Japan’s economy likely grew at a slower pace than initially estimated in the second quarter, and Asian stocks on Wednesday tracked Wall Street’s slide overnight while the dollar was on the defensive with tensions in the Korean Peninsula showing few signs of abating. A ban on crypto-currency initial coin offerings follows a similar U.S. crackdown. Like the SEC, Chinese regulators are trying to protect consumers and head off systemic risks.

Currencies

The dollar edged down against the yen on Wednesday, getting closer to a recent 4-1/2 month low, pressured by simmering tensions on the Korean peninsula and on comments by a Federal Reserve official about low U.S. inflation. The dollar fell 0.2% to 108.60 and touched a low near 108.50 yen in early Asian trade. That brought it back close to its Aug. 29 nadir of 108.265 yen, its weakest level since mid-April. The Swiss franc rose around 0.1% to 0.9538 franc per dollar, with the franc having gained about 1.1% so far this week. The euro edged up 0.1% to $1.1923 but remained below a 2-1/2 year high of $1.2070 set last week, with investors looking to the European Central Bank’s policy decision due on Thursday. The Canadian dollar last traded at C$1.2369 per U.S. dollar, having set a two-year high of C$1.2336 on Tuesday ahead of a Bank of Canada interest rate decision on Wednesday. The rand traded at 12.88 per dollar, 0.73% firmer than its New York close on Monday. The rand remained beyond the important 13.00 technical support mark, indicating positive momentum.

Treasuries/Rates

 

The U.S. Treasuries market rallied on Tuesday, with the 10-year yield hitting a near 10-month low, as worries about further nuclear tests by North Korea and concerns about Irma, a powerful storm heading toward the southern United States, spurred safety bids. The yield on benchmark 10-year Treasury notes was down 9 basis points at 2.070%. Earlier on Tuesday the yield hit 2.065%, which was its lowest level since Nov. 10.

 

Commodities/Energy

Gold was up for a fifth day on Wednesday as geopolitical risks over North Korea remained elevated, and as low U.S. inflation concerns left some Federal Reserve officials backing delays in further interest rate hikes. Spot gold was up 0.1% at $1,339.87 per ounce, after touching its highest level since early September at $1,344.21 in the previous session. U.S. gold futures for December delivery were nearly unchanged at $1,345.00. Oil prices slipped on Wednesday as crude demand remained subdued on the back of refinery closures following Hurricane Harvey which hit the U.S. Gulf coast 10 days ago. U.S. West Texas Intermediate crude futures were at $48.57 barrel, 9 cents, or 0.2 %, below their last settlement. In international oil markets, Brent crude futures dipped 19 cents, or 0.4%, to $53.19 a barrel.

 

Global Equities

 

U.S. stocks sank on Tuesday, with the S&P 500 stumbling to its biggest single-day loss in about three weeks. The Dow Jones Industrial Average fell 234.25 points, or 1.07%, to 21,753.31, the S&P 500 lost 18.7 points, or 0.76%, to 2,457.85 and the Nasdaq Composite dropped 59.76 points, or 0.93%, to 6,375.57. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 %. Japan’s Nikkei stooped to a four month low and was last down 0.3%. Australian stocks lost 0.6%. Shanghai dropped 0.4% while Hong Kong’s Hang Seng retreated 1%. South Korea’s KOSPI was down 0.3%, with auto stocks dropping on concerns about their sales in China. The index has fallen the past four days.

Regional Updates

 

Kuwait’s stock market outperformed on Tuesday as it reopened after Eid al-Adha holidays, while Abu Dhabi-listed Dana Gas continued surging on the back of a deal to obtain payments from Iraqi Kurdistan. The Kuwaiti index climbed 0.4%. Many investors hope index compiler FTSE will decide at the end of this month to upgrade Kuwait to secondary emerging market status, which would bring fresh inflows of passive funds. Abu Dhabi’s index edged down 0.1% but Dana Gas, the most heavily traded stock, surged 5.5% to close at 0.77 dirham, off an early high of 0.79. More than 85% of the market’s traded volume was Dana shares. Dubai’s index fell 0.3% but amusement park operator DXB Entertainments, the most active stock, added 0.6%, rebounding for a third straight day from a month-long downtrend. Egypt’s index was flat as the market reopened after Eid. The most heavily traded stock, investment firm Qalaa Holdings, climbed 3.2%.

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