EQUITIES

Asia-Pacific stocks declined on Wednesday, as market reacted to the latest Japan’s exports data. Markets in the U.S. however were lifted on the back of stronger-than-expected retail sales data.

Japan’s Nikkei 225 fell 0.40% after trading in positive territory earlier, while the South Korea’s KOSPI was down 1.05%. In Australia, the S&P/ASX 200 was also lower, slipped 1.01%. The S&P BSE Sensex in India shed 0.27% and the Singapore’s Straits Times index fell about 0.30%.

Hong Kong’s Hang Seng index dropped 0.50%, while the mainland Shanghai Composite bucked the overall trend, to advance 0.21% higher.

U.S. stocks, which were in a rut in recent days after touching records earlier this month, were given a boost by retail sales data. Overnight, the Dow Jones Industrial Average added 0.15%, to close at 36,142.22. The S&P 500 gained 0.39% to 4,700.90, and the Nasdaq Composite rose 0.76% to 15,973.86.

OIL

Oil prices dropped on Wednesday after U.S. gasoline stocks fell more than expected last week, which could heighten pressure on the Biden administration to release oil from the Strategic Petroleum Reserve (SPR) emergency reserves to cap soaring gasoline prices.

Data from the API industry group showed gasoline stocks fell by 2.8 million barrels for the week ended Nov. 12, much bigger than the 600,000-barrel decrease expected. Crude inventories rose by 655,000 barrels, the market sources said. That was less than analysts' expectations for a build of 1.4 million barrels.

In its monthly oil market report Tuesday, the IEA kept its outlook for oil demand growth largely steady at 5.5 million bpd for 2021 and 3.4 million bpd next year. Global oil demand is strengthening due to robust gasoline consumption and increasing international travel as more countries re-open their borders," the IEA said. Although an uptick in coronavirus cases in Europe, weaker industrial activity and higher oil prices could dent demand.

The Brent now traded at $81.64 per barrel, and U.S. crude futures traded at $80.00 per barrel. Overnight, the Brent ends at $82.43 a barrel, and the WTI settled at $80.76 per barrel.

CURRENCIES

The U.S. dollar traded higher versus a basket of major peers on Wednesday, as a run of strong economic data boosted bets for earlier Federal Reserve interest-rate hikes. The dollar index rallied at 96.089 points; a level not seen since July of last year.

The benchmark 10-year notes were last at 1.633%, a three-week high.

Bitcoin and other cryptocurrencies retreating from near record highs, driven by profit taking after a recent sharp run-up. Bitcoin was down 3% at $58,967, while Ether, the second-biggest cryptocurrency by market value, was down 4% at $4,101.

GOLD

Spot gold rose 0.20% to $1,853.90 an ounce, climbing back towards the five-month high of $1,876.90 hit a day earlier on rising inflation concerns. U.S. gold futures was little changed at $1,855.10.

Silver advanced 0.20% to $24.99, while platinum shed 0.08% to and $1,073.60 per ounce, and palladium slipped 0.07% to $2,166.00.

ECONOMIC OUTLOOK

The positive tone offered by the strong U.S. retail sales data overnight was short-lived, as Asian markets reacted to the Japan’s exports growth that hit eight-month low.

Japan's exports snapped seven months of double-digit growth in October due to slowing car shipments, as global supply constraints hit the country's major manufacturers. The slowing growth shows Japan's vulnerability to supply chain bottlenecks that have been particularly disruptive for the car industry and have clouded the outlook for trade.

The Japan’s exports rose 9.4% year-on-year in October, Ministry of Finance data showed on Wednesday, followed 13.0% growth in the prior month and was the weakest expansion since a decline in February. Car shipments fell 36.7%.

The U.S. retail sales data showed it rose 16.3% year-on-year in October, exceeding economists’ expectations of a 12% YoY improvement, suggesting that Americans were not discouraged by the inflationary pressures and continued to spend, leading to higher odds that an interest rate hike could happen sooner.

Earnings from retailers Home Depot and Walmart overnight that beating quarterly sales estimates and raised its annual sales and profit forecasts also signalled solid consumer health and eased worries about a Federal Reserve that may have to become more aggressive in the face of rising inflation.

Retailers Target, Lowe's, and TJX Companies are set to report earnings Wednesday, as well as Chinese tech giant Baidu.