Markets enter Tuesday in a cautious risk-off posture as two converging shocks dominate sentiment: a stronger-than-expected US August nonfarm payrolls print of 162,000 — well above the ~56,000 consensus — has lifted Fed rate-hike probabilities for the September 16 meeting to 60–65%, while fresh Houthi attacks on Saudi energy infrastructure wounded 73 people and halted operations, pushing Brent crude toward $99 per barrel, its highest level since late July. The ECB is simultaneously poised to deliver a 25 basis point hike to 2.5% on September 10, with eurozone inflation running at 3.3%, and the Bank of Japan's policy normalisation is weighing on USD/JPY, which has fallen sharply to 155.66, reflecting multi-month yen strength. US markets were closed Monday for Labor Day, meaning Tuesday's open is the first opportunity for Wall Street to price the full confluence of the oil surge, the jobs beat, and escalating Middle East risk. VIX ticked up 1.47% to 14.53, signalling a modest but meaningful uptick in hedging demand heading into the week.
For Asia-Pacific markets, the oil shock is the most immediate transmission mechanism: energy import costs rise for Japan, South Korea, and parts of Southeast Asia, amplifying already-elevated inflation pressures and complicating central bank messaging. The Nikkei closed Friday's session up 1.26%, but Tuesday's Asian session has seen the index give back those gains — down around 1.7% — as yen strength near multi-month highs crushes exporters, with Toyota off 4.1% and Panasonic down 5.8%. The Hang Seng softened 0.3–0.6% while Shanghai edged slightly positive; the ASX 200, which closed Friday at 9,005.9 (down 0.16%), faces a soft open given US futures pointing lower by 0.4–0.9%, elevated oil prices creating inflation anxiety, and a global rates backdrop that is unambiguously tightening. The ASX VIX at 10.6 remains subdued relative to global peers, but commodity-exposed names will be in sharp focus given the divergent signals across oil, copper, iron ore, and gold.