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EQUITIES
Asia-Pacific stocks mostly lower in Wednesday trade, as investors reacted to the release of Chinese economic data.
The Hong Kong’s Hang Seng index dropped 0.95%, the Nikkei 225 in Japan declined 0.38% while the Australia’s S&P/ASX 200 fell 0.24%, and the Straits Times index in Singapore slipped 0.65%.
The South Korea’s KOSPI edged 0.41% higher, the S&P BSE Sensex in India gains 0.38%, and the mainland Chinese stock Shanghai composite up 0.31%.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.84%, to 34,577.57; the S&P 500 lost 0.57%, at 4,443.05; and the Nasdaq Composite dropped 0.45%, to 15,037.76.
OIL
Oil prices climbed on Wednesday after API data showed a larger than expected drawdown in crude oil stocks in the U.S. and on expectations that demand will recover as vaccine rollouts widen.
U.S. crude oil, gasoline and distillate stocks all fell last week, after Hurricane Ida shut numerous refineries and offshore drilling production.
The Brent now traded at $74.03 per barrel, while U.S. crude futures traded at $70.86 per barrel.
Overnight, the Brent ends at $73.60 a barrel, and the WTI at $70.46 per barrel.
CURRENCIES
The dollar was steady having slipped against a basket of its peers on the inflation figures, at 92.641.
Yields recovered slightly and were little changed at 1.282%. Lower inflation suggests that the Fed will be under less pressure to begin trimming its vast asset purchases.
GOLD
Gold held above the key psychological level of $1,800 on Wednesday, after a tamer-than-expected rise in U.S. inflation led to uncertainty on when the U.S. central bank would begin tapering its asset purchases.
Spot gold was steady at $1,803.20 per ounce, after hitting a 1-week peak of $1,808.50 overnight. The U.S. gold futures eased 0.13% to $1,804.80.
Elsewhere, silver fell 0.38% to $23.79 per ounce, platinum hit an over 9-month low early today and was last down 1.20% at $927.40.
Palladium dipped 0.64% to $1,963.00. Its price touched their lowest level since July 2020 at $1,935 in the previous session.
ECONOMIC OUTLOOK
Asian shares fell on Wednesday as weak Chinese economic data reinforced worries about slowing growth globally as well as in the world's second-biggest economy amid fraught nerves over a still-dominant pandemic and tapering of central banks' stimulus.
A burst of data out of China showed businesses were grappling with the impact of localised lockdowns following sporadic COVID-19 outbreaks, supply bottlenecks and high raw materials costs.
Data released Wednesday showed China’s retail sales growing at slowest pace since August 2020. The retail sales print for the month grew 2.5%, against a 7% growth forecast. While industrial output also rose at a weaker pace from July, underscoring recent signs of slackening economic momentum in China and adding to expectations Beijing will offer more stimulus over coming months.
Overnight, the U.S. Labor Department reported the CPI was up just 0.1% last month, compared with an expected increase of 0.3%. That was the smallest gain in six months suggesting that inflation had probably peaked, aligning with Fed Chair Jerome Powell's long-held belief that high inflation is transitory.
The Fed holds a two-day monetary policy meeting next week, with investors keen to find out whether a tapering announcement will be made. The August CPI data lifts some of the pressure the Fed faced to announce it would begin tapering its massive bond-buying program.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.204 and 110.461.
- Support line of 109.372 and 109.115.
Commentary/ Reason:
The dollar slipped slightly to 109.602 yen, keeping close to the center of the trading range of the past two months.
Traders moved into the safe-haven currency after the U.S. inflation data for August 2021 revealed a slower-than-expected expansion pace, thus pushed the U.S. T-note yields lower and weighed on the dollar.
The Japanese yen also strengthened on the decline in the Nikkei. Japanese shares retreated on Wednesday from 3-decade peaks, as investors took profits after a strong rally over the last two weeks on hopes of a new government and a fresh economic stimulus.
The USD/JPY struggles to beat 110.204 but further gains meet resistance at 110.46, retest of the monthly high.
The pair dipped to a 3-week low overnight. The question is whether the break can be sustained, or the pair will continue the trajectory. First support at 109.372. A break lower target 109.115.
