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Stocks Mixed as Oil Prices Retrace Gains, Fed Wait Limits Trade

Stocks Mixed as Oil Prices Retrace Gains, Fed Wait Limits Trade

David Cottle, Analyst
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Asian Stocks Talking Points:

  • Major equity indexes lacked one overarching theme
  • Oil price falls hit some producers but lifted confidence elsewhere
  • The Dollar held up as that Fed meeting approached

Find out what retail foreign exchange investors make of your favorite currency’s chances right now at the DailyFX Sentiment Page

Oil producers weighed on Asia Pacific stock indexes Wednesday as oil prices slid in response to news that Saudi Arabian production could recover quite quickly from last weekend’s drone attacks on crucial energy infrastructure. The markets also looked ahead to the US Federal Reserve’s monetary policy decision which is due early Thursday morning local time. A quarter point cut in the Fed Funds target rate is widely expected.

Crude oil prices fell around 6% on Tuesday after the Saudi energy minister said that inventories would be used to restore supplies to where they were before the strikes.

Australia’s ASX 200 fell 0.3% with Woodside Petroleum the weakest performer. Oil Search also fell but the sector’s weakness was offset by more strong gains for tech. Adventure retailer Kathmandu pleased investors with its results.

The Australian stock benchmark has returned to a previous range which delineated trade between mid-June and late July.

ASX 200, Daily Chart.

The index looks reasonably comfortable there but major moves are unlikely until the market has parsed Fed commentary.

The Nikkei 225 was down 0.3% as its afternoon trade got under way. Data Wedesday showed that Japanese exports fell 8.2% on the year in August, a poor performance to be sure but better than the 11% fall expected by the market.

Stocks in Shanghai and Hong Kong were very slightly higher. Brewing giant Anheuser Busch Inbev will start taking orders in its second try to spin off its Asian business in Hong Kong on Wednesday. It hopes to raise more than $6 billion in what’s sure to be one of the year’s biggest Initial Public Offerings.

The US Dollar traded near seven-week highs against the Japanese Yen as the oil-price shock of previous sessions faded out somewhat. A dovish Fed should probably weigh on the US currency, but the market is equally likely to take broad comfort from signs that rates will go lower and that may end up supporting the Dollar

The British Pound continued to see some of the more bearish Brexit related bets pared back but remains very much hostage to news-flow.

Asian Stocks Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.