Shares cautious in Asia as earnings loom, oil slips

Asian share markets opened cautiously on Monday as earnings season approached, presenting a challenge to high-tech valuations. The oil market experienced volatility following strikes in the Gulf that affected shipping and airports. President Donald Trump's announcement of an energy ceasefire between Ukraine and Russia, which neither nation confirmed, faced criticism from both Republican and Democratic senators for potential illegality.

Following Trump's proposal for Russia to increase diesel exports, Brent futures LCOc1 opened higher but dropped 1.1% to $103.50 a barrel, falling from a recent peak of $109.97. US crude futures CLc1 declined 1.2% to $90.73 a barrel. South Korean stocks slipped 1.1%, while MSCI's broadest Asia-Pacific index outside Japan remained flat.

On Wall Street, S&P 500 futures edged up 0.2%, and Nasdaq futures rose 0.5%. In Europe, EUROSTOXX 50 futures increased 0.4%, DAX futures rose 0.4%, and FTSE futures climbed 0.3%. Trading activity was light due to Japan markets being closed and the US observing a partial holiday. Analysts anticipated substantial third-quarter earnings growth in the S&P 500, driven primarily by the tech sector, though investors sought higher yields to cover excessive borrowing for artificial intelligence.

The S&P 500 investment-grade credit default swap index surged to its highest level since the Iran war started, indicating investors' doubts about AI revenues sustaining rising borrowing costs. The US inflation report suggested a significant rise in consumer prices, reaching 3.7% annually, while core inflation was expected to remain relatively steady at 2.5%.

Oil prices were trading higher than initially anticipated due to increased shipping costs and product price surges. Market expectations indicated just an 18% probability of a Federal Reserve rate hike this month, but an 85% chance of an increase in December. The euro struggled against the US dollar at $1.1201, and the dollar index approached 17-month highs at 102.25, yet stalled around 158.15 for the yen, as Japanese intervention remained unlikely.

Gold for non-interest-bearing holdings experienced a 0.3% increase, reaching $4,206 an ounce, after a more than 1% gain the previous week.