MORGANABLE MARKETS WATCH
Asian markets came under heavy pressure on Monday, September 28, as rising US Treasury yields and higher oil prices pushed investors away from riskier assets.
Akure —
Asian markets came under heavy pressure on Monday, September 28, as rising US Treasury yields and higher oil prices pushed investors away from riskier assets.
The sell-off followed renewed uncertainty around the Strait of Hormuz and growing expectations that the US Federal Reserve may keep raising interest rates to contain inflation.
South Korea recorded some of the sharpest losses. The Kospi fell more than 2% after markets reopened following the Chuseok holiday.
Semiconductor companies led the decline as investors reacted to higher bond yields and weaker risk appetite. China also faced broad selling pressure.
The Shanghai Composite dropped about 1.7%, while the Shenzhen Composite fell more than 3%.
India’s Nifty 50 also declined, while Taiwan’s benchmark slipped. Japan, however, was more resilient, with the Nikkei and Topix trading higher during the session.
The mixed performance showed that investors were not abandoning Asian equities equally. Instead, markets with greater exposure to technology and global financing conditions faced stronger pressure.
Oil prices became a major source of concern. Brent crude climbed above $105 a barrel, while US West Texas Intermediate crude moved above $93.
The latest rise followed renewed doubts about a possible agreement between the United States and Iran over the Strait of Hormuz.
US President Donald Trump rejected an Iranian proposal linked to reopening the strategic waterway, although he said talks could continue.
The Strait of Hormuz is important to global energy markets because large volumes of oil and other energy products move through the waterway.
Continued disruption could therefore keep crude prices elevated. On Monday, Brent was up about 1.6% at around $106 a barrel, while the contract had gained roughly 17% during September.
Higher oil prices are creating a difficult backdrop for central banks. More expensive energy can raise transportation, manufacturing and household costs.
If those increases spread into wider prices and wages, inflation could remain high for longer. That possibility is encouraging investors to prepare for tighter monetary policy.
US Treasury yields added another layer of pressure. The 10-year Treasury yield moved above 5.1%, while the 30-year yield had recently climbed above 5.5%.
These levels have made US government debt more attractive relative to some Asian assets. They have also increased the cost of borrowing across global markets.
Investors are now pricing a greater chance of another Federal Reserve rate increase. Market pricing indicated roughly a two-thirds probability of a hike at the Fed’s October meeting.
Traders are also watching upcoming US economic data closely because fresh figures could change expectations for inflation and interest rates.
The week’s calendar includes several important releases. Investors are watching labour-market data, inflation indicators and other economic figures for evidence about the strength of the US economy.
Strong data could reinforce expectations for additional rate increases. Conversely, weaker numbers could reduce pressure on the Federal Reserve and provide some relief for global markets.
The combination of higher oil prices and rising US yields is particularly challenging for Asian currencies. A stronger return on US assets can encourage international investors to move money toward the dollar.
At the same time, expensive oil can worsen trade balances for economies that rely heavily on imported energy.
The US dollar remained close to a two-month high as investors weighed higher energy costs and the possibility of tighter US monetary policy.
Technology stocks were especially vulnerable. Higher interest rates tend to reduce the present value investors assign to future corporate earnings.
That effect can be significant for growth companies, including semiconductor firms, whose valuations often depend on expectations for strong future expansion.
South Korea’s major chipmakers faced selling pressure for that reason. Foreign investors reduced exposure to Korean equities as higher yields changed the risk-reward balance.
The decline came despite continued interest in artificial intelligence and semiconductor investment, showing that strong industry themes can still face pressure when financial conditions tighten.
China’s market weakness also reflected broader concerns about global growth and financial conditions.
Chinese shares have faced additional pressure this month, while investors continue to monitor domestic economic activity and relations with major trading partners.
Meanwhile, gold also came under pressure. Spot gold fell sharply as rising real yields reduced the appeal of an asset that does not provide regular interest income.
Higher oil prices added to inflation concerns, while stronger expectations for US rate increases further weighed on precious metals.
Markets are also watching developments in other Asian economies. The Reserve Bank of Australia is expected to remain under pressure as energy costs rise and inflation risks persist.
Higher global yields are already affecting bond markets across the region, including Japan, South Korea, Indonesia and the Philippines.
For investors, the focus is likely to remain on oil, Treasury yields and incoming US economic data.
Any sign of easing tensions around the Strait of Hormuz could reduce energy prices and relieve some pressure on markets.
However, a prolonged disruption could keep inflation concerns elevated and strengthen expectations for tighter monetary policy.
Asian markets therefore begin the week facing several connected risks. Higher crude prices threaten to lift inflation, while higher US yields increase borrowing costs and strengthen the dollar.
Together, those forces can reduce appetite for equities and pressure emerging-market currencies.
Still, Monday decline does not mean every Asian market will follow the same path. Local economic conditions and sector exposure will continue to shape performance.
For now, markets remain sensitive to developments in energy supplies and US monetary policy.
As the week progresses, economic data and diplomatic developments will help determine whether Monday’s sell-off deepens or whether investors regain confidence.
