EQUITIES
Markets in Asia-Pacific traded lower on Wednesday, as traders assessed fresh economic data in volatile trading.
The Nikkei 225 in Japan shed 1.13%, the South Korea’s KOSPI slipped 1.60%, and the S&P/ASX 200 in Australia was down 1.50%. Singapore’s FTSE Straits Times Index fall 0.50%.
The Hong Kong Hang Seng index lost 1.68%, and in mainland China, the Shanghai Composite pared earlier losses to trade flat. Concerns about fresh COVID-19 restrictions on large mainland cities such as Guiyang, following a full lock down of the southwest city of Chengdu weighed on sentiment.
Overnight on Wall Street, main indexes closed lower. The Dow Jones Industrial Average fell 0.55%, to 31,145.3, the S&P 500 lost 0.41%, to 3,908.19, and the Nasdaq Composite dropped 0.74%, to 11,544.91.
OIL
Oil prices fell on Wednesday as COVID-19 curbs in top crude importer China and expectations of further interest rate hikes fanned concerns of a global economic recession and lower fuel demand growth.
Brent crude futures fell 1.48%, to $91.48 a barrel after slipping 3% in the previous session. U.S. WTI crude futures declined by 1.29%, to $85.81 a barrel.
Lending some support to prices, however, were expectations of tighter oil inventories in the U.S. Crude inventories in the U.S. Strategic Petroleum Reserve (SPR) fell 7.5 million barrels in the week to Sept. 2 to 442.5 million barrels, their lowest since November 1984, according to data from the Department of Energy.
Weekly U.S. inventory reports from the API and EIA will be released on Wednesday and Thursday respectively.
CURRENCIES
Fixed-income markets came under heavy pressure with U.S. 10-year treasuries yields rising to 3.365% on Wednesday, its highest since June 16, on expectations the Fed will keep hiking interest rates to tame soaring prices.
The dollar index was up 0.30% to 110.552, sticking close to 20-year high of 110.57 scaled in the previous session.
Asian currencies tumbled against the dollar due to a surge in the U.S. bond yields. The Japanese yen hit a fresh 24-year low of 143.57 per dollar and China's yuan extended losses, nearing the psychologically important level of seven per dollar, even as the central bank has taken steps recently seen as aimed at arresting the yuan's rapid decline.
Cryptocurrency bitcoin stood around $18,715, after dipping to $18,666 earlier for the first time since June 30. It tumbled more than 5% on Tuesday.
GOLD
Gold prices fell as the dollar and Treasury yields rose, after economic data bolstered expectations the Fed will continue an aggressive rate-hike path.
Spot gold was down 0.50% at $1,693.50 per ounce. U.S. gold futures were down by the same margin at $1,703.70.
Spot silver fell 0.7% to $17.92 per ounce, platinum was 0.7% lower at $847.46, and palladium shed 1% to $1,986.79.
ECONOMIC OUTLOOK
Stocks fell on Wednesday as persistent worries about rising global interest rates and recessions hounded stocks, bonds, and oil prices, with a surging dollar weighing heavily on regional currencies.
Investors braced for more aggressive rate hikes from major central banks, while remain worried about the impact of the latest COVID-19 curbs in China, and concerns over the supply of energy to Europe.
A report overnight showed the U.S. services industry unexpectedly picked up last month. While those reinforced views the economy was not in recession, it also added to expectations the U.S. central bank would not be slowing the pace of interest rate hikes any time soon, giving the Fed leeway for another super-sized 75-bps rate rise on Sept 21. Investors also anticipate the Federal Reserve to give its summary on current economic conditions later today, also known as the Beige Book.
The European Central Bank is widely expected to lift rates sharply when it meets on Thursday. After the ECB's meeting, a U.S. Federal Reserve meeting will follow on Sept. 21.
