EQUITIES
Asia-Pacific markets were mixed on Wednesday as investors digested key Chinese economic data. The Shanghai composite was near flat while the Hong Kong’s Hang Seng index was up 0.21%.
China released a slew of key economic data. Its industrial output for November was up 3.8% year-on-year, more than the 3.5% increase in October. Data also showed that retail sales in November rose 3.9% year-on-year, less than October’s 4.9% increase.
Elsewhere, Japan’s Nikkei 225 edged 0.08% lower, while South Korea’s Kospi lost 0.30%, and Australia’s S&P/ASX 200 dipped 0.42%.
Overnight on Wall Street, the Dow Jones Industrial Average fell 0.3% to end at 35,544.18 points, while the S&P 500 lost 0.75% to 4,634.09, and the Nasdaq Composite dropped 1.14% to 15,237.64.
OIL
Oil prices fell on Wednesday for a third day of the week on growing expectations that spread of Omicron coronavirus variant would dent the recovery in global fuel demand.
The International Energy Agency (IEA) on Tuesday said a surge in COVID-19 cases with the emergence of the Omicron variant will dent global demand for oil at the same time that crude output is set to increase, especially in the U.S., with supply set to exceed demand through at least the end of next year.
In contrast, the OPEC on Monday raised its world oil demand forecast for the first quarter of 2022.
In another bearish indicator, industry data showed that U.S. crude inventories last week did not decline as much as expected. The API data showed U.S. crude stocks fell by 815,000 barrels in the week ended Dec. 10, compared with a 2.1-million-barrel drop expected. Gasoline stocks rose by 426,000 barrels, which was a smaller build than expected.
Weekly data from the U.S. EIA is due later Wednesday.
The Brent now traded at $73.09 per barrel, and U.S. crude futures traded at $70.05 per barrel.
Overnight, the Brent futures ends at $73.70 a barrel, while the WTI crude oil prices closed to $70.73 per barrel.
CURRENCIES
The dollar held its recent gains on Wednesday as investors are awaiting the outcome of a key U.S. Fed policy meeting for signs of when the central bank may raise interest rates. The dollar index was at 96.546, having gained 0.5% so far this week in choppy trading
Ten-year yields nudged up to 1.443% but remain well short of the recent top of 1.693%. The yield curve continued its flattening trend as investors wager an earlier start to Fed tightening will lead to slower inflation in the long run.
GOLD
Spot gold edged slightly lower on Wednesday, slipped 0.06% to $1,770.00 per ounce, and U.S. gold futures unchanged at $1,772.70.
Spot silver rose 0.07% to $21.94 an ounce, platinum advanced 0.35% to $914.10, and palladium added 0.14% to $1,625.00.
ECONOMIC OUTLOOK
Asian markets were mixed on Wednesday as investors held their breath ahead of the update on monetary policy due out from the Federal Reserve later today.
Meanwhile the fast-spreading Omicron coronavirus variant kept dampened investor sentiment. The WHO on Tuesday warned that the Omicron variant is spreading faster than any previous strain.
The Fed will conclude its two-day policy meeting on Wednesday later stateside, and central bank Chair Jerome Powell is set to speak at a 2:30 p.m. ET press conference. The world waited to hear from the U.S. Federal Reserve on when it would stop buying assets and start raising interest rates, possibly piling pressure on its peers to follow.
Whatever the Fed decides, it will set the bar for the central banks of the EU, UK, and Japan when they meet this week, and add to pressure for further tightening in other markets. ECB is to follow on Wednesday, the Bank of England on Thursday, and the Bank of Japan on Friday.
Data on Tuesday that showed producer prices increased more than expected in November, solidifying expectations the Fed will announce a faster wind-down of asset purchases. Data from the Labor Department showed the PPI shot up 9.6%, clocking its largest gain since November 2010. That followed an 8.8% increase in October.
