Asian stocks are poised to fall as volatility gripped Wall Street with traders looking for signs of a potential escalation of the Middle East conflict, while weighing Federal Reserve chairman Jerome Powell’s remarks for clues on the policy outlook.

Equity futures for benchmarks in Australia and Japan point to early losses while those for Hong Kong suggest a flat open. After multiple twists and turns, the S&P 500 notched its third straight loss, weighed by disappointing Tesla Inc. earnings. Early Asian trading for US share futures declined while the Golden Dragon index of Chinese companies listed in the US slid over 2% for the second straight session.

Oil extended gains following a report US bases in Iraq and Syria were targeted in drone attacks, while an American destroyer in the Red Sea intercepted cruise missiles and drones fired toward Israel by Houthi rebels in Yemen. Gold surged to a 12-week high.

Treasury 10-year yields approached 5%, while two-year rates fell after Powell said the Federal Reserve will proceed carefully with rate hikes, while citing evidence that policy isn’t “too tight.” Swaps trimmed the implied odds of another Fed rate increase to under 50%, and priced a start to cuts in July, compared with September previously.

“Jay Powell is putting to bed any chance of a Nov. 1 rate hike. As to not let markets get carried away though, he left the door open for more rate hikes,” said Peter Boockvar, author of the Boock Report. “Short rates are falling as they are likely done, but the rise in long rates is proving again that they are losing their grip on that part of the market.”

Fed Bank of Chicago President Austan Goolsbee said he’s hopeful the US is able to avoid a recession despite rapid and steep interest-rate hikes over the past 18 months. He emphasized the need for the Fed to ensure inflation was on track to ease to its 2% goal and for inflation expectations to stay anchored.

Thursday’s economic reports were mixed. Applications for US unemployment benefits dropped to the lowest level since January as the labor market kept powering ahead. Sales of previously owned US homes fell to the lowest level since 2010 as affordability worsened even further.

Traders will soon shift their attention to Japan’s inflation report due later Friday for clues as to when the Bank of Japan may begin exiting its ultra-easy policy stance. The BOJ on Thursday upgraded its economic assessments for the most regions in a sign of growing confidence in the economic recovery, while ex-board member Makoto Sakurai said the central bank could scrap its negative interest rate policy by year-end.

Corporate Highlights

• Netflix Inc. surged after posting its best quarter for subscriber growth in years.
• American Airlines Group Inc. topped expectations for profit even as its forecast for the rest of the year fell short.
• Union Pacific Corp. reported profit that topped analysts’ estimates, which had been adjusted down in the last month, as the railroad leaned on efficiency to make up for lower carloads and higher labor costs.
• AT&T Inc. raised its free cash flow guidance for the full year after posting mobile subscriber gains and profit that beat analysts’ estimates.
• Lam Research Corp.’s revenue fell for a third straight quarter, a sign demand for chipmaking equipment remains sluggish.
• Blackstone Inc., grappling with higher interest rates and stung by a pullback in dealmaking, reported a 12% decline in quarterly profit available to shareholders.
• Las Vegas Sands Corp. authorized its first share buyback program since 2020, signaling management’s confidence in the business after years of pandemic-related hardship.

Key events this week:

• Japan CPI, Friday
• China loan prime rates, Friday
• Philadelphia Fed President Patrick Harker speaks, Friday

Some of the main moves in markets:

Stocks

• S&P 500 futures fell 0.2% as of 7:03 a.m. Tokyo time. The S&P 500 fell 0.9%
• Nasdaq 100 futures fell 0.3%. The Nasdaq 100 fell 0.9%
• Hang Seng futures were little changed
• S&P/ASX 200 futures fell 0.6%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%
• The euro was unchanged at $1.0582
• The Japanese yen was little changed at 149.79 per dollar
• The offshore yuan was unchanged at 7.3365 per dollar
• The Australian dollar was little changed at $0.6328

Cryptocurrencies

• Bitcoin fell 0.3% to $28,642.94
• Ether was little changed at $1,566.09

Bonds

• Australia’s 10-year yield was little changed at 4.79%

Commodities

• West Texas Intermediate crude rose 1.2% to $89.37 a barrel
• Spot gold was unchanged at $1,974.46 an ounce

This story was produced with the assistance of Bloomberg Automation.