Gold struggles for direction with Fed minutes on the radar

Aug 17 (Reuters) – Gold prices were little changed on Wednesday, with gains curbed by a firmer dollar, while investors braced for any guidance on future US interest rate hikes from the minutes of the Federal Reserve’s latest policy meeting.

Spot gold was flat at USD 1,775.85 per ounce at 0845 GMT. US gold futures were little changed at USD 1,789.20.

Gold is struggling to find a clear direction, and so the Fed’s minutes could represent a significant market driver, with the central bank’s annual Jackson Hole Symposium getting closer, said Carlo Alberto De Casa, external analyst for Kinesis Money.

“Inflation has given some signal that we could have reached the peak, but before seeing any further rebound in gold, investors will probably need some dovish signal from the Fed,” he added.

The Fed has raised its benchmark overnight interest rate by 225 basis points (bps) in total since March to tame high inflation. Traders are pricing in a 50 or 75 bp rate hike at its September meeting

Recent hawkish remarks from Fed policymakers has led to a pullback in gold prices from the key USD 1,800 level, despite signs of easing inflation.

Rising US interest rates increase the opportunity cost of holding non-yielding bullion.

However, StoneX analyst Rhona O’Connell said: “the Empire State Manufacturing figures which were dreadful, argue for a more benign rate hike than last time,” and that supports gold as it thrives on uncertainty.

“The Fed has dropped its previous policy of guidance so the minutes, which are three weeks out of date, will only really give us a backdrop,” O’Connell said, adding the market will, however, be waiting to read between the lines.

The dollar firmed against its rivals, with the focus on US retail sales data and the Fed minutes.

Meanwhile, data showed British consumer price inflation jumped to 10.1% in July, its highest since 1982.

Spot silver fell 0.6% to USD 20.00 per ounce, platinum dropped 0.5% to USD 930.16.

Palladium was little changed at USD 2,152.20.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Mark Potter)

US dollar holds gains ahead of Fed minutes

LONDON, Aug 17 (Reuters) – The dollar held onto gains against other major currencies on Wednesday, ahead of the release of minutes of the US Federal Reserve’s July meeting that could give further clues about the pace of further interest rate hikes.

The greenback has recovered the ground it lost since softer-than-expected inflation data last week led to investor bets that price rises may have peaked, weakening the dollar.

“The question is whether the Fed wants to use these minutes as a communication tool to push back against the view of a 2023 easing cycle,” ING currency analysts said in a note.

Several Fed officials have signalled over the past week that the central bank will still act decisively to combat inflation, helping lift the dollar back up.

US retail sales data due later on Wednesday will also be watched closely as an indicator of the economy’s resilience.

The dollar index was last broadly flat on the day at 106.510. It has recovered by around 2% since last week’s post-inflation data low, but remains more than 2% off the two-decade high of 109.29 hit in mid-July.

The euro was also broadly unchanged versus the dollar at USD 1.01785, ahead of the final reading for euro zone GDP in the second quarter due later on Wednesday, after preliminary data showed faster than expected growth despite the deteriorating outlook.

Sterling gained 0.2% to USD 1.21155, after official data showing British consumer price inflation jumped to 10.1% in July – the highest since February 1982.

The New Zealand dollar jumped as much as 0.6% after the country’s central bank announced a fourth consecutive 50 basis point rate hike to 3.00% without giving hints of slowing down.

But the kiwi dollar later reversed course and was last down 0.4% on the day at USD 0.63210.

“It (the RBNZ’s remarks) were marginally on the hawkish side, enough to keep the pressure on rates,” said Jason Wong, senior market strategist at BNZ.

The Aussie dollar fell 0.7% to USD 0.69750, after wage data showed growth slightly below expectations and well behind inflation.

The US dollar gained 0.4% versus the yen to 134,785, after data showed Japan’s trade gap widened after a record surge in imports in July.

(Reporting by Iain Withers, additional reporting by Alun John in Hong Kong, Editing by Mark Heinrich)

Signs of slowing growth weigh on CEE currencies

Aug 17 (Reuters) – Signs of slowing economic growth weighed on central and eastern European currencies and stocks on Wednesday, while emerging market stocks hovered at seven-week highs as investors awaited minutes of the US Federal Reserve’s last meeting.

