EQUITIES
Shares in major Asia-Pacific markets fell in Tuesday trade, with the Hong Kong’s Hong Kong’s Hang Seng index dipped 0.95%, followed by Japan’s Nikkei 225 at 0.86% lower, and the Straits Times index in Singapore at 0.83% lower. The S&P/ASX 200 in Australia shed 0.36%, and the South Korea’s KOSPI declined 0.02%.The mainland Chinese stocks recovered from an earlier slip, with the Shanghai composite traded just above the flatline.
Elsewhere in the region, the S&P BSE Sensex in India bucked the overall trend, to advance 0.55% higher.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.28%, to 34,838.16, and the Nasdaq Composite added 0.06%, to 14,681.07. The S&P 500 index rose to a near all-time high on morning, before retreated to lose 0.18%, to 4,387.16
OIL
Oil prices plunged, as concerns over coronavirus curbs combined with slowing factory activity in key markets weighed on sentiment.
The Brent traded at $72.84 per barrel, and U.S. crude futures traded at $71.22 per barrel.
Both markets dropped more than 3% on Monday, its biggest loss in two weeks. The Brent settled at $72.89 a barrel, down 3.3%, while the WTI slumping 3.6% to end at $71.26 per barrel.
CURRENCIES
The benchmark 10-year Treasury yield rose to 1.186% but were still down from 1.239% late on Friday and continuing a multi-month decline. The sentiment was soured following the ISM report that showed July U.S. manufacturing growth slowed for the second straight month.
The dollar fell back toward the 1-month lows hit last week. The dollar index, which measures the greenback against six major peers, stood at 92.013.
The Reserve Bank of Australia is set to announce its interest rate decision today.
GOLD
Gold prices were subdued on Tuesday. The spot gold fell 1.8% to $1,811.50 per ounce, while U.S. gold futures fell 0.4% to $1,815.00.
Silver fell 0.7% to $25.38 per ounce, palladium shed 0.1% to $2,682, while platinum was down 0.5% to $1,050.70.
ECONOMIC OUTLOOK
Asian stocks slipped on Tuesday, on concerns the economic recovery from the pandemic is losing momentum. The overnight U.S. equity that turned lower, tumbling in Treasury yields and slid in oil prices weighted on investors sentiment. The Delta coronavirus variant spread in key markets also put authorities on downward pressure, rattling investor confidence.
Adding to the negative sentiment is ongoing concern about increasing China’s regulation. After the technology, fintech and education sectors, a Chinese state media outlet branded online video games as "spiritual opium", stoking concern that the online gaming sector may be next in regulators' crosshairs.
U.S. manufacturing activity grew at a slower pace in July for the second straight month as raw material shortages persisted, though there are signs of some easing in supply-chain bottlenecks. The ISM's index of national factory activity fell to 59.5 last month, the lowest reading since January, from 60.6 in June.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.757 and 109.985.
- Support line of 109.021 and 108.793.
Commentary/ Reason:
The dollar traded at 109.118 yen, down 0.10% on the day, and near its July 19 low of 109.064, which was its lowest level since late May.
The dollar was on the back foot against the safe-haven yen following the soft U.S. manufacturing data and rising concerns about the coronavirus Delta variant.
The decline in the 10-year T-note yield to a 1-1/2-week low Monday as investors seek for safety also weakened the dollar’s interest rate differentials and weighed on the dollar.
Japan meanwhile expanded state of emergency curbs to more regions as cases hit record in Tokyo.
USD/JPY has accelerated its decline, approaching the multi-month low set in July. The USD/JPY pair has moved to test the 109.02 support level as bearish sentiment continues to rise. This price area has proven to be an obstacle in the past, where buyers typically return.
