Overnight Market Wrap: 6 September 2022

Overnight Market Wrap: 6 September 2022

Key Points:

  • Stocks, Treasury Yields Rise as Crude Oil Climbs
  • Crude bolstered by the first OPEC+ supply cut in over a year
  • Yuan fluctuates after China’s move to cut forex reserve ratio

Stocks in Asia rose along with US equity futures on Tuesday amid a dip in the dollar, a break from the dour sentiment that’s been prevailing in markets as central banks tighten monetary policy.

Shares advanced in Japan and Hong Kong while China fluctuated. S&P 500 futures pushed higher ahead of the resumption of Wall Street trading after a holiday. Treasuries dipped across the curve, taking the 10-year yield to 3.21%. 

Crude has climbed to about $89 a barrel after OPEC+ agreed to cut 100,000 barrels a day in October. Gas prices surged in Europe on Monday, hurting the region’s shares, following Russia’s decision to keep a key pipeline offline.

A dollar gauge retreated, with the British pound and commodity-linked currencies leading gains. The euro also found some relief after earlier hitting a two-decade low on Europe’s energy woes.

The offshore yuan pared gains after strengthening in the wake of China’s announcement of a cut in the amount of foreign-exchange deposits banks must set aside as reserves. The People’s Bank of China set the daily reference rate for the yuan at a stronger-than-expected level for a 10th day, the longest run since 2019.

The next leg in a wave of monetary tightening is due in Australia, where economists expect the central bank to lift the policy rate by a further 50 basis points. Tightening financial conditions globally have been weighing on stocks and bonds in recent weeks. Bouts of investor calm have tended to fizzle.

Elsewhere, Bitcoin retook the $20,000 level and gold made gains.

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