EQUITIES
Asia-Pacific markets were lower on Wednesday, except for the Australian ASX 200 that bucked the overall trend by rising 0.51%.
In Japan, the Nikkei 225 slipped -1.68%. While over in South Korea, the KOSPI slid -0.30%. Mainland Chinese stocks also edged lower, with the Shanghai composite down -1.22% while the Hang Seng index in Hong Kong dipped -1.90%.
The Singapore’s Straits Times index shed -0.18%, and the India’s S&P BSE Sensex index down -0.77%.
Overnight on Wall Street, the Dow Jones Industrial Average fell 308.05 points, or 0.94%, to 32,423.15, the S&P 500 lost 30.07 points, or 0.76%, to 3,910.52 and the Nasdaq Composite dropped 149.85 points, or 1.12%, to 13,227.70.
OIL
Oil prices edged higher, though the gains were capped as lockdowns in Europe and a build in U.S. crude inventories curbed risk appetite and raised oversupply fears.
The Brent crude futures traded to $60.87 per barrel, while the U.S. crude futures at $57.90 per barrel.
Overnight, the Brent closed at $60.79 for Brent while WTI futures ended at $57.76 per barrel, slipped around 6% for both benchmarks.
CURRENCIES
Trades drove into Treasuries and the dollar on concerns over a third COVID-19 wave in Europe, potential U.S. tax hikes and escalating tensions between the West and China, that sapped risk appetite.
The dollar index rose to a 2-week high at 92.40, while approaching a 4-month top of 92.506 hit earlier this month.
The flight to safety received an additional nudge when Treasury Secretary Janet Yellen told lawmakers that future tax hikes will be needed to pay for infrastructure projects and other public investments. Yellen was testifying to the House Financial Services Committee along with Federal Reserve Chair Jerome Powell, who reiterated that an expected near-term spike in inflation will be transitory.
That also helped to tame U.S. Treasury yields, with the benchmark dipping to 1.6048% on Wednesday, continuing its retreat from a 14-months high last week.
GOLD
Safe haven gold rose around 6%, to trade at $1,733.40 an ounce, while added to around $1,731.60 per ounce for gold futures. Previously closed at $1,727.40 and $1,725.10, respectively.
ECONOMIC OUTLOOK
Asian markets were largely lower on Wednesday as investors adopted cautious trading given the overnight losses on Wall Street, amid concerns over U.S. bond yield, weaker oil prices performance, and intensifying COVID-19 cases in Europe.
Safe-haven assets gained as an extended economic lockdown in Germany and U.S. and European sanctions on China curbed risk appetite.
Data from the American Petroleum Institute shows that U.S. crude oil stocks jumped by 2.9 million barrels in the week to March 19, while the gasoline stocks fell by 3.7 million barrels.
Some key events today:
The U.S. Treasury auctions of five- and seven-year debt.
EIA crude oil inventory report.
Fed Chairman Jerome Powell and Treasury Secretary Janet Yellen to testify to the Senate Banking Panel.
To date, number of confirmed worldwide cases for COVID-19 pandemic has surpassed 124.15 million, recording more than 2.73 million fatality globally.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.081 and 109.574.
- Support line of 108.095 and 107.602.
Commentary/ Reason:
The Japanese yen was broadly stronger on increased safe-haven demand for the yen after Japan’s Nikkei Stock Index fell for a fourth day to a its 2-week low.
The yen was last stood at 108.498 per dollar.
The dollar however, found support on the strength of its T-note yields and reduced inflation concerns at the Congressional testimony by the Fed Chair and Treasury Secretary yesterday.
