EQUITIES
Shares in Asia-Pacific were mixed on Wednesday trade. The broader Hang Seng index in Hong Kong slipped 0.74%. In Japan, the Nikkei 225 dropped 0.95% and the South Korea’s KOSPI shed 0.63%. Singapore’s Straits Times index led the losses regionally at 1.48% lower.
Over in Australia, the S&P/ASX 200 rose 0.68%, while the S&P BSE Sensex in India traded above the flatline. Mainland Chinese stocks were were higher, with the Shanghai composite rising 0.44%.
Overnight on Wall Street, the S&P 500 shed 0.2% to 4,343.54. The Dow Jones Industrial Average fell 208.98 points to 34,577.37 and the Nasdaq Composite closed at a new record, rising 0.17% to 14,663.64.
OIL
Oil prices steadied on Wednesday after a steep drop in the previous session as uncertainty shrouds the next move in the OPEC+ saga.
The Brent now traded at $74.53 per barrel, and U.S. crude futures traded at $73.45 per barrel.
Crude prices were volatile overnight. After jumping to the highest in six years, gains were wiped out, with U.S. crude losing more than 2%, while Brent tumbled more than 3%. The Brent closed at $74.53, while WTI ended at $73.37 per barrel.
CURRENCIES
Expectations of a hawkish tone helped the dollar rally against a basket of currencies to 92.533, following a 0.4% gain in the previous session.
The greenback's move came even as U.S. Treasury yields fell amid slower-than-expected service-sector expansion. The benchmark 10-year Treasury yields were pinned near their lowest since Feb 24.
GOLD
Gold prices hovering at a 3-week high scaled in the previous session, helped by a drop in U.S. Treasury yields. The spot gold advanced to $1,797.60 an ounce and jumped to $1,798.60 per ounce for gold futures. Previously closed at $1,796.50 and $1,794.20, respectively.
Elsewhere, silver was steady at $26.25 per ounce, palladium fell slightly to $2,795.00, and platinum added 0.3% to $1,087.70.
ECONOMIC OUTLOOK
Asian share markets stumbled on Wednesday following losses on Wall Street with the S&P 500 ending its 7-day winning streak. A bout of risk aversion boosted bonds and the dollar, while investors braced for minutes from the Fed’s last meeting which should underline a hawkish turn in U.S. monetary policy.
Inflationary pressures, reduced central bank stimulus and the spread of the COVID-19 Delta strain are among catalysts watched by traders and investors today.
The Chinese crackdown on tech companies also impacting the markets movements. Chinese technology stocks remain under the microscope after the Cyberspace Administration of China (CAC) ordered an investigation into Didi Global Holdings just days after it listed on the NYSE.
Data from the ISM showed that U.S. services industry activity moderated in June, likely restrained by labour and raw material shortages, resulting in unfinished work continuing to pile up. The ISM survey's measure of service employment fell to a reading of 49.3 in June from 55.3 in May.
Later today, investors will keep an eye on the FOMC meeting minutes for more clues on when the U.S. central bank may begin tapering the substantial asset purchases that have bolstered financial markets.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 110.942 and 111.110.
- Support line of 110.398 and 110.230.
Commentary/ Reason:
The dollar easing to 110.527 against the yen on Wednesday, continued to fall back from Friday’s 1-1/4 year high.
The USD/JPY pair now extends to its weekly decline.
The market mood is sour, with safe-haven assets appreciating against the greenback yet the latter higher against high-yielding rivals. The U.S. Treasury yields ticked lower after the long weekend, with that on the 10-year note currently around 1.42%.
However, the accelerating COVID-19 infections in Tokyo renewed concerns about a potential surge triggered by the Olympics, which open July 23 will weigh on the local currency.
The FOMC meeting minutes report could be decisive on Wednesday.
