EQUITIES
Asia-Pacific markets were mostly higher on Wednesday. Mainland Chinese stocks were higher, with the Shanghai composite rising about 0.01% while the Hong Kong’s Hang Seng index advanced 0.26%. The South Korea’s KOSPI jumped 0.17%, the Australia’s S&P/ASX up 0.50%, and the India’s S&P BSE Sensex index 0.24% higher.
Meanwhile, the Nikkei 225 lost -0.48%, and the Singapore’s Straits Times index slipped -0.27%.
Overnight on Wall Street, the Dow Jones Industrial Average rose 0.38%, while the S&P 500 gained 0.81%. The tech-heavy Nasdaq Composite outperformed as it jumped 1.53%.
OIL
Oil prices rally in anticipation of more U.S. stimulus spending and better demand. The Brent crude futures traded to $56.26 a barrel, while U.S. crude at $53.39.
Front-month February WTI futures expire on Wednesday.
On Friday, the Brent closed at $55.90 per barrel, while WTI futures ended at $52.98 per barrel.
CURRENCIES
The dollar dropped for a second straight session with investors turning their focus to riskier assets. The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 90.37 following an earlier high above 90.7.
U.S. treasuries also fall after Yellen affirmed during her hearing yesterday that 2017 tax cuts for corporations should be back.
The Australian dollar changed hands at $0.7717, still off levels above $0.775 seen last week. New Zealand dollars edged up in morning trade to also hold modest overnight rises, last up 0.2% to $0.7128. Chinese yuan ticked up about 0.1% to 6.4741 per dollar after its 1Y and 5Y LPR were left unchanged.
GOLD
Gold prices rose on hopes of Biden's proposed stimulus. Trading at $1,849.90 an ounce, while added around $1,848.90 per ounce for gold futures. Previously closed at $1,839.7 and $1,840.20, respectively.
Silver trading at $25.44, platinum trading at $1,091.00 and palladium trading at $2,255.00.
ECONOMIC OUTLOOK
Asian stocks looked set for gains on Wednesday as traders analysing the latest earnings reports and after Wall Street indexes rose overnight on the back of U.S. Treasury Secretary nominee Janet Yellen's push for a sizable fiscal relief package in response to the COVID-19 pandemic.
At Yellen's confirmation hearing on Tuesday, she said the benefits of a big stimulus package are greater than the expenses of a higher debt burden.
President-elect Joe Biden will be sworn into presidential office on Wednesday. Investors are watching out for his inauguration speech for details on the country’s $1.9 trillion aid package.
The IEA lowered forecasts for global oil demand, cuts 600,000 bpd. Traders will be watching out for U.S. crude and products inventory data due from the API on Wednesday and from the EIA on Friday.
The 1-year prime rate (LPR) and 5-year LPR in China were both left unchanged at 3.85% and 4.65%, respectively, in line with expectations.
In corporate earnings reports, Bank of America topped Q4 profit estimates and joined JPMorgan, Citigroup Inc and Wells Fargo & Co in releasing some cash reserves to cover for coronavirus-driven loan losses, underscoring its confidence in the economy.
To date, number of confirmed worldwide cases for COVID-19 pandemic has surpassed 96.142 million affecting 213 countries and territories around the world and 2 international conveyances, recording more than 2.056 million fatality globally.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 104.323 and 104.570.
- Support line of 103.526 and 103.280.
Commentary/ Reason:
The Japanese yen added 0.15%, traded at 103.746 per dollar, stronger than an earlier level of 103.93 against the greenback.
US dollar weakened as U.S. Treasury Secretary nominee Janet Yellen used a confirmation hearing on her appointment as Treasury secretary to bolster the case for additional fiscal stimulus.
The yen meanwhile rose after the currency see some underlying support on Tuesday's rise in the 10-year Japan JGB bond yield to a 4-1/2 month high of 0.058%.
The advancement of the yen, however, was hampered on expectations for the BoJ to downgrade its assessment of the economy at this Thursday's policy meeting.
