Asian Stocks Fall on Warsh's Rate Hike Expectations, Oil Prices Rise
The US Federal Reserve Chair Kevin Warsh's remarks on Friday at Jackson Hole boosted expectations of a rate hike next month, causing Asian stocks to fall on Monday. MSCI's Asia Pacific equities gauge dropped 0.8%, with technology shares bearing the brunt of a selloff.
South Korea's Kospi Index fell over 3% before paring some losses to trade 1.83% lower during early Asia trade. Japan's Nikkei 225 slid 1.69%, while the broader Topix index shed 0.77%. Hang Seng futures edged down 0.2%.
The declines extended into US futures markets, with contracts on the S&P 500 losing 0.5% and Nasdaq 100 futures dropping 0.7% after both underlying indices closed lower on Friday. Warsh's comments pushed traders to raise the odds of a rate increase next month to 60%, according to Bloomberg.
US semiconductor stocks sold off, and Treasury bonds weakened, with yields on rate-sensitive two-year notes climbing sharply in Friday's session. The Japanese yen stayed close to a one-month low, changing hands around 160.04 per dollar after giving back more than half of its earlier intervention-driven gains.
The offshore yuan was little changed at 6.7296 per dollar. Meanwhile, oil prices climbed after the US military struck Iranian rocket launchers on Sunday, reportedly being prepared to lay mines in the Strait of Hormuz.