Shares turn cautious ahead of Warsh speech; FX, bonds hold breath

Shares in Asia became cautious on Friday as the technology rally driven by Nvidia cooled, while currency and bond markets eagerly awaited comments from the Federal Reserve's most influential official, Kevin Warsh, on U.S. interest rates. The oil market saw weekly declines as Iran and Oman reached an agreement to manage traffic in the Strait of Hormuz and share revenues, but the U.S. showed little enthusiasm for restoring direct talks with Tehran.

Brent crude slipped 0.1% to $89.63 a barrel, but was expected to fall over 5% for the week. MSCI's Asia-Pacific index outside Japan gained 0.1%, while Japan's Nikkei rose 0.5%. Taiwanese shares jumped 1.2% after Nvidia reported strong earnings and hinted at the potential for a prolonged AI spending boom. South Korea's KOSPI fell 1%, and Hong Kong's Hang Seng declined 0.3%.

Futures for the S&P 500 and Nasdaq were down 0.1%, while the EURO STOXX 50 edged up 0.3%. All eyes were on Warsh, who was to speak about U.S. interest rates at the Jackson Hole Symposium. Three Fed officials had already warned of sticky inflation, but Warsh resisted offering forward guidance on rate decisions. Futures implied a 35% chance of a rate hike at the Fed's September meeting, with expectations fully priced for a move by December.

ANZ analysts expected Warsh to provide little guidance, which could cause market uncertainty. Long-term yields rose after the Fed's July meeting due to Warsh's perceived lack of concrete steps to combat inflation, while the dollar held steady at 99.12 against major peers, up 0.3% for the week. Australia's dollar was the best-performing G10 currency after a strong inflation report prompted a sharp shift in the Reserve Bank of Australia's interest-rate outlook, reaching a three-month high of $0.72.