EQUITIES
Markets in Taiwan and China reopened lower on Wednesday after a two-day break, fell more than 1% before bouncing back slightly amid the ongoing Evergrande crisis. The Shanghai composite was last down 0.29%, with Evergrande’s shares in Hong Kong had slumped 10.6% on Monday and Tuesday combined, taking YTD losses to 85%.
Elsewhere in Asia, the Nikkei 225 in Japan slipped 0.58% while the Straits Times index in Singapore dropped 0.55%.
The S&P/ASX 200 in Australia rose 0.84%, the South Korea’s KOSPI added 0.33%, and the S&P BSE Sensex in India added 0.03%.
Markets in Hong Kong were closed for a holiday.
Overnight on Wall Street, stocks ended near flat after a broad sell-off the day before. The Dow Jones Industrial Average fell 0.15%, to 33,919.84, the S&P 500 lost 0.08%, to 4,354.19 and the Nasdaq Composite added 0.22%, to 14,746.40.
OIL
Oil prices extending overnight gains, after industry data showed U.S. crude stocks fell more than expected last week in the wake of two hurricanes, highlighting tight supply as demand improves.
U.S. crude stocks fell by 6.1 million barrels for the week ended Sept. 17, against the 2.4 million barrels drop expectation, citing figures from the API on Tuesday. Gasoline inventories fell by 432,000 barrels and distillate stocks, which include jet fuel, fell by 2.7 million barrels.
The market will next be watching out for data from the U.S. EIA later today to confirm the big drops in crude and fuel stocks.
The Brent now traded at $74.85 per barrel, while U.S. crude futures traded at $69.38 per barrel.
Overnight, the Brent ends at $74.36 a barrel, and the WTI at $70.56 per barrel.
CURRENCIES
Moves were capped ahead of Wednesday's FOMC meeting, as traders eyed risks that the Fed might surprise markets by bringing forward hike projections from 2023 to 2022.
The dollar index stood at 93.269, staying not far off Monday’s one-month high of 93.455, while the 10-year U.S. Treasury yield was slightly lower at 1.321%.
Bitcoin struggled for a third day, dropping briefly below $40,000 for the first time since early August amid rising criticism from regulators and a general mood of caution in global markets. The U.S. on Tuesday unveiled sanctions against a cryptocurrency exchange over its alleged role in enabling illegal payments from ransomware attacks.
The digital currency last stood at $42,100 while ether dropped to $2,860, down more than 30% from a four-month peak hit earlier this month.
GOLD
Gold prices were flat, traded at $1,777.70 per ounce, while U.S. gold futures at $1,778.90.
Silver climbed to $22.78 per ounce, while palladium edged 0.60% higher to $1,905.50. Platinum was steady at $954.30.
ECONOMIC OUTLOOK
Asian stock markets made a cautious start on Wednesday, while the dollar held firm near one-month high. Fears of contagion from the debt crisis at China Evergrande Group and expectations that the upcoming Federal Reserve meeting will signal a scaling back in asset purchases later this year are among the impediments for investors.
In latest development, the China Evergrande said it would pay some bond interest due on Thursday, allaying fears of an imminent and messy collapse that had spooked investors.
Central bank meetings in the United States and elsewhere in the world were soon to take centre stage for markets, with U.S. Fed meeting due to conclude on Wednesday as investors look for when it will ease its bond-buying program.
In the ECB monetary meeting, the European Central Bank policymakers still see the recent inflation surge as temporary, but a growing number appear to be acknowledging the risk that price growth may exceed their relatively benign projections.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.049 and 110.335.
- Support line of 109.126 and 108.841.
Commentary/ Reason:
The dollar traded at 109.481 yen, bounced back from near the low end of its trading range since mid-August.
The safe-haven Japanese currency was supported by the cautious mood, although it eased slightly after struggling Chinese property giant Evergrande said it would make an upcoming bond coupon, allaying immediate fears about a messy corporate collapse.
As widely expected, the BoJ kept monetary policy steady, maintained its short-term interest rate target at -0.1% and that for 10-year bond yields around 0%. The BoJ however offered a bleaker view on exports and output, reinforcing expectations the bank will maintain its massive stimulus even as major counterparts eye a withdrawal of crisis-mode support.
U.S. currency had been on the rising, on expectations the Fed will signal a start to stimulus tapering.
The USD/JPY pair has moved back towards the 109.126 lower bound. Buyers have already returned in early trading which suggests the support level will, once again, remain intact.
