EQUITIES
Asia-Pacific stocks mostly rose in Thursday morning trade. Hong Kong’s Hang Seng index jumped more than 1% earlier in the week, before paring the gains to around 0.70%. It had returned to trade after a holiday on Wednesday. Shares of China Evergrande Group in the city jumped more than 12%, although its YTD plunge is still more than 80%.
Mainland Chinese stocks were also higher, with the Shanghai composite climbing 0.58% and the Shenzhen component also advanced. The S&P/ASX 200 in Australia edged 1.02% higher, the Straits Times index in Singapore rose 0.84%, and the S&P BSE Sensex in India added 0.78%.
South Korea’s KOSPI, returning to trade from holidays earlier in the week, slipped 0.44%.
Markets in Japan are closed on Thursday.
Overnight on Wall Street, stocks ended solidly higher. The Dow Jones Industrial Average rose 1%, to 34,258.32, the S&P 500 gained 0.95%, to 4,395.64 and the Nasdaq Composite added 1.02%, to 14,896.85.
OIL
Oil prices steadied after a two-day gain, with the fuel demand growing and crude stocks shrinking to the lowest level since 2018, while production remains hampered in the U.S. Gulf of Mexico after two hurricanes.
U.S. crude inventories dropped by 3.48 million barrels last week to about 414 million barrels, citing figures from the EIA on Wednesday. Gasoline stockpiles rose by 3.47 million barrels, compared with the survey for a 1.47-million-barrel decline.
The Brent now traded at $76.20 per barrel, while U.S. crude futures traded at $72.41 per barrel.
Overnight, the Brent ends at $76.19 a barrel, and the WTI at $72.23 per barrel.
CURRENCIES
The dollar rose after the Fed Chair's remarks, hitting a one-month high of 93.526 against a basket of currencies, before paused for breath in Asian hours. Last at 93.363.
The benchmark U.S. 10-year Treasury yield was slightly lower at 1.302%.
In cryptocurrencies, Bitcoin last rose to $44,103 following three straight days of declines, while ether added to $3,107.
GOLD
Gold prices dipped after the U.S. Fed signalled easing of its monthly bond purchases by next year and a sooner-than-expected interest rate hike, which could increase the opportunity cost of holding the non-yielding bullion.
Spot gold slipped 0.24% to $1,763.70 per ounce, while U.S. gold futures shed 0.80% to $1,764.50.
Silver fell 1.34% to $22.60 per ounce, platinum dropped 0.66% to $994.50, and palladium eased 0.87% to $2,018.50.
ECONOMIC OUTLOOK
Asian shares moved higher on Thursday, supported by some positive news from struggling developer China Evergrande Group, while the dollar held near a one-month top after the U.S. Federal Reserve took a hawkish tilt overnight. Worries about a slowing recovery from the pandemic and elevated inflation continue to linger.
Fears of imminent contagion from China Evergrande’s debt crisis were temporarily soothed after the property developer agreed to settle interest payments on a domestic bond, on top of the Chinese central bank injected cash into the banking system. although, investors remained on edge about Evergrande's future, with a major test to come later on Thursday when $83.5 million in dollar-bond interest payments are due.
In its policy statement on Wednesday, the Fed Chair Jerome Powell said the central bank could begin scaling back asset purchases in November and complete the process by mid-2022. Officials also revealed a growing inclination to raise interest rates next year in response to inflation.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.104 and 110.413.
- Support line of 109.103 and 108.793.
Commentary/ Reason:
The dollar extended its gains overnight on Thursday, last traded to 109.815, about the middle of a range it has kept since March.
Liquidity was lightened by a holiday in Japan on Thursday.
The greenback gain ground late Wednesday after Powell's news conference and ended up jumped up 0.5% for the session - its sharpest gain in more than three months.
Weakness in the Japanese yen also stemmed in the wake of the BoJ’s decision to keep policy on hold. The Bank of Japan, which met on Wednesday, made no policy changes and is not seen lifting rates anytime soon.
The safe haven yen had also suffered a bit after developer China Evergrande offered the market some relief after its main unit said it agreed to settle a bond interest payment with some domestic creditors.
The USD/JPY pair rallied upwards strongly yesterday, reinforcing the expectations of continuing the bullish trend, and the way is open to visit 110.104 that represents the first resistance, followed by 110.413.
The support line at 109.103 stopped a price slide. This area has been tested successfully four times since Mid-July. A failure to hold will indicate the selling pressure is getting stronger. Further down, 108.793 is eyed.
