Asian Shares Slide as Rate Hike Bets Keep Yields Elevated

Asian shares declined on Monday as investors digested the latest US Federal Reserve chair Kevin Warsh's emphasis on controlling inflation. The risk of an early rate hike has increased, with markets pricing in a 57% probability of a September increase.

The US dollar surged past 160 yen on August 28 and remains above that level, prompting analysts to argue for a series of hikes to shore up the currency. US Treasury Secretary Scott Bessent said the move was 'pretty well contained', but this has not calmed market nerves.

Brent futures rose 2.7% to $90.51 per barrel after US forces struck Iranian launchers, while US crude prices climbed 2.6% to $85.57 per barrel. Gold lost 0.6% to $4,425 an ounce as yields spiked on August 28.

The market reaction has led Barclays to expect the US Fed to raise rates by 25 basis points in both September and December. The outcome of Friday's US August payrolls report and consumer price data due on September 11 will be key to determining the timing of any rate hikes.