EQUITIES
Asia-Pacific markets gained on Wednesday trade. The Shanghai composite rose more than 0.27%, while Hong Kong Hang Seng index added 0.35%. The Japan’s Nikkei 225 climbed 0.61%, while the S&P/ASX 200 in Australia was up 0.36%. The S&P BSE Sensex in India meanwhile advanced 0.17%.
Elsewhere, the South Korea’s KOSPI shed 0.41%, while the Singapore’s Straits Times index dipped 0.48%.
Stocks on Wall Street shot to new records overnight, boosted by the Senate’s passing of a $1 trillion infrastructure package. The Dow Jones Industrial Average rose 0.46%, to 35,264.67 to close at a record, and the S&P 500 0.10%, to 4,436.75 to close at a fresh all-time high. The Nasdaq Composite dropped 0.49%, to 14,788.09.
European shares extended gains for a seventh straight session as investors took comfort from strong earnings reports and economic recovery prospect.
OIL
Crude oil holding on Wednesday, bounced back from a 3-week low on bets of solid demand recovery outweighed concerns of the fast-spreading Delta virus variant.
The Brent last traded at $70.53 per barrel, while U.S. crude futures traded at $68.14 per barrel.
Overnight, the Brent settled at $70.63 a barrel, and the WTI ends at $68.27 per barrel, spiking more than 2% for both benchmarks.
CURRENCIES
The dollar and U.S. yields extended gains on Wednesday, spurred by tapering talk. Improving U.S. economic data and a more hawkish tone from Fed officials have led markets to expect the central bank to begin tapering its asset purchases later this year.
The U.S. dollar index, which tracks the greenback against a basket of its peers, rose to 93.091, held firm near 3-week high.
U.S. Treasury yields rose to their highest levels since mid-July, with yields on benchmark 10-year Treasury notes touching a 5-week high of 1.3610%.
Bitcoin is staging a comeback and was back above $45,000 amid renewed commitment for the digital coin. A change to cryptocurrency reporting rules in the infrastructure bill was blocked in the Senate, leaving language for broad oversight of virtual currencies in the legislation.
GOLD
A stronger dollar and a rise in bond yields pressuring the gold prices. Spot gold at $1,733.10 per ounce, while U.S. gold futures at $1,734.3 per ounce.
Silver eased 0.2% to $23.34 per ounce. Platinum rose 1.23% to $999.10, and palladium was steady at $2,644.50.
ECONOMIC OUTLOOK
Asian stocks traded higher on Wednesday, tracking gains on of their U.S. peers higher as investors assessed the ability of the economy to sustain less stimulus and rising virus outbreaks. Meanwhile fears of Delta variant COVID-19 keep investors on edge.
Wall Street sailed to record highs, with both the Dow and S&P 500 closing at record highs, as economically sensitive value stocks gained with the U.S. Senate's passage of a $1 trillion bipartisan infrastructure package.
Investors now await the monthly U.S. personal consumption report due later in the day to gauge inflationary pressure. Indications in recent days of an improving labour market has raised fears of a sooner-than-expected U.S. interest rate hike.
Besides the inflation data, a speech by Federal Reserve Bank of Kansas City President Esther George will be closely watched, as will the troubling global spread of the Delta coronavirus variant.
In crude oil market, industry data by the API showed U.S. crude stocks fell by 816,00 barrels and gasoline stocks fell by 1.1 million barrels in the week ended Aug. 6. Both drawdowns were a bit smaller-than-expected.
The U.S. Energy Information Administration raised its forecast for fuel demand in 2021 and said consumption in May through July was higher than expected. EIA's monthly report showed that the need for supply from the OPEC will exceed its supply by 1 million bpd in the Q3 and by 300,000 bpd in the foQ4 of 2021. Weekly inventories figures from the EIA are due on Wednesday.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.691 and 110.818.
- Support line of 110.282 and 110.127.
Commentary/ Reason:
The yen, which has dropped for five consecutive sessions against the dollar, fell marginally on Wednesday to 110.642 per dollar, hovering at its lowest since mid-July.
The dollar traded higher, as traders awaited U.S. inflation data and wagered a high reading could pressure the Federal Reserve to wind back policy support. The greenback also has already caught a boost from last week's strong U.S. jobs data and from recent remarks by Fed officials hinting that asset purchase tapering is on the cards. Hot inflation could also add to expectations for rate hikes next year.
The yen came under pressure throughout the day from higher T-note yields, which lending support for the greenback.
The USD/JPY pair holds on to intraday gains and has room to extend its advance, as strong bullish support begins to rise, although it may correct lower in the near-term.
The RSI indicator consolidates within overbought levels as the momentum eases within positive levels, suggesting decreasing buying interest.
