EQUITIES
Asia-Pacific stocks mostly declined on Thursday, led by the Chinese stocks. Hong Kong’s Hang Seng index slipped 1.44%, while the mainland Shanghai composite fell 0.50%. The South Korea’s KOSPI shed 0.68%, the Australia’s S&P/ASX 200 fell 0.61%, and the Singapore’s Straits Times index at 0.05% lower.
In other markets, Japan’s Nikkei 225 was trading flat, while the S&P BSE Sensex in India added 0.19%.
Overnight on Wall Street, the benchmark S&P 500 and the Nasdaq once again surged to record highs. The Dow Jones Industrial Average rose 0.11%, to 35,405.5, the S&P 500 gained 0.22%, to 4,496.19 and the Nasdaq Composite added 0.15%, to 15,041.86.
OIL
Oil fell on Thursday as fresh outbreaks fuelled by the Delta variant are raising concerns about the strength of the economic recovery globally, hitting demand for oil.
The Brent now traded at $71.88 per barrel, while U.S. crude futures traded at $67.89 per barrel.
Oil prices rose more than 1% on Wednesday, extending gains for a third session. The Brent settled at $72.25 a barrel, and the WTI ends at $68.36 per barrel.
CURRENCIES
The dollar was little changed in Asian hours sitting around a week low against a basket of major peers, with investors now eyeing the Fed’s Jackson Hole symposium on Friday for clues on the timing of a tapering of monetary stimulus.
The dollar index edged up 0.05% to 92.870 after dropping to 92.801 overnight for the first time since Aug. 17.
The rate on benchmark 10-year Treasury notes at 1.341% eased after touching 1.352% for the first time since Aug. 13 earlier.
The South Korean central bank raised its base rate by 25 basis points to 0.75%, the first major economy in Asia to do so, after Sri Lanka hiked its base rate last week.
GOLD
Gold prices inched lower on Thursday as investors turned cautious ahead of U.S. Federal Reserve Chair Jerome Powell's speech this week, which could provide cues to the central bank’s plans over tapering of economic stimulus.
Spot gold was flat at $1,786.30 per ounce. Prices fell 0.7% in the previous session, its biggest 1-day decline in more than two weeks. U.S. gold futures slipped 0.11% to $1,789.00.
ECONOMIC OUTLOOK
Asian shares stepped back on Thursday after a sharp rebound this week, as the spread of the Delta variant of the coronavirus and the U.S. Federal Reserve's pending plans to taper its asset purchases leave equity markets exposed to turbulence over the coming days. Although rising vaccinations rate offset some of the worries over persistently high COVID-19 cases worldwide.
U.S. crude inventories fell last week for a third consecutive week while overall fuel demand increased to the most since March 2020, the EIA stated Wednesday. The crude inventories dropped by 3 million barrels to 432.6 million barrels, their lowest since January 2020, although a little above than analysts' expectations of a 2.7 million barrel drop. The gasoline stocks fell 2.2 million barrels, exceeding analysts' expectations for a 1.6 million barrel drop.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.210 and 110.392.
- Support line of 109.623 and 109.442.
Commentary/ Reason:
The dollar traded at 109.984 yen, weakened slightly from above 110 in the previous session, although still meandering near the centre of its trading range since early July.
U.S. Treasury yields advanced, limiting the downside for greenback, with the yield on the 10-year note touched 1.352% for the first time since Aug. 13 earlier.
The yen meanwhile was weighted after the Japanese government expanded a pandemic state of emergency until Sep 12 for 21 prefectures that make up 79% of Japan's economy. Also, a BOJ board member on Wednesday said that “downward pressure on the economy is going to continue for the time being,” which is dovish for BOJ policy and negative for the yen.
The focus at Jackson Hole, Wyoming will be Fed Chair Jerome Powell’s speech, which will be parsed for clues on the timing and pace of tapering of monetary stimulus. Signals that Fed officials viewed a taper this year most likely will helped buoy the dollar.
The USD/JPY pair has stalled once again. Strong bullish conviction in yesterday’s trading suggested a break was a possibility, yet sentiment appears to be waning in the early Asian trading session.
The pair bottomed at around 109.44 on Tuesday, now act as the support level, as well as at 109.62.
