EQUITIES

Asia-Pacific shares fell on Wednesday as investors digest inflation data from China and look ahead to the U.S. CPI report.

Hong Kong’s Hang Seng index fell 2.12% to lead losses regionally, while Japan's Nikkei 225 extended losses from the previous day and was last down 0.73%.

Mainland China markets also slipped, with the Shanghai Composite traded 0.46% lower. China’s CPI increased 2.7% in July compared with the same period in 2021, the most since July 2020. Analysts expected the print to stand at 2.9%. PPI for July rose 4.2% from a year ago, lower than the 4.8% prediction.

In South Korea, the KOSPI dipped 0.75% and in Australia, the S&P/ASX 200 lost 0.35%.

Singapore’s FTSE Straits Times Index bucked the overall trend to add 0.40% as it returns from holiday.

The slips in Asian markets tracked Wall Street, which closed on Tuesday with all three major indices down. Overnight on Wall Street, the Dow Jones Industrial Average declined 0.18%, to 32,774.41, while the Nasdaq lost 1.19%, to 12,493.93. The S&P 500 fell 0.42%, to 4,122.47.

OIL

Oil prices eased on Wednesday after industry data showed U.S. crude inventories unexpectedly rose last week, signalling a potential hiccup in demand, though concerns over supply kept losses in check.

Investors weigh recessionary concerns with news that some oil exports had been suspended on the Russia-to-Europe Druzhba pipeline that transits Ukraine, while also awaited on the latest progress in last-ditch talks to revive the 2015 Iran nuclear accord, which would clear the way to boost its crude exports in a tight market.

U.S. crude futures were down 0.52% at $90.03 per barrel, while Brent crude futures dipped 0.49% to $96.06 per barrel.

U.S. crude stocks rose by about 2.2 million barrels for the week ended Aug. 5, according to market sources citing American Petroleum Institute figures. Analysts had forecast a small 400,000-barrel drop in crude inventories.

Traders will next be watching out for weekly U.S. oil inventory data from the Energy Information Administration later today, as well as market report by IEA and OPEC monthly report on Thursday.

CURRENCIES

The dollar index edged slightly lower to 106.250, holding in anticipation of U.S. inflation data later in the day.

A strong inflation print is likely to reinforce the idea that the Fed is not close to pausing its tightening cycle and markets would readjust their expectations for U.S. interest rates. The figures are due at 1230 GMT. Economists expect YoY headline inflation running at a scorching 8.7%, a small retreat from June's whopping 9.1% figure. Core inflation is expected at 0.5% month-on-month.

GOLD

Gold pared gains and was down 0.23% at $1,789.70 an ounce. It briefly broke through the $1,800 to hit its highest since July 5 overnight. U.S. gold futures were down 0.40% at $1,805.20.

Spot silver eased 0.2% to $20.47 per ounce, platinum fell 0.4% to $930.14, and palladium edged 0.1% higher to $2,217.40.

ECONOMIC OUTLOOK

Asian shares fell on Wednesday, weighed down by the weak overnight Wall Street closing, rising geopolitical tension and heightened inflationary pressures.

Sentiments also remained jittery as investors digesting the latest inflation data from China and look ahead for a key U.S. CPI report.

China’s consumer inflation accelerated in July to the highest level in two years, largely due to surging pork costs, while weak consumer demand kept overall price pressures in check. The CPI rose 2.7% last month from a year earlier, as pork prices surged 20.2%, National Bureau of Statistics (NBS) data showed on Wednesday. The pickup in the CPI was lower than the 2.9% median estimate. Producer price inflation, meanwhile, slowed to 4.2% in July, from 6.1% in June, as commodity prices weakened.

The United States consumer inflation report meanwhile will be released later today, with markets watching for signs that inflation eased in July despite last week's unexpectedly strong U.S. jobs numbers.