Shares in Seoul bore the brunt of losses as political tensions weighed on the technology sector. Stocks in Japan, Hong Kong, China and Australia also fell. S&P 500 futures edged lower and the 10-year Treasury yield was little changed above 2%. Turkish assets were in focus after President Recep Tayyip Erdogan’s shock decision to replace the country’s central bank governor fueled concern the regulator will lower borrowing costs more than expected.

Bets on July Fed easing trimmed post-payrolls report, but a reduction is still seen
Next up for traders comes Fed Chair Jerome Powell’s testimony to Congress on Wednesday and Thursday. Despite the trade war and fragile global growth, the latest American labour report delivered signs the economy remains on track. US stocks hit a record last week and a bond rally took yields to multi-year lows amid expectations the Fed will lower interest rates by at least a quarter percentage point at its July meeting, though fed fund futures showed traders trimming the amount of easing they expect.

“The testimony this week will be crucial around how they are seeing the evolution of the US economy,” Anne Anderson, head of fixed income at UBS Asset Management in Sydney, told Bloomberg TV. “It’s a matter of finding the balance between not scaring people that there’s something deleterious going on, but moving ahead of the curve.”

Elsewhere, oil ticked higher as geopolitical risks remained high after Iran threatened to breach the levels of uranium enrichment under the 2015 nuclear accord.