Stocks, Gold Drop on Fed Rate-Hike Bets; Oil Gains: Markets Wrap
(Bloomberg) — Global stocks and gold retreated as hawkish comments from Federal Reserve Chair Kevin Warsh fueled bets on an interest-rate hike next month. Oil climbed as Middle East tensions flared.
Wall Street’s retreat following Warsh’s speech at Jackson Hole on Friday carried into Asia, where MSCI’s regional equities gauge fell 0.3%, having dropped as much as 1.1%. Futures pointed to declines in Europe and further weakness in the tech-heavy Nasdaq 100 after the semiconductor selloff late last week
The MSCI All Country World Index — a broad barometer of global stocks — slipped 0.1%, set for a second day of losses.
Gold fell to around $4,430 an ounce as prospects for higher interest rates diminished the appeal of the non-yielding metal. Brent crude climbed 2.9% to $90.61 a barrel after the US military struck Iranian rocket launchers on Sunday, ending weeks of relative calm. Bitcoin declined 0.7% to about $78,000.
Treasuries recouped some of last week’s losses in Monday’s trading, with the two-year yield slipping two basis points to 4.33%. Bloomberg’s dollar gauge eased in the Asian session after the Fed chief’s speech drove its biggest advance in two months on Friday. There will be no trading of cash Treasuries in Europe Monday for a UK holiday.
The negative tone in equities followed Warsh’s comments that inflation isn’t meaningfully slowing, and policymakers have “work to do” if they are not confident that it is. Traders boosted bets on a September rate hike after he spoke, although some market commentators expressed skepticism about such a move.
Higher borrowing costs also risk undercutting this year’s rally in AI shares, where elevated valuations make tech stocks vulnerable to rising yields. Escalating Middle East tensions compounded the pressure as oil climbed, adding to inflation risks.
“Asian markets are opening the final session of the month with a cautious ‘what-comes-next’ mood,” said Hebe Chen, a senior market analyst at Vantage Global Prime. “Kevin Warsh’s hawkish Jackson Hole message has put another Fed hike firmly back on the table, leaving rate-sensitive tech particularly exposed and suggesting the near term could remain more about managing volatility than chasing the next leg higher.”
Traders boosted bets to 62% that the Fed will raise its benchmark rate when it meets next month from about 34% odds before Warsh spoke, according to swaps data compiled by Bloomberg.
Warsh said financial conditions aren’t currently restrictive and described rates as the Fed’s “predominant tool” for achieving its mandate, while stopping short of signaling support for a hike in September.
Warsh has re-established hawkish credibility at Jackson Hole with his unambiguous reference to inflation as the greater risk, Vishnu Varathan, head of macro strategy for Asia Pacific at Mizuho Securities in Singapore, wrote in a note.
“But this is neither a commitment of imminent hikes in September-October, nor an inclination for sustained hiking cycle,” he said.
Bond investors at firms including ABN Amro Investment Solutions and Brandywine Global Investment Management also voiced skepticism about mounting speculation that Warsh is poised to raise interest rates.
Some investors have their doubts after the chairman’s appearances jolted markets over the last few months, even as he’s consistently vowed to tamp down inflation. That has them bracing for the risk he keeps rates steady again, as he did in June and July, adding to Fed credibility worries that have helped drive long-maturity yields to the highest levels in about two decades.
Elsewhere, the yen strengthened 0.1% to 159.87 per dollar on Monday. Traders remain on alert to any stronger rhetoric from Japanese officials after the currency weakened on Friday to a one-month low following the dollar’s surge.
In geopolitical news, the attack by the US was the first military action against Iran in more than a month, as President Donald Trump has switched to a campaign to drive Iran to the negotiating table by squeezing its economy.
Iran’s Islamic Revolutionary Guard Corps launched a missile-and-drone attack on US air bases in Jordan early Monday in retaliation.
“For now, the latest newsflow does little to accelerate diplomatic talks, but traders are not showing any major surprise at the developments and are trading the headlines accordingly,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 2:55 p.m. Tokyo time Nikkei 225 futures (OSE) fell 0.4% Japan’s Topix rose 0.2% Australia’s S&P/ASX 200 fell 0.1% Hong Kong’s Hang Seng fell 0.5% The Shanghai Composite rose 0.3% Euro Stoxx 50 futures fell 0.2% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1588 The Japanese yen rose 0.1% to 159.86 per dollar The offshore yuan rose 0.1% to 6.7217 per dollar Cryptocurrencies
Bitcoin fell 0.8% to $78,000.81 Ether fell 2.2% to $2,436.09 Bonds
The yield on 10-year Treasuries was little changed at 4.71% Japan’s 10-year yield advanced two basis points to 2.940% Australia’s 10-year yield was little changed at 5.10% Commodities
West Texas Intermediate crude rose 2.8% to $85.72 a barrel Spot gold fell 0.4% to $4,436.64 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
©2026 Bloomberg L.P.
