Nikkei futures NKc1 were down 2% at 63,260, compared with a cash close of 64,011. On Wall Street, S&P 500 futures ESc1 lost 0.5%, while Nasdaq futures NQc1 fell 1.0%.
Treasury futures TYc1 were a shade firmer in early trading, having been sold heavily in recent weeks. Just last week alone, 2-year yields rose a steep 26 basis points over the week, while 10-year yields added 19 basis points as the curve flattened.
Ben Snider, chief U.S. equity strategist at Goldman Sachs, said strong corporate earnings should provide support for Wall Street if borrowing costs rise.
"Equities typically struggle when the Fed starts to hike rates, but we expect the bull market to continue," he added. "The S&P 500 has generated an average three-month return of -2% at the start of seven hiking cycles during the last few decades."
"Yet the S&P 500 has generated an average return of +9% during the 12 months following the first hike."
Markets also imply around a 76% chance the Bank of Japan will lift its cash rate by a quarter point, to 1.25%, when it meets on Friday. The BOJ is also expected to sound hawkish on further tightening as it struggles to prevent a relapse in the yen after market intervention helped to pull it from a 40-year low.
The dollar was holding at 153.77 yen JPY=EBS, having fallen around 4% over the last two weeks and away from a July peak of 163.99. The euro was also little changed at $1.1600 EUR=EBS, having found support at $1.1570 on Friday.
Sterling was flat at $1.3518 GBP=D3 with the Bank of England expected to hold its rates at 3.75% on Thursday, though the decision could again be split.
In commodity markets, gold slipped 0.3% to $4,336 an ounce XAU=, as higher bond yields diminished the lure of the non-interest-paying metal.
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