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September 1, 2026 - 00:06
4 minutes
(Bloomberg) — Stocks in Asia are set to follow Wall Street lower as renewed geopolitical tensions lifted oil prices, reviving inflation concerns and the prospect of further monetary tightening.Equity futures signaled declines in Sydney, Tokyo and Hong Kong, while those for the S&P 500 were steady after the benchmark trimmed its August advance. US crude extended gains in early Asia trading after escalations in the Middle East drove it near $86 on Monday, with rising energy costs lifting Treasury 10-year yields to the highest since January 2025.The US and Iran exchanged strikes for the first time in about a month as American forces hit an island in the Strait of Hormuz and the Islamic Republic responded by launching attacks on the United Arab Emirates and Jordan.The fresh hostilities dashed hopes for a normalization of traffic through Hormuz, with elevated oil prices reinforcing bets on higher rates after Fed Chair Kevin Warsh reiterated a commitment to bring down inflation. While much hinges on employment and inflation figures, money markets see a hike as more likely than not in September.“With traders tracking geopolitical volatility as well as potential seasonal volatility, it will be interesting to see which market impulse from last week might carry over to this week,” said Chris Larkin at E*Trade from Morgan Stanley. “Unexpectedly strong labor-market data might be taken as bad news by the market, since it could reinforce expectations for a rate hike.”The August US payrolls data is expected to be consistent with general steadiness in the labor market that’s helping the Fed focus more intently on its battle with inflation.Friday’s jobs report “will be critical,” though the Sept. 11 consumer-price data will be even more important given Warsh’s view that the US economy is at full employment, said JPMorgan Chase & Co.’s Andrew Tyler. He’s shifted to a “tactically cautious” view on US stocks for the next few weeks, but expects a strong backdrop will persist amid economic data and earnings.In Asia, traders will be closely monitoring the yen as the Japanese currency traded near 160 versus the dollar, raising the risk that authorities enter the market again to slow its decline. While it strengthened slightly on Monday, the yen has still unwound more than half the gains it made during a record bout of intervention that began in late July.Meanwhile, South Korea’s won is seen extending its rally as the nation’s chip firms bring in capital from overseas to expand their production, according to BNP Paribas SA. In the latest regional deal, Nvidia Corp. said it will invest $3.5 billion in Taiwan’s MediaTek Inc.What Bloomberg Strategists say…“Given the stimulative effects of higher rates and yields, we have to see a decent amount of financial distress from borrowers rolling over debts or taking on new loans to make rate increases restrictive. Until we actually get that distress and the subsequent cooling, the outlook is decidedly worse for bond investors than equity investors.”—Edward Harrison, Macro Strategist, Markets Live. For the full analysis, click here.Some of the main moves in markets:StocksHang Seng futures fell 0.4% as of 7:02 a.m. Tokyo time S&P/ASX 200 futures fell 0.2% Nikkei 225 futures fell 0.9% CurrenciesThe Bloomberg Dollar Spot Index fell 0.2% CryptocurrenciesBitcoin was little changed at $78,856.35 Ether was little changed at $2,473.98 BondsThe yield on 10-year Treasuries advanced three basis points to 4.75% CommoditiesSpot gold rose 0.3% to $4,452.04 a barrel West Texas Intermediate crude rose 0.7% to $86.33 a barrel This story was produced with the assistance of Bloomberg Automation.©2026 Bloomberg L.P.
