Asian stocks drop after Warsh lifts rate-hike bets

Asian equities opened Monday on the back foot after Federal Reserve Chair Kevin Warsh's Jackson Hole speech on Friday. Markets read the remarks as hawkish on inflation.

MSCI's Asia Pacific gauge fell as much as 1 percent before paring to about 0.6 percent, according to The Business Times. Technology shares led the losses. South Korea's Kospi dropped 1.6 percent, with Samsung Electronics and SK Hynix among the decliners. Nikkei 225 futures fell 1.7 percent. S&P 500 futures were also lower.

Warsh said the Fed would "have work to do" if policymakers lacked confidence that inflation was heading to 2 percent. He came closer than before to acknowledging that rate hikes may be needed. CME FedWatch odds of a September hike jumped, with reports putting the chance around 57 to 60 percent after the speech, up from the mid-30s beforehand.

Gold held near flat on Monday after falling more than 3 percent in the previous session. Spot gold was around $4,455 an ounce early Monday, per Economic Times citing Reuters. Higher rates make a non-yielding metal less attractive.

Brent crude climbed as Middle East tensions rose after a US strike on Iranian rocket launchers near the Strait of Hormuz.

A Fed chair speech that lifts hike odds moves Asia before Indian markets finish digesting the weekend.

Tech-heavy Asia feels the rate story first. Chipmakers in Seoul are a clear read-through for the AI trade. Gold's Friday hit was the other side of the same repricing.

For Indian investors, the cue is global. A stronger dollar and higher US yields can tighten risk appetite across emerging markets. Oil climbing on Gulf tension adds another price pressure to watch.

Warsh did not lock in a September hike. The market still treated the speech as a turn toward tighter policy.

A run of US labour reports is due this week, including job openings, ADP, claims, and nonfarm payrolls. Those numbers will test whether the September hike odds stick. Asian opens will keep pricing Warsh until then.