(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

July 23 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

There was a familiar playbook in response to Alphabet's

earnings beat and capital expenditure boost overnight - its

stock fell and chip stocks rose.

The hyperscaler posted more than 80% growth in its key cloud

business, beating the Street, but raised its capex estimates yet

again - with AI-linked investments this year now set to top $200

billion.

I'll get into that and more below.

But first, check out my latest column on how the sheer scale of

the U.S. K-shaped economy explains its resilience.

And listen to the latest episode of the Morning Bid daily

podcast, where we discuss Alphabet's soaring AI bill and the

fresh inflation headache facing the ECB.

Subscribe to hear Reuters journalists discuss the biggest news

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MAGNIFICENT CASH BURN

Partly on some disquiet about delays in its latest Gemini AI

model, as well as the rising cash burn, markets shrugged at the

headlines and knocked Alphabet's stock down 3% ahead of today's

bell.

Lapping up the higher spend, however, chip-heavy South Korean

stocks jumped more than 4% on Thursday. But it wasn't all good

news in the chip world either, with Europe's STMicroelectronics

dropping 14% first thing on a slight miss in its earnings.

Stateside, Tesla stock also flubbed and lost 4% on Wednesday

after it reported its first negative free cash flow in over two

years. Intel's earnings are due out later today, a test for the

U.S. chipmaking giant as its shares remain up nearly three times

so far this year, even after tumbling from a record high in late

June.

Wall Street futures were down before the bell on Thursday, while

European shares also edged lower as tech stocks there slipped,

led by chipmaker STMicro after its below-expectations results.

More broadly, oil climbed further toward $98 per barrel

overnight amid the raging conflict in the Gulf and the new

shipping hiatus in the Red Sea, as Yemen's Iran-aligned Houthis

targeted Saudi oil tankers and shipping data showed tankers

changing course.

The resurgent oil prices are pressuring oil and natural gas

futures, as well as interest rate and bond markets in turn.

Short-term U.S. Treasury yields rose to their highest in around

17 months on Thursday.

With the European Central Bank meeting today, the inflation

impact from spiraling natural gas prices as winter storage

starts to get rebuilt will mean the signals are likely to be

hawkish.

Futures markets now price two ECB hikes by year-end and two

Federal Reserve hikes within nine months.

Chart of the day

Brent crude oil surged above $98 a barrel on Thursday for the

first time in six weeks as the raging Iran conflict escalated to

the Red Sea and its shipping, putting the psychological $100

marker in the crosshairs again.

There were few signs of any talks or mediation in the

conflict, with U.S. Secretary of State Marco Rubio saying U.S.

military policy towards Iran would now be a "head for an eye".

The oil price move and rise in long-term crude futures

underscores the wild volatility in energy prices since the Iran

war began almost five months ago, while compounding inflation

worries in interest rate markets and among central banks.

The European Central Bank is due to decide on policy later

today, amid an alarming rise in natural gas prices as the winter

re-stocking season gets underway.

Today's events to watch

* ECB interest rate decision (8:15 a.m. EDT)

* U.S. weekly jobless claims (8:30 a.m. EDT), 10-year TIPS

auction (1 p.m. EDT)

* U.S. corporate earnings: Intel, Blackstone, T-Mobile

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Opinions expressed are those of the author. They do not reflect

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