Asian markets slip, oil jumps as Fed rate hike fears and Gulf tensions return

Asian markets and US futures opened the week on a cautious note, with investors weighing the prospect of higher interest rates against renewed geopolitical tensions in the Middle East. Oil prices surged roughly 3% on Monday after US forces struck Iranian rocket launchers near the Strait of Hormuz, marking the first such military action in a month. The move comes just days after the administration signaled a shift toward economic pressure, raising concerns about a return to open conflict in a region critical to global energy supplies.

Brent crude, the international benchmark, climbed 2.9% to $90.61 per barrel, while US benchmark crude rose 2.7% to $85.66. Market analysts noted that the relative calm in the region had allowed traders to trim the risk premium from crude prices, but Sunday's strike served as a stark reminder that quiet in the Strait of Hormuz does not equate to lasting peace.

Equities in the region were pressured by comments from Federal Reserve Chairman Kevin Warsh on Friday, who reiterated the central bank's commitment to bringing inflation down, even if it means short-term economic pain. His remarks reinforced expectations that the Fed could raise rates soon. Futures for the S&P 500 and the Dow Jones Industrial Average slipped 0.3%.

In Tokyo, the Nikkei 225 fell 0.4%, while South Korea's Kospi declined 0.5%. Hong Kong's Hang Seng lost 0.4%, though the Shanghai Composite managed a modest gain of 0.4%. Australia's S&P/ASX 200 edged down 0.2%, Taiwan's Taiex fell 0.4%, and India's Sensex slipped 0.6%.

Adding to the mixed picture in China, an official survey released Monday showed factory activity remained in contraction for a second straight month in August, though there were slight improvements in new export orders and production. Meanwhile, e-commerce and fast fashion giant Shein is set to begin trading in Hong Kong on Tuesday, in what would be the city's biggest initial public offering this year.

In the bond market, the yield on the two-year Treasury, which closely tracks expectations for Fed moves, jumped to 4.35% from 4.22% just before Warsh's speech at the annual economic symposium in Jackson Hole, Wyoming. Longer-term yields also rose, with the 10-year Treasury yield climbing to 4.72% and the 30-year yield reaching 5.21%. The rise in long-term yields this summer has been driven partly by concerns that inflation will remain persistent.

In currency markets, the US dollar slipped to 159.85 Japanese yen from 160.10 yen, while the euro rose to $1.1588 from $1.1580.