EQUITIES
Shares in Asia-Pacific traded mostly higher on Wednesday, after a Caixin/Markit survey showed accelerating Chinese services activity growth in July. The mainland Chinese stocks were higher, with the Shanghai composite up 0.56%, and the Hong Kong’s Hang Seng index jumped 1.57%.
The South Korea’s KOSPI advanced 1.10%, the Straits Times index in Singapore at 0.93% higher, and the S&P BSE Sensex in India rose 0.84%. In Australia, the S&P/ASX 200 gained 0.33%.
Stocks in Japan meanwhile lagged as the Nikkei 225 slipped 0.28%.
Overnight on Wall Street, the S&P 500 gained 35.99 points, or 0.82%, to close at 4,423.15 - another record closing high - while the Dow Jones Industrial Average rose 0.8%, to 35,116.4, and the Nasdaq Composite added 0.55%, to 14,761.30.
OIL
Oil prices fell for a third day on Wednesday on exacerbating concerns of the spread of the Delta variant of COVID-19 in the U.S. and China, the world's two biggest oil consumers China, threatening to disrupt the recovery in global crude consumption.
The Brent traded at $72.45 per barrel, and U.S. crude futures traded at $70.43 per barrel.
Overnight, the Brent settled at $72.41 a barrel, while the WTI ends at $70.56 per barrel.
CURRENCIES
The yield on 10-year Treasuries was little changed at 1.179%, as traders awaited further indicators of jobs data for a guide to the rates outlook.
The dollar index pinned near recent lows against the basket of major currencies on Wednesday, held at 92.023.
GOLD
Gold prices were flat, as investors awaiting signals from U.S. jobs data on the labour market recovery that could influence the Federal Reserve's tapering plans.
Spot gold was at $1,813.10 per ounce, while U.S. gold futures added 0.1% to $1,815.90. Silver rose 0.4% to $25.68 per ounce, while platinum eased marginally to $1,046.30. Palladium was flat at $2,653.50 per ounce.
ECONOMIC OUTLOOK
Asian shares advanced on Wednesday, led largely by strong U.S. corporate earnings and private survey that shows Chinese services activity growth accelerating in July, although the mood remained cautious as the rapidly spreading Delta variant of the coronavirus clouds the global economic outlook.
Stronger-than-expected profits from U.S. companies in recent weeks have ratcheted up already high Wall Street forecasts on how Q2 earnings growth will look versus last year.
The Caixin/Markit services PMI for July came in at 54.9 on Wednesday, up from June’s reading of 50.3.
Analysts, however, also cautioned as deepening regulatory scrutiny in China that sent jitters through the global technology sector. Shares in U.S.- and European-listed gaming companies fell after a steep sell-off in China's social media and video games group Tencent, driven by fears the sector could be next in regulators' crosshairs.
U.S. crude stockpiles fell by 879,000 barrels for the week ended July 30, the API cited on Tuesday. Gasoline inventories fell by 5.8 million barrels and distillate stocks fell by 717,000 barrels.
Investors awaiting signals from U.S. jobs data on the labour market recovery that could influence the Federal Reserve's tapering plans. The ADP jobs data due later in the day could set the stage for the much-awaited Friday's U.S. non-farm payroll numbers.
TECHNICAL OUTLOOK
[USDJPY]
Important Levels to Watch for Today:
- Resistance line of 109.360 and 109.548.
- Support line of 108.749 and 108.560.
Commentary/ Reason:
The dollar traded 109.057 per yen on Wednesday, having weakened from the levels below 109.8 against the Japanese yen earlier this week, and after touching its lowest since late May overnight at 108.878.
The U.S. dollar eased against the Japanese yen as questions about disappointment in economic growth. Lower Treasury yields are also weighing on the greenback.
Mixed risk sentiment readings are driving investors into the safety of the Japanese yen. The yen has benefited from the dollar's softness, particularly as nerves about the spread of the Delta coronavirus variant keep a degree of caution in currency markets.
The yen strength however was hampered after Japan's services sector activity shrank at a faster pace in July to contract for the 18th consecutive month, dropped to 47.4 from the previous month's 48.0 level.
Bearish sentiment is driving price action which looks set to continue to break out of the current range.
