10-year Gilt yields 4.98%.

The corporate earnings season continues this week, with announcements scheduled from Google owner Alphabet, American Express, Tesla, EQT, Compass Group, Newmont Mining, Relx, and Anglo American.

Source: Bloomberg