Hungary’s forint dropped for a third straight session, down 0.9% against the euro, while the zloty fell 0.7%, on course for its worst session in three weeks.

The Romanian leu inched lower after marking its worst session in 3-1/2 years on Tuesday.

Data on Wednesday showed Romania’s second quarter GDP growth beat expectations, while Hungarian economic growth slowed on a quarter-on-quarter basis. Polish GDP came in much lower than expected.

A slowdown in domestic demand, rising interest rates, government spending cuts and companies’ surging costs amid double-digit inflation are dampening growth in the central and eastern Europe, economists say.

“There is a real risk that some EMs might experience an H2 growth cliff – we were alarmed by a sharp drop in July’s activity surveys in Poland, the Czech Republic, and Mexico,” said Natalia Gurushina, chief economist, EM fixed income at VanEck.

More broadly, sentiment was cautious ahead of Fed minutes due at 1800 GMT. Bets for a third consecutive 75 basis points rate hike had come down after data last week showed softer-than-expected US inflation growth. But odds are now more or less split between a 50 bps and 75 bps hike.

Emerging market stocks were up 0.2%, with gains capped by losses in central and eastern Europe.

Against a steady dollar, South Africa’s rand slipped 0.5% ahead of local retail sales data for June, which is seen having grown at a significantly slower pace month-on-month.

Turkey’s lira was flat against the dollar, less than 2.5% away from record lows, with investors expecting the central bank to hold its key interest rate steady at 14% again at Thursday’s meeting, despite inflation surging to almost 80%.

A report of Ankara signing a contract for more Russian S-400 defence systems raised worries about frayed ties with NATO allies. The United States impose sanctions on Turkey after its initial 2020 purchase of the S-400 system.

Kenyan government bonds gave back some of Tuesday’s recovery as the country braced for a legal battle over the presidential election victory awarded to current deputy president William Ruto.

Israel’s shekel currency extended gains against the greenback, inching closer to four-month highs, after a sharp rebound in the country’s economic activity and a jump in annual inflation made a 75 bps interest rate increase more likely next week.

(Reporting by Susan Mathew in Bengaluru; Editing by Mark Potter)

World shares edge up even as inflation and policy concerns linger

Aug 17 (Reuters) – World shares edged up on Wednesday taking comfort from strong US retail earnings even though the UK’s highest inflation since 1982 and a rate hike in New Zealand reminded investors of the challenges facing the global economy.

MSCI’s benchmark for global stocks was up 0.1% by 0829 GMT, extending its July recovery, although concerns over high inflation and policy tightening kept a lid on gains.

European shares were barely changed after a positive open. The MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.2%, off earlier highs.

Wall Street looked set for a weaker start after strong gains on Tuesday following stronger-than-expected results from Walmart and Home Depot which bolstered views on the health of consumers. S&P 500 futures were down 0.3%.

But British consumer price inflation jumping more than expected to 10.1% in July highlighted growing pressures on households while cementing expectations of another 50 basis point (bps) rate hike at the next Bank of England meeting.

After an initial spike on the data, sterling pared some gains and was last up 0.1% against the dollar.

“Higher inflation should trigger a more aggressive monetary policy response from the Bank of England – a bullish signal for sterling,” said Matthew Ryan, Head of Market Strategy at Ebury.

“On the other hand, however, higher prices present a clear downside risk to economic activity, and raise the possibility of a potentially prolonged UK recession, which is clearly bearish for GBP,” he added.

Shares in New Zealand were flat. After an initial spike the kiwi dollar turned negative after the country’s central bank announced a fourth consecutive 50-bps rate hike without giving hints of slowing down.

The hike was in line with forecasts, but Imre Speizer, head of NZ market strategy at Westpac, said the tone of RBNZ’s statement was more hawkish than expected.

“Clearly they’re a bit more worried about wage inflation and a very tight labour market, that’s been a big recent development,” Speizer said.

In foreign exchange markets, the dollar index gained 0.15% to 106.64 ahead of the release of minutes from the Federal Reserve’s latest meeting which investors will scrutinize for more clues on its policy tightening outlook.

