EQUITIES
Asia-Pacific markets traded lower on Tuesday amid mounting rate hike concerns. The Nikkei lost 1.04% after a PMI survey showed factory activity in Japan slowed to a 19-month low in August. The South Korea’s KOSPI was down 0.76%, and S&P/ASX 200 declined 0.95%.
Hong Kong’s Hang Seng index was down 0.49%. The Shanghai Composite bucked the overall traded 0.18% higher.
Overnight on Wall Street, the Dow Jones Industrial Average fell more than 600 points in its worst day since June, closed down 1.91%. The S&P 500 tumbled 2.14% and the Nasdaq Composite fell 2.55%.
OIL
Oil rose on Tuesday as renewed concerns over tight supply dominated market sentiment after Saudi Arabia warned that OPEC+ producer alliance could cut output to correct a recent oil price decline. Limiting gains, prices have been weighed by demand concerns and the chance of a nuclear deal that could return sanctioned Iranian oil to the market.
The OPEC stands ready to reduce production to correct the recent oil price fall driven by poor futures market liquidity and macro-economic fears, which has ignored extremely tight physical crude supply, OPEC's leader Saudi Arabia said on Monday.
Brent crude futures rose 0.50% to $97.17 a barrel, after a choppy session on Monday when they dropped by more than $4 before paring losses to trade near flat. U.S. West Texas Intermediate crude futures rose 0.60% to $91.10 a barrel.
In U.S. supply, market participants are awaited on industry data from API due out at 4:30 p.m. ET on Tuesday.
CURRENCIES
Against a basket of currencies, the U.S. dollar index stood firm at 108.914, within a whisker of its July peak of two-decade high.
Yields on the benchmark 10-year Treasury note stood at 3.026%. Yields on the two-year Treasury note were up around 3.314% as investors remained on inflation and Fed watch mode.
A closely monitored recession signal - the inversion of the U.S. Treasuries' yield curve - widened as the market braced for remarks on Friday from Federal Reserve Chair Jerome Powell, who will discuss at Jackson Hole, Wyoming, the Fed's mission to lower inflation.
One exception to the tightening trend is China, where the central bank trimmed some key lending rates by between 5 and 15 basis points on Monday in a bid to support a slowing economy and a stressed housing sector. Unease over China's economy tipped the yuan to a 23-month low.
Bitcoin was 0.75% lower at $21,234, weighed down by broad risk aversion in markets.
GOLD
The ascent of the U.S. dollar and yields has been a drag for gold, which was hovering at $1,737.30 an ounce after hitting a three-week low overnight. U.S. gold futures was flat to $1,751.30 per ounce.
ECONOMIC OUTLOOK
Asian shares were down for a sixth straight session on Tuesday. Unease over China’s economy, property sector, and COVID-19 policy; a renewed spike in European energy prices; and concerns over a more aggressive interest rate hike pace by the U.S. Federal Reserve weighed on investors sentiment.
In Asia, unease over China's economy continued to percolate as a cut in lending rates and talk of a fresh round of official loans to property developers underlined stresses in the sector. The PBOC, on Monday trim some key lending rates in a bid to support a slowing economy and a stressed housing sector.
A renewed spike in European energy prices stoked fears of recession and pushed bond yields higher, while tipping the euro to 20-year lows. Benchmark gas prices in the EU surged 13% overnight to a record peak, having doubled in just a month to be 14 times higher than the average of the past decade.
With the next U.S. Federal Reserve meeting just over a month away, investors worried about the pace of further interest-rate increases. Investors and economists will turn their attention to the Rocky Mountain town of Jackson Hole, Wyoming, where the U.S. Fed will hold its annual three-day economic policy symposium beginning Thursday, August 25. Fed Chair Jerome Powell is among the featured speakers.
In economic news, Australia’s Manufacturing signalled the first contraction in the private sector’s output since January, while Singapore is set to release its core inflation data later in the afternoon.
Japan's factory activity growth meanwhile slowed to a 19-month low in August as output and new order declines deepened, amid growing pressure from persistent rises in raw material and energy costs and weakening global demand. The au Jibun Bank Flash Japan Manufacturing PMI fell to a seasonally adjusted 51.0 in August from a 52.1 final in July, marking the slowest expansion since January last year.
European and British manufacturing surveys due later Tuesday were expected to highlight the damage being done to activity, with Germany seen deeper in contractionary territory.
