SynopsisMSCI’s Asia Pacific equities gauge fell 0.8%. Technology shares led declines, with the Kospi Index — a barometer for artificial intelligence investments — dropping over 3%.APAsian 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 0.8%. Technology shares led declines, with the Kospi Index — a barometer for artificial intelligence investments — dropping over 3%.Futures on the S&P 500 Index lost 0.5% and those on the Nasdaq 100 Index retreated 0.7% after the underlying gauges closed lower on Friday and as tensions rose in the Middle East.Global crude benchmark Brent climbed 1.6% to $89.50 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 dollar traded in a narrow range against major peers after posting its biggest gain in about a month on Friday following Warsh’s remarks. The yen held around 160.04 per dollar after hitting its weakest level in a month.The moves showed a cautious start to the week after Warsh vowed to bring inflation back to target in his Jackson Hole speech on Friday, prompting traders to ramp up bets that the Fed could hike as soon as next month. US semiconductor stocks sold off and bonds fell, pushing yields on rate-sensitive two-year Treasuries sharply higher in the last session, as the probability of a rate increase climbed to 60%.“Markets look set for a shaky start to the trading week,” Kyle Rodda, a senior analyst at Capital.com, wrote in a note to clients. “Sentiment won’t be helped at all by geopolitical risk in the Middle East.”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.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.”Traders will also be alert to stronger rhetoric from Japanese officials as the yen hovers around 160 per dollar. The currency weakened to a one-month low 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.”Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless(You can now subscribe to our ETMarkets WhatsApp channel)Read More News on(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .) Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today. Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price...moreless