Equity Markets

Asian Equity Market

In Asia, performance was mixed across the indices with the SHCOMP recording a drop of -1.30%. The HSI closed essentially unchanged as it stalled just below its 200-day moving average. Other indices also closed near unchanged levels: the Nikkei (-0.03%) was paused to consolidate the upside move in the prior day, while the Kospi (+0.11%) recovered from late day losses.

European Equity Market

In Europe, the major indices closed higher after the declines yesterday. Most rebounded off the session’s lows to close higher, though the UK’s FTSE 100 only gained +0.14%. Southern Europe’s indices were also at the lower end of the gains, with the German DAX leading the way at +0.98%, after being down -0.39% earlier in the session.

US Equity Market

In the US, both the S&P 500 (+1.02%) and Nasdaq (+2.13%) closed at record highs once again (3rd consecutive time). Despite the strong performance in the S&P and Nasdaq, the volatility indexes, VIX and VXN, were up +5.63% and +10.27% respectively. Amongst the S&P sectors, communications were the best performer at +3.4%, while energy lagged at -2.1%.

Fixed Income

Yields on longer-term U.S. Treasuries were higher Wednesday as traders anticipated that Federal Reserve comments would raise inflation expectations. Long-term yields were up 0.49-2.00bps and short-term yield rose 0.11- 0.26bps. This had the effect of steepening the US 2Y-10Y curve to 53.8bps. Euro zone bond markets turned their focus to a pick-up in supply on Wednesday, with yields continuing to inch up after a hefty sell-off a day earlier saw key assets suffer their biggest daily losses since May.

Commodities

Precious metals were strong on Wednesday, as gold rose +1.36% while silver rose +3.64%. Silver broke out of its recent consolidation and downtrend line, with a sustained close above this likely to lead to more short-term upside. In oil markets, the advancement into a Cat 4 hurricane for Laura, pushed markets higher at the start of the session. Brent eventually closed lower by -0.48%, while WTI closed essentially unchanged. Both are still trading higher than their 200-day moving average. In base metals, nickel registered a new YTD high, up +1.22% on good volume. Now substantially higher than the 50% Fib of the 2019 highs and 2020 lows, nickel seems to have little resistance advancing towards the USD15,7000/ounce levels.

Currencies

The dollar edged lower on Wednesday but stayed within a relatively tight range a day ahead of a highly anticipated speech by Federal Reserve Chairman Jerome Powell. The dollar index was down marginally at -0.01% to 93.006, it high a session high of 93.37 after better than expected U.S durable goods orders. The pound was the biggest winner as it rose 0.44% as it awaits BOE Governor scheduled speech on Thursday while some analyst expects a correction as sterling factors in the risk of a no-deal Brexit as well as high employment figures after the government furlough scheme ends in October. The euro dipped -0.04% to 1.183, while the Australian Dollar rose 0.53% and the yen rose 0.38%

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