Asian shares rise, Treasuries steady before US Fed chair’s policy speech; Kospi down 1.3%

ASIAN shares posted a modest gain, while US stock futures slipped, as traders avoided big bets before US Federal Reserve chair Kevin Warsh’s Jackson Hole speech for clues on the path of interest rates. US Treasuries held their losses.

MSCI’s Asia Pacific equities gauge added 0.3 per cent, with winners and losers almost evenly split. The Kospi Index – a barometer for artificial intelligence investments – fell 1.3 per cent.

Futures for Wall Street gauges edged lower as initial enthusiasm over the AI trade following Nvidia’s bullish outlook waned. Nasdaq 100 contracts slipped 0.2 per cent, with Marvell Technology weighing on sentiment after falling more than 7 per cent in extended trading following its earnings report. European shares, however, were set to advance.

Treasuries held Thursday’s losses, when yields rose two to three basis points across the curve amid concerns about US inflation and the US fiscal outlook. Warsh is due to speak at the Fed’s annual gathering in Jackson Hole, Wyoming, with some investors expecting a hawkish tone. The yield on the rate-sensitive two-year note held at 4.23 per cent. The US dollar was little changed.

The modest moves across assets showed traders were reluctant to add to positions before Warsh’s speech, which may determine whether the recent rise in bond yields has further to run.

Investors will look for clues on how the Fed will balance persistent inflation against a cooling economy, with any lack of clarity likely to fuel volatility in longer-dated Treasuries and stocks already grappling with concerns over massive AI spending.

“If he does not give any framework guidance, the risk is that it will involve a much higher move in long rates,” Torsten Slok, chief economist at Apollo Global Management, said in an interview with Bloomberg Television.

Traders also assessed fresh clues on the Fed’s policy path, including a drop in US jobless claims and rising wholesale inventories, while the merchandise trade deficit widened in July to the largest since early 2025.

Kansas City Fed president Jeff Schmid said monetary policy is not restraining the economy. Fed policymakers left the federal funds rate unchanged at 3.5 per cent to 3.75 per cent at their latest meeting, while futures are pricing in a quarter-point increase by end-2026.

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“Warsh’s speech at Jackson Hole is an opportunity to contain the continued sell-off in long-end Treasuries,” wrote Dhiraj Narula, US rates strategist at HSBC.

“Clarity on the Fed’s inflation reaction function could help compress the uncertainty-related term premium.”

A clear policy signal will likely be scarce given Warsh’s reluctance to provide forward guidance, said Elias Haddad at Brown Brothers Harriman & Co.

Instead, Warsh may preview the Fed’s five task forces’ early findings on communications, the balance sheet, economic data, productivity and jobs, and the inflation framework, he said.

In Asia, the yen hovered around 159.40 per US dollar after Tokyo’s key inflation gauge accelerated for a third month. Data is due on Friday from the Finance Ministry on how much the nation spent on currency intervention over July.

A sale of Japan’s two-year government bond auction on Friday saw weaker demand amid growing speculation of central bank tightening.

In other corners of the market, gold edged lower to trade around US$4,580 an ounce, while Bitcoin slipped to just under US$80,000.

Brent fell 0.5 per cent to about US$89.25 a barrel even as diplomatic efforts towards an agreement over the Strait of Hormuz hit fresh hurdles.

Separately, Venezuela was closely examining plans to leave Opec, according to people familiar with the matter.

On Thursday, US technology stocks rallied on Nvidia’s outlook, lifting the major indices even as every other sector in the US market declined.

While questions over the sustainability of AI spending may continue to fuel bouts of volatility in tech, accelerating investment in the sector may also add to inflation and upward pressure on bond yields.

“The tailwinds from Nvidia’s results may thus quickly fizzle over the course of the trading day as investors prepare for the impact from the speech by Fed chair Warsh,” said Frederic Neumann, chief Asia economist at HSBC. BLOOMBERG