The index, which tracks the greenback against six main peers, has recovered most of the ground it lost last week after a cooler-than-expected US inflation reading but remains well off its mid-July top.

In Europe, yields rose as the UK inflation data shifted investors’ focus back to potential further monetary tightening in the euro area. German 10-year bond yields rose 6 bps to 1.43%, their highest since July 22. Ten-year Treasury yields rose 4 bps to 2.865%.

Oil prices stayed near 6-month lows as worries over a global economic recession lingered, although an unexpectedly large drop in US stocks provided support earlier in the day.

Brent crude was down 0.3% at USD 92.06 a barrel while US West Texas Intermediate crude was flat at USD 86.5.

Spot gold traded in a narrow range and was last down around 0.2% at USD 1,7712.5 an ounce.

(Reporting by Danilo Masoni and Sam Byford in Tokyo; Editing by Nick Macfie)

European shares slip on inflation worries, Germany leads fall

Aug 17 (Reuters) – European shares slid on Wednesday and bond yields rallied after a sharp rise in UK inflation brought the spotlight back to more monetary tightening amid data which showed euro zone economic growth was slightly less robust in the second quarter.

The pan-European STOXX 600 shed 0.9%, clocking its biggest one-day percentage fall in more than a month. The index also snapped a five-day winning streak.

Data showed British consumer price inflation rose to 10.1% in July, its highest since February 1982. Britain’s FTSE 100 fell 0.3%.

“The market is seeing the UK experience as a harbinger of what is to come in the EU,” said Stuart Cole, chief macro economist at Equiti Capital.

Euro zone government bond yields jumped after the inflation reading, while investors also turned their focus to data which showed economic growth in the bloc was less-than-expected in the second quarter but still strong, and employment rose again.

European bourses have bounced off June lows, but have been struggling to make headway in August on growing concerns of a recession, high inflation and low water levels in the Rhine river.

The river is Germany’s main commercial artery, which is now experiencing a block, with 20 ships stuck in traffic after a vessel’s engine failure closed part of the waterway.

German stocks fell 2.0%.

“Rhine troubles add to pressure on the German industry,” said Andrew Kenningham, chief Europe economist at Capital economics.

He noted that even if it is a smaller problem for Germany compared to the gas crisis or a recent shortage of semiconductors, if it persists until December it could weigh on economic growth and add to inflation.

Money markets in the euro zone, meanwhile, continue to fully price in a 50-basis point European Central Bank rate hike in September.

Among stocks, Uniper dropped 12.1% after the German utility reported a first-half net loss of 12.3 billion euros (USD 12.5 billion), mainly due to lower Russian gas supplies.

Sanofi fell 5.7% after the French healthcare company stopped further work on amcenestrant, a treatment once seen to have strong commercial potential in breast cancer, after a second trial failure.

Switzerland’s biggest life insurer Swiss Life rose 0.3% after posting a 4% rise in its half-yearly net profit.

Danish brewer Carlsberg jumped 3.9% as it said it had not seen rising living costs impacting beer sales.

(Reporting by Anisha Sircar and Shreyashi Sanyal in Bengaluru; editing by Uttaresh.V and Emelia Sithole-Matarise)

As earnings support US stock rebound, worries over future profits grow

NEW YORK, Aug 17 (Reuters) – Stronger-than-expected corporate earnings have helped fuel the rebound for US stocks but some investors are pointing to potential risks ahead for profits that could sap the market’s momentum.

With the vast majority of S&P 500 companies reported, second-quarter earnings are expected to have climbed 9.7% from a year earlier, well above the 5.6% estimated on July 1, according to Refinitiv IBES. The robust profits have supported a rally that has taken the S&P 500 up about 14% this quarter, after a brutal first half.

Some market participants are growing concerned, however, that strong corporate numbers may not last, as companies face an array of challenges, including surging inflation and changing consumer spending habits. These may make it difficult for stocks to hold their recent gains or rise further, they said.

“There is some downside to earnings going forward and it’s revolving around inflation and the ability of companies to pass on those rising costs,” said Paul Nolte, portfolio manager at Kingsview Investment Management.

“I would think the next leg (higher) is going to be a little bit harder” for stocks, he said.

