EQUITIES

Shares in Asia-Pacific were mixed in Wednesday trade. In Japan, the Nikkei 225 shed earlier gains to fall 1.55%, the South Korea’s KOSPI slipped 0.99%, the Australia’s S&P/ASX 200 down 0.48%, and the Hong Kong’s Hang Seng index traded 0.69% lower.

Elsewhere, the S&P BSE Sensex in India rose 0.23%, while the Straits Times index in Singapore advanced 0.18%.

Mainland Chinese markets remain closed on Wednesday for the holidays.

Overnight on Wall Street, the Dow Jones Industrial Average jumped 311.75 points to 34,314.67, the S&P 500 gained 1.05% and the Nasdaq Composite climbed 1.25% to 14,433.83.

European markets also set to tumble at the open later today, reversing mostly positive trade this week.

OIL

Crude oil holds on to its rally on Wednesday, still driven by concerns about energy supply on signs of tightness in crude, natural gas, and coal markets.

However, inventory data from the U.S., the world's biggest oil consumer, showed some signs of slowing fuel demand. The API on Tuesday reported U.S. oil inventories rose by 951,000 barrels in the week to Oct. 1, while the gasoline inventories rose by 3.682 million barrels in the week, and stockpiles of distillate fuel, including diesel fuel and heating oil, climbed 345,000 barrels.

The Brent now traded at $82.54 per barrel, while U.S. crude futures traded at $78.85 per barrel.

Overnight, the Brent ends at $82.56 a barrel, and the WTI at $78.93 per barrel. Brent crude futures rose to a three-year high while U.S. benchmark oil hit its highest since 2014 after the OPEC and allies stuck to their planned output increase rather than boosting it further. On Monday, OPEC+ agreed to adhere to its July pact to boost output by 400,000 bpd each month until at least April 2022, phasing out 5.8 million bpd of existing production cuts.

CURRENCIES

The fears of U.S. federal credit default help push the dollar back towards its 12-month highs and benchmark treasury yields to near their highest level since mid-June. The Senate will vote on Wednesday on a Democratic-backed measure to suspend the U.S. debt ceiling, a key lawmaker said on Tuesday.

The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.13% to 94.098, while the yield on benchmark 10-year Treasury notes rose to 1.548%.

The Reserve Bank of New Zealand on Wednesday raised its official cash rate to 0.5%, among the first advanced economies to do so in the pandemic era, joining South Korea and Norway. Following the rate hike announcement, the New Zealand dollar briefly jumped above $0.697, before retreating from those levels and last trading at $0.6947.

Bitcoin passing the $50,000 mark for the first time in four weeks on Tuesday and adding to gains this month on mounting institutional interest. It was last up 4% to $51,365 on Wednesday, with the smaller coins were also up. Ether rose 2.9% to $3,476 and XRP was up 1.9% at $1.06.

GOLD

Gold prices inched lower on Wednesday as a firmer dollar and rise in U.S. Treasury yields weighed on the precious metal's appeal, with investors focused on U.S. non-farm payrolls data due later this week.

Spot gold shed 0.45% to $1752.60 an ounce, while U.S. gold futures were 0.30% lower at $1,755.70.

Spot silver fell 0.48% to $22.50 per ounce, platinum eased 0.93% to $950.90, and palladium dropped 0.50% to $1,890.00.

ECONOMIC OUTLOOK

Asian shares dropped on Wednesday, reversing early gains as investors assess the resilience of the economic recovery to elevated inflation fanned by surging energy costs, as well as the looming reduction in Federal Reserve stimulus and a stalemate over the U.S. debt ceiling.

Volatility has picked up in global markets as investors brace for a slower but still robust economic recovery from the pandemic and gradual monetary policy tightening to contain price pressures. The 10-year Treasury yield spiked above 1.50%.

Political gridlock in the U.S. over the nation’s debt ceiling and President Joe Biden’s wider economic agenda is also contributing to the uncertainty. The Senate will vote on Wednesday on a Democratic-backed measure to suspend the U.S. debt ceiling, a key lawmaker said on Tuesday, as partisan brinkmanship in Congress risks an economically crippling federal credit default.

Investors are also focused on Friday, when the U.S. unemployment report for September may determine when the Fed proceeds with plans to begin tapering $120 billion a month of bond purchases. Non-farm payrolls data is expected to show continued improvement in the labour market, with a forecast for 488,000 jobs to have been added last month. Friday's report will be telling about the direction of both interest rates and the economy, as well as the equity markets.

Worries about China’s highly leveraged property sector and broad regulatory crackdown on private industries continue to shadow sentiment. On Tuesday, representatives of Man Group, Soros Fund Management and Elliott Management raised concerns about the outlook for Chinese stocks. The nation’s markets are closed for a holiday and reopen Friday.