Asian Stocks Drop on Hawkish Warsh Tone, Oil Gains: Markets Wrap
(Bloomberg) — Asian stocks dropped and the dollar held its gains after hawkish comments from Federal Reserve Chair Kevin Warsh strengthened bets on an interest-rate hike next month. Oil climbed as Middle East tensions intensified.
MSCI’s Asia Pacific equities gauge fell as much as 1% before paring its decline to 0.6%, with technology shares leading losses. The Kospi Index — a barometer for artificial intelligence investments — dropped 1.6%, with chipmakers Samsung Electronics Co. and SK Hynix Inc. among the decliners. US stock-index futures also retreated.
The dollar traded in a narrow range against major peers after posting its biggest gain in about a month on Friday following Warsh’s remarks.
Elsewhere, Brent crude climbed 1.4% to $89.30 a barrel after the US military on Sunday struck Iranian rocket launchers that were preparing to send mines into the Strait of Hormuz, ending weeks of relative calm.
The moves showed a cautious start to the week after Warsh vowed in his Jackson Hole speech on Friday to bring inflation back to target, prompting traders to lift the probability of a September rate hike to 60%. Adding to the pressure, escalating Middle East tensions drove oil higher, raising the risk of another bout of price pressures.
“Asian market will be in a defensive mode to start the week today,” said Nick Twidale, chief market analyst at AT Global Markets. “The combination of a sharp escalation in Fed rate hike expectations after Kevin Warsh’s speech on Friday and renewed US strikes in the Strait of Hormuz will have investors on full alert.”
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.
In other corners of the market, gold steadied around $4,460 an ounce after last week’s selloff. Higher interest rates tend to diminish the appeal of the non-yielding metal.
Futures on the S&P 500 Index lost 0.2% and those on the Nasdaq 100 Index retreated 0.3% after the underlying gauges closed lower on Friday and as tensions rose in the Middle East.
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.
The recent intervention has “curbed yen depreciation pressures to some degree, signaling that a move well above 160 is unlikely to be tolerated,” Barclays strategists including Lemon Zhang wrote in a note to clients. “However, fundamental factors continue to weigh on the JPY, including a still-wide US-Japan yield differential, fiscal pressures and continuing Japanese investors’ purchases of overseas assets.”
Meanwhile, traders have piled into bets that a quarter-point rate hike next month is more likely than not, and will tighten policy at least once more over the coming year, according to swaps data compiled by Bloomberg.
In his first major speech since taking the helm of the central bank, Warsh warned inflation isn’t meaningfully slowing and said policymakers must be confident it is, otherwise the Fed has “work to do”.
He 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.
“The market took a hawkish message away from Fed Chair Warsh at his Jackson Hole speech,” Marc Chandler, chief market strategist at Bannockburn Capital Markets, wrote in a note. “Even if the market has overreacted to Warsh’s comments, the upside dollar correction has only just begun.”
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.3% as of 9:45 a.m. Tokyo time Hang Seng futures fell 0.2% Nikkei 225 futures (OSE) fell 1.7% Japan’s Topix fell 0.7% Australia’s S&P/ASX 200 was little changed Euro Stoxx 50 futures fell 0.4% Currencies
The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1591 The Japanese yen was little changed at 160.04 per dollar The offshore yuan was little changed at 6.7287 per dollar The Australian dollar was little changed at $0.7162 Cryptocurrencies
Bitcoin fell 0.8% to $77,998.37 Ether fell 2.4% to $2,431.63 Bonds
The yield on 10-year Treasuries was little changed at 4.71% Japan’s 10-year yield advanced 1.5 basis points to 2.935% Australia’s 10-year yield was little changed at 5.10% Commodities
West Texas Intermediate crude rose 1.1% to $84.33 a barrel Spot gold rose 0.2% to $4,464.33 an ounce This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matthew Burgess.
©2026 Bloomberg L.P.
