Some Asian Stocks Bounce Back, Weaker US Futures Still Weigh

Talking Points:

  • Asian stocks put in a mixed session. The Nikkei and ASX managed gains
  • However, South Korean indexes were lower again, as were Chinese stocks as US futures turned down
  • The US Dollar steadied against its major traded rivals

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Asian equities were more composed Wednesday thanks to a more stable performance on Wall Street which seems to have prevented this week’s global equity rout from taking another turn around the planet.

Worries about reduced liquidity thanks higher US interest rates, the prospect of an inflation comeback after years of price torpor and suspicions that some stock valuations were beyond justification all combined to darken the backdrop for stocks in the past three sessions. However, the world’s underlying economic fundamentals still look robust, a fact which may be underpinning indexes.

The Nikkei 225 ended Wednesday up, if not by much, rising 0.16%. Australia’s ASX 200 rebounded by 0.7%. Gains were not universal however with Chinese stocks lower –weighed down by the financial sector. South Korean stocks sustained some quite heavy losses as investors cashed out of blue chips. A late session turn lower for US equity futures was not good news for those indexes still trading when it came.

There was little to see in Asia’s foreign exchange session with the US Dollar steady against most major rivals although it did drift down against the Japanese Yen. China set its onshore Yuan reference rate for the USD/CNY at 6.2882- that’s the strongest for the local currency since late 2015. Senior DailyFX Currency Strategist Ilya Spivak thinks that one danger for US Dollar bulls might be that of more dovish commentary from US Federal Reserve officials in the days ahead

Gold prices found takers at three-week lows while crude oil prices rose on the latest report of declines for US stockpiles. Bitcoin prices were steadier than they have been, holding above $ 7,500 as Asian trading wound down.

The remainder of Wednesday is pretty full of economic data, but little of it is what you might call first-tier. Likely highlights include German industrial production numbers, the Swiss real estate bubble index from UBS, US mortgage applications and Canadian building permits. The Department of Energy will release its weekly crude oil inventory roundup. Dallas Federal Reserve President Robert Kaplan will speak in New York. European Central Bank board members Sabine Lautenschlager and Daniele Nouy will speak in Frankfurt.

— Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX

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