EQUITIES

Shares in the Asia-Pacific were higher on Wednesday as investors reacted to China trade data, and the Bank of Korea and Reserve Bank of New Zealand hike rates.

Chinese trade data released Wednesday showed a 13.2% increase in yuan-denominated exports for the first half of 2022, while imports rose 4.8%. The Bank of Korea and Reserve Bank of New Zealand both increase rates by 50 basis points.

Hong Kong’s Hang Seng index rose 0.25%, and the mainland Shanghai Composite gained 0.15%. Taiwan’s benchmark Taiex jumped more than 3% in morning trade after the finance ministry said it would use its stock stabilization fund to intervene in the market, according to Reuters. The index was last up 2.76%.

The S&P/ASX 200 in Australia was about flat, and Japan's Nikkei 225 was up 0.37% after losing nearly 2% the previous day. In South Korea, the KOSPI advanced 0.42%.

Thailand’s stock exchange is closed for a holiday.

Overnight on Wall Street, major U.S. indexes seesawed during the trading day before closing lower. The Dow Jones Industrial Average fell 0.62%, to 30,981.33, the S&P 500 slid 0.92%, to 3,818.8 and the Nasdaq Composite dipped 0.95%, to 11,264.73.

OIL

Oil prices paused their overnight declines to edge slightly higher on Wednesday, still pressured by the strong dollar, demand-sapping COVID-19 curbs in top crude importer China, and fears of a global economic slowdown. Traders looked towards U.S. inflation data later today that could weaken the market.

Brent crude futures were up 28 cents, at $99.50 a barrel while the U.S. WTI crude gained 13 cents, to $95.77.

Both benchmarks settled more than 7% lower in the previous session, with Brent fell through $100 a barrel for the first time since April.

U.S. crude stocks rose by about 4.8 million barrels for the week ended July 8. Gasoline inventories rose by 3 million barrels, while distillate stocks rose by about 3.3 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.

In a monthly report issued on Tuesday, OPEC expected that global oil demand to rise in 2023 and that the market would remain tight. It estimated that an additional 900,000 bpd of oil would be needed from its members in 2023 from 2022 to balance the market.

Market is also closely watching U.S. President Joe Biden's visit in the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to raise oil output to help stabilise prices.

CURRENCIES

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 108.148 after climbed earlier in the day to 108.56, its highest level since October 2002.

The U.S. benchmark 10-year yield was 3.190%, having traded either side of 3% for the last week. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was down 3.1 basis points at 3.039%.

Bank of Korea raised rates by 50 basis points for the first time, bringing the rate to 2.25%, in line with analyst expectations. The Korean won stood at 1,304.78 against the greenback.

The Reserve Bank of New Zealand also increased rates by 50 basis points to 2.5%. The currency was at $0.6125.

Cryptocurrency prices dropped, with bitcoin last down 2.17% to $19,511. Bitcoin fell back below $20,000 on Tuesday after enjoying its strongest run in more than three months last week, as a surge in the greenback rippled through global markets. Second-largest Ether slid to $1,060.

GOLD

Gold prices steadied near a nine-month low, as an elevated U.S. dollar, renewed COVID-19 restrictions in China and fears of rapid interest rate hikes stifled demand. Investors also cautiously awaited monthly U.S. inflation data for cues about the road ahead for the U.S. Fed’s monetary policy.

Spot gold was flat at $1,725.80 per ounce, after dropping to its lowest level since late-September at $1,722.30 earlier. U.S. gold futures were also flat at $1,724.00.

Spot silver firmed 0.4% to $18.97 per ounce, platinum was flat at $845.51, and palladium gained 0.2% to $2,031.06. London copper fell to a fresh 20-month low.

ECONOMIC OUTLOOK

Asian stocks gained on Wednesday, taking back some of their recent losses with investors’ sentiment remained jittery on slower economic growth amid inflationary pressures. Prospects of further central bank tightening and worries about the health of economies worldwide kept traders on edge.

Renewed COVID-19 travel curbs in China also weighed on the market. Multiple cities in the world's second-biggest economy have adopted fresh restrictions, from business shutdowns to broader lockdowns, in an effort to rein in new infections from the highly infectious BA.5.2.1 sub-variant of the virus.

The surging cost of energy in Europe is also a major fear as the biggest single pipeline carrying Russian natural gas to Germany entered a 10-day annual maintenance period. Investors are concerned the shutdown might be extended because of the war in Ukraine, restricting European gas supply further and tipping the struggling eurozone economy into recession.

Economic data, including U.S. consumer inflation on Wednesday, and comments from Federal Reserve officials will be in focus later this week as investors look for clues on the outcome of the Fed's upcoming policy meeting before the pre-meet blackout period.

The markets are expecting hot inflation, which would keep the Fed firmly on its hiking path. The CPI is expected to rise 8.8% in June YoY, marking a fresh 40-year peak and adding more pressure on the Fed to tame soaring prices. The Fed increased rates by a supersized 75 basis points in its last meeting.

Investors also held back from making large bets ahead of China's macroeconomics data scheduled for release on Friday to determine the health of the world's second-largest economy.

The Q2 reporting season will hit full stride later in the week as JPMorgan Chase & Co, Morgan Stanley, Citigroup and Wells Fargo & Co post results.