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August 31, 2026 - 03:58
5 minutes
(Bloomberg) — Asian stocks and bonds fell 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 1.1%, snapping a four-day gain, with technology shares leading declines. The Kospi Index — a barometer for artificial intelligence investments — slid 2.5%, with chipmakers Samsung Electronics Co. and SK Hynix Inc. the biggest contributors. US stock-index futures also retreated.Bloomberg’s gauge of the dollar held near a one-week high after jumping 0.5% on Friday following Warsh’s comments at Jackson Hole. Sovereign bonds fell in Australia and New Zealand, tracking losses in their US peers on Friday after Warsh’s comments. The Treasury two-year note pared some of last week’s losses in Asian trading, with the yield falling two basis points to 4.33%.Elsewhere, Brent crude climbed 2.4% to $90.23 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 negative tone 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 to 60% after he spoke. Higher borrowing costs risk undercutting this year’s equity rally, particularly the AI trade, where elevated valuations make tech shares 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 have piled into bets that a quarter-point Fed rate hike next month is more likely than not, and that the Fed will tighten policy at least once more over the coming year, 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.“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.”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 0.4% and those on the Nasdaq 100 Index retreated 0.5% 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.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.“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.Some of the main moves in markets:StocksS&P 500 futures fell 0.4% as of 10:55 a.m. Tokyo time Nikkei 225 futures (OSE) fell 1.9% Japan’s Topix fell 0.7% Australia’s S&P/ASX 200 was little changed Hong Kong’s Hang Seng fell 1.1% The Shanghai Composite fell 0.4% Euro Stoxx 50 futures fell 0.5% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1592 The Japanese yen rose 0.2% to 159.80 per dollar The offshore yuan was little changed at 6.7248 per dollar CryptocurrenciesBitcoin fell 1.1% to $77,726.07 Ether fell 2.9% to $2,417.29 BondsThe yield on 10-year Treasuries declined one basis point to 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% CommoditiesWest Texas Intermediate crude rose 2.4% to $85.39 a barrel Spot gold fell 0.2% to $4,445.97 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Winnie Hsu.©2026 Bloomberg L.P.
