The dominant macro driver overnight is the intersection of geopolitical energy risk and Fed policy repricing: US strikes on Iranian oil tankers — destroying one — prompted Iran to announce a restricted zone outside the Strait of Hormuz, pushing Brent crude to $96.28/bbl and WTI to $91.48/bbl in market data. Simultaneously, strong US nonfarm payrolls data released Friday narrowed odds of near-term Fed rate cuts and boosted hike expectations ahead of the September 16 FOMC meeting, keeping US 10-year Treasury yields at 4.77% — levels not seen since late 2023 — while the 2-year yield sits at 4.34%, reflecting a market pricing a higher-for-longer rate path with meaningful risk of an additional hike. VIX ticked up 5.30% to 15.3, signalling that US equity markets are beginning to price incremental uncertainty even as broader indices retreated modestly, with the S&P 500 down 0.38% to 7,718.6 and the DJIA off 0.51% to 53,414.25.
For Asia-Pacific investors, the cross-asset pressure is concentrated in three places. First, JPY at 154.36 — strengthening 1.18% against the USD — reflects growing market conviction of a BoJ rate hike at the September 17–18 meeting, with markets pricing approximately 75% probability of a 25bp move to 1.25%; this yen strength is a direct headwind for Japanese exporters even as the Nikkei 225 gained 1.26% to 65,020.94, driven by tech and semiconductor names. Second, CNY at 6.7103 is broadly stable, but China's Ministry of Finance capital injection of approximately $54B (300 billion yuan) into state-owned banks and insurers is the key domestic liquidity signal, reflected in the HKEX surging 1.74% to 25,650.87. Third, elevated oil prices are a stagflationary input cost risk for energy-import-dependent economies across the region, particularly for South Korea and Japan, even as KOSPI surged 1.64% to 6,687.21 and TWSE gained 1.51% to 46,551.13 on AI and semiconductor momentum.