Wall Street retreated sharply on Thursday 20 August as a combination of rising Treasury yields, higher oil prices, and a soft guidance print from Walmart weighed on risk sentiment across all major US indices, with the S&P 500 falling 0.87% to 7,641.16 and the Dow shedding 703 points. The Fed remains on hold near 3.63% ahead of the 16 September FOMC meeting, though markets are pricing a non-trivial chance of a hike, while the ECB and BoE are similarly in a holding pattern before their respective September meetings — a backdrop of entrenched 'higher for longer' policy across major economies. Geopolitical pressures remain elevated, with Iran-linked energy supply risks, extended US-China tariffs running to November 2026, and a Canada trade deadline that passed on 19 August adding layers of uncertainty to an already fragile macro environment. The VIX jumped 7.52% to 16.01, signalling that options markets are beginning to reprice near-term volatility even as absolute levels remain contained.
Despite the US selloff, Asia-Pacific markets found support overnight from earlier crypto strength, a US Treasury plan to increase purchases of long-dated securities to cap yields, and residual momentum in tech-adjacent names, with the Nikkei 225 rising 1.36% to 66,216.79 and the KOSPI surging 5.89% to 6,852.58. The ASX 200 closed Thursday's session up 0.33% at 9,083.8 ahead of the US weakness, meaning Australian investors open Friday with a modest overnight headwind from Wall Street to digest. Brent crude pushing toward $93.78 and WTI at $87.83 — both up over 2.3% — will be a net positive for ASX energy names, while the stronger EUR and GBP against the USD and a firmer gold price at $4,516.30/oz provide support for gold miners. Flash PMI readings out of France, Germany, and the UK this morning will set the tone for European risk appetite and may ripple through into late ASX session trading.