Asian Stocks Drop on Fed Rate-Hike Bets, Oil Gains: Markets Wrap
(Bloomberg) — Asian stocks fell with US equity-index futures after hawkish comments from Chair Kevin Warsh boosted bets on a Federal Reserve interest-rate hike next month. Oil rose as Middle East tensions flared.
MSCI’s Asia Pacific equities gauge dropped 0.8%, snapping a four-day advance, with technology shares leading losses. The Kospi Index — a barometer for artificial intelligence investments — slid 1.6%, with chipmakers Samsung Electronics Co. and SK Hynix Inc. the biggest drags. Nasdaq 100 futures fell 0.5%.
Treasuries recouped some of last week’s decline in Asian trading, with the yield on the two-year note slipping two basis points to 4.32%. Bloomberg’s dollar gauge also eased after the Fed chief’s Jackson Hole speech spurred its biggest advance in two months on Friday.
Gold extended its losses to trade around $4,425 an ounce on concern that higher interest rates will diminish the appeal of the non-yielding metal. Brent crude climbed 2.4% to $90.20 a barrel after the US military on Sunday struck Iranian rocket launchers, ending weeks of relative calm.
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 65% 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. Markets are also pricing in at least one more hike over the coming year.
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.
Even so, bond investors at firms including ABN AMRO Investment Solutions and Brandywine Global Investment Management are voicing 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 hovered around 160 per dollar after hitting its weakest level in a month. Traders will be alert to stronger rhetoric from Japanese officials after the currency weakened on Friday after the dollar surged, erasing more than half of its intervention-fueled gains.
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 news flow 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.
Corporate News:
HDFC Bank Ltd.’s search for a new chief executive after Sashidhar Jagdishan’s surprise decision to step aside will test whether India’s largest private-sector lender can restore investor confidence. BYD Co.’s overseas revenue exceeded what it made at home for the first time, helping end one of the company’s longest profit slumps. The company’s shares fell 5.9% in Hong Kong. Meituan’s shares rose as much as 3.6% in Hong Kong after strong a revenue beat led some brokers to raise price targets, citing the company’s resilience in its core food delivery business. Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.4% as of 12:54 p.m. Tokyo time Japan’s Topix fell 0.2% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 0.7% The Shanghai Composite fell 0.2% Euro Stoxx 50 futures fell 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1590 The Japanese yen rose 0.2% to 159.81 per dollar The offshore yuan rose 0.1% to 6.7220 per dollar Cryptocurrencies
Bitcoin fell 1% to $77,792.12 Ether fell 2.8% to $2,422.25 Bonds
The yield on 10-year Treasuries declined one basis point to 4.71% Japan’s 10-year yield advanced 2.5 basis points to 2.945% Australia’s 10-year yield was little changed at 5.09% Commodities
West Texas Intermediate crude rose 2% to $85.07 a barrel Spot gold fell 0.7% to $4,424.97 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Winnie Hsu.
©2026 Bloomberg L.P.
