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.
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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 as contracts on the S&P 500 lost 0.5% and Nasdaq 100 futures dropped 0.7%, after both underlying indices closed lower on Friday, August 28.
The selloff followed Warsh’s first major address since taking charge of the central bank, delivered at Jackson Hole on Friday. He said inflation had not slowed meaningfully and that policymakers needed clear evidence it was doing so, saying that “the Fed has work to do.”
Warsh added that financial conditions were not currently restrictive and called interest rates the Fed’s “predominant tool” for meeting its mandate, though he stopped short of explicitly backing a September hike.
His comments pushed traders to raise the odds of a rate increase next month to 60%, Bloomberg reported. 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.
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Meanwhile, oil prices climbed after the US military struck Iranian rocket launchers on Sunday August 30, that were reportedly being prepared to lay mines in the Strait of Hormuz. The development marked what was Washington’s first military action against Tehran in more than a month.
As a result, Brent crude rose 1.6% to $89.50 a barrel, while West Texas Intermediate gained 1.5% to $84.63 a barrel.
