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Talking Points

  • Asian stocks were always going to find the going tough given New York’s Tuesday swoon
  • Sure enough they did, with reports of more missile tests by Pyongyang deepening the local gloom
  • Japan dominated the Asian data slate, but the numbers were second-tier and largely passed depressed markets by

Asian stock markets endured a miserable Wednesday, plagued by very weak leads from Wall Street and reports of yet more missile tests by North Korea

Investors seem to be expressing rising doubts about the growth agenda of US President Donald Trump and dumping perceived riskier assets in the process. Asian stocks have enjoyed a reasonable run higher in recent sessions so Tuesday’s US jitters could have been the chance some were waiting for to take a bit of profit. In any case the Nikkei 225 ended down 2.1%, for its worst session in two weeks. Australian stocks slipped 1.6%, with nervous glances cast at the country’s plentiful commodity producers. Iron ore prices have teetered as investors worry that China’s inventory rebuild could be slowing. The country’s bank stocks were hit hard too.

Chinese stocks weren’t immune with both mainland and Hong Kong bourses slipping back.

The day’s economic numbers were focused on Japan. Official trade balance data showed a January export surge, but policy meeting minutes from the Bank of Japan added little to what investors already knew. Later in the session an official leading indicator index picked up, but only by a little.

The US Dollar was largely weaker, with USD/JPY falling to a four-month low of 111.60 at one point. The Australian Dollar was a notable exception, with AUD/USD slipping back as investors apparently decided to cash out and take recent gains.

Gold prices were on track to extend Tuesday’s performance, and seemed to be happy around two-week highs as equity wilted. Crude oil prices slipped once again. Worries that the market will remain oversupplied despite production cuts from traditional producers are still dominant. US crude made a four-month low of $48.07/barrel.

The remainder of Wednesday offers a scanty economic calendar. US existing home sales data will be released, as will official oil inventory numbers from the Department of Energy.

Would you like to know more about trading the financial markets? DailyFX’s trading guide should be your first stop.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter:@DavidCottleFX