Israel-Hezbollah strikes, Powell Jackson Hole

Asia-Pacific markets were mixed on Monday amid escalating tensions in the Middle East with Israel and Hezbollah trading strikes, while investors assessed dovish comments from U.S. Federal Reserve Chairman Jerome Powell.

Powell on Friday signaled cuts to the Federal Funds rate, though he did not reveal the quantum or the exact timing of the reductions.

“The time has come for policy to adjust,” the central bank leader said at Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”

Over the weekend, Reuters reported Israel’s Air Force struck Hezbollah targets in Lebanon, shortly before the Iran-backed armed group launched over 320 rockets toward Israel.

Hezbollah said this was in retaliation for Israel’s assassination of Fuad Shukr, a senior commander, last month.

However, the group signaled it was not preparing for more strikes, while Israel’s Foreign Minister said the country did not want a full-scale war, Reuters added.

In Asia, investors will assess medium-term lending rates from China’s central bank on Monday, and Singapore’s manufacturing numbers for July.

Japan’s Nikkei 225 fell 0.88%, while the Topix lost 0.87%. The Japanese yen strengthened 0.51% to trade at 143.74, its strongest level since the Aug. 5 Nikkei sell-off.

South Korea’s Kospi was marginally above the flatline, and the small cap Kosdaq inched down 0.38%.

Australia’s S&P/ASX 200 rose 0.67%.

Hong Kong Hang Seng index rose 0.93%, but the mainland Chinese CSI 300 index inched lower.

On Friday in the U.S., all three major indexes rose after Powell’s comments, with the Dow Jones Industrial Average up 1.14%, while the Nasdaq Composite advanced 1.47%. The S&P 500 gained 1.15%.

—CNBC’s Alex Harring, Yun Li and Jeff Cox contributed to this report.