September 28, 2026 (MLN): Asian markets came under pressure on Monday as rising US interest-rate expectations and higher oil prices weighed on investor sentiment, while markets braced for a week packed with key economic data.
South Korea’s KOSPI fell 2.52%, while China’s Shanghai Composite and Shenzhen Composite declined 1.74% and 3.37%, respectively, according to CNBC market data. India’s Nifty 50 dropped 1.21%, while Taiwan’s benchmark slipped 0.28%.
Hong Kong’s Hang Seng, however, gained 0.64%, while Australia’s ASX 200 rose 0.3%. Japan’s Nikkei was down 0.12%.
Oil prices moved higher as uncertainty over a possible US-Iran truce continued to support energy prices. Brent crude futures rose 2.1% to $106.49 a barrel, while US crude futures gained 1.5% to $93.84.
Data later showed Brent at $106.94 a barrel, up 2.51%, while US crude was trading at $94.06, up 1.79%.
US President Donald Trump had rejected an Iranian proposal to reopen the Strait of Hormuz, while talks between Washington and Tehran were expected to continue this week, according to reports.
The rise in oil prices is adding to inflation concerns, particularly as limited refining capacity has pushed diesel prices sharply higher relative to crude, Reuters said.
Higher energy costs are also coming as major central banks face renewed pressure to keep monetary policy tight. The Reserve Bank of Australia is expected to consider a rate increase at its Tuesday meeting, while markets are pricing further tightening by the US Federal Reserve.
US Treasury yields have climbed sharply, with the 30-year yield reaching 5.5185%, close to its highest level since 2004, according to Reuters. The 30-year yield has risen 27 basis points this month, while two-year yields have climbed 55 basis points as investors price in further Fed tightening.
The stronger US rate outlook has also supported the dollar. The dollar index rose to a two-month high of 101.39, while the euro slipped to $1.1380, Reuters reported.
The dollar was up 0.3% against the Japanese yen at 157.73, while sterling traded near a three-month low at $1.3240.
A separate Reuters analysis by Manishi Raychaudhuri, founder and CEO of Emmer Capital Partners, said the impact of tighter US monetary policy would vary significantly across Asian economies.
Higher US yields can attract global capital toward dollar-denominated assets, potentially triggering outflows from emerging Asian markets and putting pressure on domestic currencies, according to the analysis.
Estimated monthly foreign-equity outflows from Asia reached a record $192 billion through September 25, compared with the previous 2025 peak of $45 billion, based on data from Asian stock exchanges cited by Reuters.
Countries running current-account deficits, including India, Indonesia and the Philippines, have experienced greater currency pressure, while currencies of surplus economies such as China and South Korea have performed relatively better, Reuters reported.
Weaker currencies can also intensify imported inflation by increasing the domestic cost of commodities and other imports.
At the end of August, inflation stood at 4.8% in India, 3.2% in Indonesia and 6.1% in the Philippines, according to figures cited by Reuters.
Higher interest rates are also affecting equity valuations across Asia.
Reuters reported that the average 12-month forward price-to-earnings multiple for the FactSet Asia Market Index fell to 12.5 times in late September from 16.7 times in late October 2025, as the average 10-year Asian yield climbed from 3.4% to 4.2%.
Technology stocks could face greater valuation pressure because their earnings are often weighted toward the future, making them more sensitive to higher discount rates, according to the Reuters analysis.
South Korea and Taiwan, whose equity markets have significant technology exposure through companies including Samsung Electronics, SK Hynix and TSMC, have seen some of the sharpest declines in forward valuations during the latest rise in US yields.
Highly leveraged sectors such as real estate and utilities also face higher refinancing costs, while tighter household borrowing conditions could weigh on consumer discretionary companies.
According to FactSet data cited by Reuters, the Philippines, Thailand and China had net debt-to-equity ratios of 118%, 105% and 86%, respectively, in 2025.
Banks and insurers could benefit from the higher-rate environment, Reuters reported. Banks may see lending rates rise faster than deposit costs, supporting net interest margins, while insurers can invest new premium income in higher-yielding bonds.
Financial stocks account for 47% of Singapore's market, 32% of Hong Kong's, 31% of Malaysia's and 26% of India's, according to FactSet data cited by Reuters.
Markets now face a busy week of US economic data covering inflation, GDP, manufacturing and employment. The September payrolls report, due Friday, is expected to show an increase of 85,000 jobs, while the unemployment rate is forecast to remain at 4.1%, Reuters reported.
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