EQUITIES
Asia-Pacific stocks largely slipped in Tuesday trade. The S&P/ASX 200 in Australia dipped 1.21%, to lead the decline in the region. The South Korea’s KOSPI slipped 0.73%, and in Japan, the Nikkei 225 fell 0.36%. The Straits Times index in Singapore and the S&P BSE Sensex in India also slipped, declined 0.40% and 0.14%, respectively.
Elsewhere, the mainland Chinese stocks rose, with the Shanghai composite added 0.532% while the Hong Kong’s Hang Seng index rose 1.53%.
Overnight on Wall Street, of the three major U.S. stock indexes, only the blue-chip Dow Jones Industrial Average closed in positive territory, buoyed by financials and industrials. The Dow Jones Industrial Average climbed 71.37 points to 34,869.37 while the S&P 500 shed 0.28% to 4,443.11, and the Nasdaq Composite dipped 0.52% to 14,969.97.
European market heads for positive open as region continues to digest German election fallout.
OIL
Oil markets extending their rally into a sixth session, as market sentiment remained strong with tighter supply and recovering demand with the easing of COVID-19 pandemic restrictions.
The Brent now traded at $80.23 per barrel, while U.S. crude futures traded at $76.16 per barrel.
Overnight, the Brent ends at $79.53 a barrel, and the WTI at $75.45 per barrel.
CURRENCIES
U.S. yields have been pulled higher, hitting 1.5% on Monday for the first time since June on solid economic data and signals that the Federal Reserve is shifting toward a more hawkish policy. The 10-year Treasury yield later retreated and last sat at 1.479% on Tuesday.
The dollar also rose alongside bond yields, popped to as high as 93.526 for the first time in more than a month, before moved mostly sideways, around 93.430.
GOLD
The firmer dollar weighed on gold, though still holding on at $1,749.70 an ounce and above a recent six-week low of $1,738. The U.S. gold futures slipped 0.14% to $1,749.60.
ECONOMIC OUTLOOK
Asian shares drifted lower Tuesday as investors continued to fret over China Evergrande Group's unsolved debt crisis and eyed the potential impact of a widening power shortage in China.
The future of Evergrande, the world's most indebted property developer, is being forensically scrutinised by investors after the company last Friday did not meet a deadline to make an interest payment to offshore bond holders.
Widening power shortages in China, meanwhile, halted production at several factories including suppliers to Apple Inc and Tesla Inc and are expected to hit the country's manufacturing sector and associated supply chains. The ongoing blackouts could affect the country's listed industrial stocks.
In Washington, negotiations over funding the government and raising the debt ceiling were heating up at the start of a week that could also include a vote on U.S. President Biden's $1 trillion infrastructure bill.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 111.191 and 111.407.
- Support line of 110.492 and 110.277.
Commentary/ Reason:
The dollar traded at 111.180, near an almost three-month high to the Japanese yen, as rising bond yields in the U.S. and Europe lured Japanese investors.
The U.S. Treasury yields have soared to a three-month high, touching 1.516% overnight in anticipation of tighter U.S. monetary policy.
While benchmark 10-year Japanese government bond yields remain pinned near zero by the Bank of Japan's yield curve control policy.
The safe-haven yen also sank as fears of widespread market contagion from indebted China Evergrande Group has ebbed, following a 100 billion yuan ($15.5 billion) injection by the PBOC into the financial system on Monday, adding to the net 320 billion yuan last week.
Bullish conviction has begun to soar, and buyers have dominated the trading sessions since last week. Momentum indicators are approaching overbought conditions yet there remains further upside. The USD/JPY pair is approaching the 111.19 resistance line. A surge above the mark might find resistance in the 111.40.
If the 111.19 level manages to provide resistance, the rate could retrace down to the 110.49 and 110.27 levels.
