Interest rate, oil price and dollar

SINGAPORE — Asia-Pacific markets looked poised for a lower start on Wednesday after an overnight selloff on Wall Street.

Nikkei futures indicated opening declines for the Japanese benchmark at the top of the hour.

In Australia, the ASX 200 fell 0.67% in early trading, with most sectors trading lower. The heavily weighted financial services sub-index fell 0.96% as the country’s major banks were liquidated.

“Stock markets fell while oil stocks gained overnight as markets expect central banks to need to raise rates faster to control inflation,” analysts wrote. ‘ANZ Research in a Wednesday morning note.

In the United States, the Dow Jones Industrial Average fell more than 540 points after Goldman Sachs shares sold off as the investment bank missed analysts’ earnings expectations. The S&P 500 as well as the Nasdaq Composite, which includes interest rate sensitive technology stocks, also fell sharply.

Currencies and Oil

In the currency market, the US dollar rose 0.49% to 95.726 against a basket of its peers, falling from a previous level around 95.129.

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Analysts at ANZ Research said rising US bond yields weighed on risk appetite and gave the world’s main reserve currency a boost.

The yield on the 10-year Treasury rose above 1.87% on Tuesday, its highest level in 2 years, after starting the new year at around 1.5%. The 2-year rate, which reflects short-term interest rate expectations, exceeded 1% for the first time in two years.

The Japanese yen changed hands at 114.58 to the dollar while the Australian dollar traded almost at $0.7187.

Oil prices hit a seven-year high overnight after Houthi rebels in Yemen claimed responsibility for a deadly attack in Abu Dhabi earlier this week, sparking fresh tensions in the region. The United Arab Emirates have vowed to retaliate against them.

International benchmark Brent as well as US crude futures rose more than 1% and 2% respectively, with both oil contracts hitting their highest level since October 2014 earlier in the session.

“Global oil demand continues to be resilient despite the latest surge in Covid-19 cases due to the highly transmissible omicron variant,” Vivek Dhar, mining and energy commodity analyst at Commonwealth Bank of Australia, said in a statement. a morning note.

He explained that oil demand is sensitive to Covid-19, especially Covid-related lockdowns and restrictions, more than other commodities, as around two-thirds of global oil consumption is mobility-related.

“Fears are fading, however, that the omicron variant will cripple oil consumption,” he wrote, adding that jet fuel consumption, for example, continues to rise.

During Asian trading hours on Wednesday, U.S. crude was up 1.69% at $86.87 a barrel.

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