EQUITIES
Shares in Asia-Pacific fell in Tuesday trade following overnight losses on Wall Street, with the Japanese shares tumbled to one-month lows. The Nikkei 225 in Japan dropped 2.12%, while the South Korea’s KOSPI shed 1.63%, the Australia’s S&P/ASX 200 down 0.33%, and the S&P BSE Sensex in India slipped 0.06%. In Southeast Asia, the Straits Times index in Singapore declined 0.75%.
The Hang Seng index in Hong Kong bucked the overall trend regionally, rising 0.20%.
Markets in mainland China remain closed on Tuesday for the holidays.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.94% to 34,002.92, the S&P 500 lost 1.30% to 4,300.46 and the Nasdaq Composite dropped 2.14% to 14,255.49 as investors dumped Big Tech stocks in the face of rising Treasury yields.
OIL
Oil prices were higher on Tuesday after climbing to their highest levels in years in the previous session, following the decision by OPEC and allies that would stick to their current output policy instead of boosting supply more.
The OPEC+ said on Monday it would maintain an agreement to increase oil production only gradually, ignoring calls from the U.S. and India to boost output as the world economy recovers from the coronavirus pandemic. The group agreed to stick to an existing pact to raise oil output by 400,000 barrels per day in November.
Shares of oil companies in Asia-Pacific rose in Tuesday trade, with Beach Energy and Santos in Australia rising 1.4% and 2.97%, respectively. Japan’s Inpex rose 4.26% while PetroChina shares in Hong Kong jumped 5.42%.
The Brent now traded at $81.62 per barrel, while U.S. crude futures traded at $77.84 per barrel.
Oil prices reached three-year peak on Monday after OPEC+ output policy. Overnight, the Brent ends at $81.26 a barrel, and the WTI at $77.62 per barrel.
CURRENCIES
The 10-year US Treasury yield stood at 1.481%, was flat on Tuesday after it rose overnight. U.S. Treasury yields rose on investor caution about the need to raise the government's debt ceiling as the U.S. faces the risk of a historic default in two weeks.
The U.S. dollar index, which measures the currency against six rivals, was at 93.984, easing back slightly since peaking Thursday at 94.504, its highest since late September 2020. The dollar weakened from last week's one-year highs as investors looked ahead to the release on Friday of September employment data, which might offer clues on the timing of a tapering of Federal Reserve stimulus and the start of interest rate increases.
Bitcoin was around $49,268, making a push back toward $50,000 for the first time since El Salvador’s troubled rollout of the largest cryptocurrency as legal tender at the start of September.
GOLD
Gold fell on Tuesday as the dollar rose, although concerns that rising energy prices dampening economic activity dented appetite for riskier assets, keeping the bullion close to a more than one-week peak hit in the previous session.
Spot gold fell marginally to $1,758.60 per ounce, while the U.S. gold futures slipped to $1,760.20.
Silver fell 0.86% to $22.45 per ounce, platinum shed 0.38% to $957.90, while palladium rose 0.93% at $1,892.50.
ECONOMIC OUTLOOK
Asian shares suffered losses on Tuesday, hurt by the possibility of slower growth in China due to Beijing’s property-sector crackdown, as well as the looming reduction in Federal Reserve stimulus and a stalemate over the U.S. debt ceiling. The markets also fretted about the impact of the spikes in oil prices at a time when supply chain disruptions are already putting pressure on economic activity, stoked further worries about inflation and monetary tightening globally.
Market focus in Asia will be on whether embattled property developer China Evergrande offers any respite to investors looking for signs of asset disposals. Shares in the company were halted for trading on Monday. Adding to that, Fantasia Holdings Group Co. reportedly didn’t repay a $205.7 million bond that was due Monday, adding to the strains of the nation’s heavily leveraged property firms. Chinese markets are shut until Friday for the Golden Week holidays.
OPEC+ said on Monday it would stick to an existing pact for a gradual increase in oil output, sending crude prices to three-year highs and adding to inflationary pressures that consuming nations fear will derail an economic recovery from the pandemic.
Some events to watch today including the final service and composite PMI readings for the US and the European region, as well as the RBA interest rate decision.
