Asian share markets slipped on Monday as Brent crude futures rose above $90 a barrel and U.S. Treasury yields remained elevated, keeping pressure on risk assets. The MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%, while Japan’s Nikkei dropped 2.1% and South Korea’s Kospi declined 2.4%. European equity futures also pointed lower, with EUROSTOXX 50 and DAX contracts down 0.5% and 0.4%, respectively.
Oil prices extended gains after U.S. forces struck two Iranian launchers on Larak Island in the Persian Gulf on Sunday. Brent crude futures climbed 2.04% to $90.08 a barrel, while U.S. West Texas Intermediate rose 2.04% to $85.10. The increases followed a 1.4% gain in Brent and 1.3% rise in WTI on Friday, pushing both benchmarks further into a multi-week uptrend. Gold prices, meanwhile, were little changed near $4,500.54 an ounce after a 3.2% drop on Friday.
U.S. Treasury yields remained a headwind for equities. The two-year note yield held at 4.36%, unchanged after a near 12-basis-point jump on Friday, while the 30-year bond yield was at 5.2080%. The yen hovered around 160.00 per dollar, steady after sliding past that level on Friday but well below July’s peak of 163.99. The euro traded at $1.1591, little changed after a 0.6% decline on Friday.
Market expectations for a September Federal Reserve rate hike edged higher, with traders pricing a 57% probability of an increase, according to rate futures. Fed Chair Kevin Warsh emphasized on Friday that the central bank still had work to do to control inflation, reinforcing expectations for a prolonged period of restrictive policy. JPMorgan’s chief U.S. economist, Michael Feroli, noted that while a hike may not come until December, the September meeting remains a possibility. He added that Warsh’s remarks suggested a willingness to act more aggressively on inflation concerns.
U.S. Treasury Secretary Scott Bessent described the yen’s recent depreciation as "pretty well contained," indicating it had not yet reached levels that would trigger joint intervention by Japan and the U.S. The yen’s slide past 160 per dollar has drawn attention from policymakers, though intervention remains a last-resort tool absent signs of disorderly market conditions.
Investors are also focused on key economic data this week, including the August payrolls report and European inflation figures. Analysts expect U.S. nonfarm payrolls to rebound by 58,000 jobs after a surprise 23,000 decline in July, while the unemployment rate is forecast to hold at 4.1%. The European Central Bank is scheduled to meet on September 10, with consumer price data due the following day.