Analysts’ estimates for full-year profit growth have edged lower since the start of July, but still call for solid growth — 8% in both 2022 and 2023, according to Refinitiv.

Strategists at fund management giant BlackRock, however, are among those who believe the market’s views are overly optimistic.

One reason is a shift in consumer spending from goods to services that they believe will weigh on S&P 500 profits.

While goods make up less than a third of gross domestic product, earnings tied to goods are expected to account for 62% of S&P 500 earnings this year, BlackRock said.

“This means a boom in services doesn’t power S&P 500 earnings as much as it does the economy,” they wrote on Monday.

Overstocked inventories at companies such as retailers and semiconductor manufacturers show that such a trend is already underway, they said.

“The risk of disappointing earnings is one reason we’re tactically underweight stocks,” BlackRock said.

Earnings expectations are “remarkably strong” given headwinds such as slowing growth in China and an inverted US Treasury yield curve, which often precedes a recession, said Jack Ablin, chief investment officer at Cresset Capital.

He remains “slightly underweight” equities, despite the recent rebound. Nolte, of Kingsview, has been adding to stock positions in portfolios he manages although he is still below his benchmark allocation.

Morgan Stanley’s strategists, meanwhile, are focused on the prospect of weakening profit margins. Overall analyst estimates call for companies’ operating margins at all-time highs next year, they noted.

“The combination of sustained, higher wage costs and slowing end market/consumer pricing loudly signals margin pressure, which is at odds with optimistic consensus estimate,” they wrote Monday.

The firm believes downward earnings revisions are going to accelerate over the next two months, based on historical data going back to 1996.

At the same time, rising valuations could set a higher bar for earnings to come in strong enough to justify the elevated prices. The forward price-to-earnings estimate for the S&P 500 has risen to about 18 times after falling below 16 times in June, according to Refinitiv Datastream. The ratio is still well below the nearly 22 times level reached at the start of the year.

For now, however, companies have continued to show better-than-expected strength in earnings. Walmart WMT.N on Tuesday nudged up its annual profit forecast, partly reversing a hefty cut less than a month ago, while Home Depot’s HD.N quarterly sales surpassed estimates after demand from builders and higher prices helped it cushion a hit from dwindling store visits.

Indeed, some market watchers believe the upbeat earnings trends will continue.

Citi strategists said in an Aug. 12 note that earnings revision trends had improved so far in August versus the previous month.

“The stabilization in revisions is encouraging,” Citi said in the note. “However, 2023 estimates have not worked lower in tandem so there may still be some risk to out year estimates.”

(Reporting by Lewis Krauskopf; Editing by Ira Iosebashvili and Richard Pullin)

Oil prices turn more volatile as investors exit the market

NEW YORK/LONDON, Aug 17 (Reuters) – Traders and fund managers have left crude oil markets in recent months, dropping activity to a seven-year low amid the worst global energy crisis in decades as investors become unwilling to deal with persistently high volatility.

The exodus of participants, especially hedge funds and speculators, has made daily price swings far greater than in previous years, making it harder for companies to hedge against physical purchases of oil. The volatility has harmed companies that need energy market stability for their operations, which includes oil-and-gas companies, but also manufacturing and food-and-beverage industries.

Brent crude futures are swinging sharply on a daily basis. Between Russia’s invasion of Ukraine on Feb. 24 through Aug. 15, the daily range between Brent’s session highs and lows averaged USD 5.64. For the same time period last year, the average was USD 1.99, a Reuters analysis of Refinitiv Eikon data showed.

The high volatility is delaying increased capital expenditures that would help supply keep pace with energy demand, said Arjun Murti, a veteran energy analyst. When volatility is high, oil companies have less confidence in price forecasts, he said.

“There will be concern that prices could fall back to lower levels that wouldn’t justify new capex,” Murti told Reuters.

Many different types of investors, including banks, funds and producers, have exited the market, participants said, as the market on some days surges on threats to supply, while on other days the cloudy economic outlook causes equally wild selloffs.

Overall open interest in the futures market has fallen nearly 20% since the start of the Russia-Ukraine conflict, according to data from JP Morgan. Open interest in Brent crude futures at the start of August sat at 1.802 million contracts, the lowest since July 2015, according to Refinitiv Eikon data.

The “story is primarily driven by speculators, trend-followers and macro-focused funds looking for a hedge against an economic slowdown that is being priced in by the market,” Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, told Reuters.

The volatility has had a severe impact on businesses in 2022, a July survey from Schneider Electric showed. Twenty-four of 100 companies in industries including energy, manufacturing and construction firms said it has severely affected their business, the survey showed.

Forty-three percent of companies said energy budgets are the biggest operational area affected by supply-chain disruptions, which have stemmed recently from the coronavirus pandemic and geopolitics.

“The huge increase in energy prices has created an imbalance in procurement, budgeting, and production that we are finding increasingly difficult to maintain,” said a survey respondent in the manufacturing and industry sector.

Seventeen percent of the companies said they were either not at all confident or just slightly confident in their organization’s ability to hedge against future volatility.

PRICE SWINGS

Because of declining market participation, oil prices are moving around USD 25 per barrel for every 1 million barrel-per-day variation in supply or demand, JP Morgan said. That is nearly double the USD 15 move before Russia’s invasion, it added. This creates a cycle in which the wild swings make investors less inclined to trade the markets.

“The amount of open interest generally starts to fall when there’s a lot of uncertainty and direction,” said Tony Scott, vice president of Energy Analysis at FactSet. “You wait to pick your spots as the fundamentals become clearer on where things are going.”

The consolidation could also signal that hedge funds that invested in the market a year ago are simply taking profits, he added.

(Reporting by Stephanie Kelly in New York and Noah Browning in London; additional reporting by Arathy Somasekhar in Houston and Julia Payne in London; Editing by Matthew Lewis)

Oil edges off low as strong export demand drains US crude stocks

HOUSTON, Aug 17 (Reuters) – Oil prices rose about 1.5% after hitting a six-month low on Wednesday, as a steeper-than-expected drawdown in US crude stocks outweighed concerns over rising Russian output and exports as well as recession fears.

US crude stocks fell by 7.1 million barrels in the week to Aug. 12 to 425 million barrels, Energy Information Administration (EIA) data showed, compared with analysts’ forecasts for a 275,000-barrel drop in a Reuters poll.

Brent crude settled USD 1.31, or 1.42% higher at USD 93.65 per barrel. Earlier in the day, recession worries had pushed the benchmark price to its lowest since February at USD 91.51.

US West Texas Intermediate (WTI) crude rose USD 1.58, or 1.8%, to USD 88.11 per barrel.

U.S crude exports hit 5 million barrels per day, the highest on record, EIA data showed, as WTI has traded at a steep discount to Brent, making purchases of US crude more attractive to foreign buyers.

In a sign of strong demand, gasoline stocks drew 4.6 million barrels, much higher than the expected 1.1 million barrel draw.

“It was expected to be a friendly report and it was pretty much across the board. Some of those demand destruction concerns that the market was going through seem to be alleviated a little bit,” said Phil Flynn, an analyst at Price Futures group.

The American Petroleum Institute had on Tuesday flagged a 448,000 barrel draw in crude stocks and 4.5 million barrels in gasoline inventories, according to sources.

Oil has soared in 2022, coming close to an all-time high of USD 147 in March after Russia’s invasion of Ukraine.

However, Russia has started to gradually increase oil production after sanctions-related curbs and as Asian buyers have increased purchases, leading Moscow to raise its forecasts for output and exports until the end of 2025, an economy ministry document seen by Reuters showed.

Russia’s earnings from energy exports are expected to rise 38% this year partly due to higher oil export volumes, according to the document, in a sign that supply from the country has not been affected as much as markets originally had expected.

The prospect of recession has also more recently weighed on oil prices. British consumer price inflation jumped to 10.1% in July, its highest since February 1982, intensifying a squeeze on households, and pushing oil prices lower earlier in the day.

“There are growing downside risks as a result of the growth outlook and ongoing uncertainty around Chinese COVID restrictions,” said Craig Erlam of brokerage OANDA.

An exodus of participants, especially hedge funds and speculators, has made daily price swings far greater than in previous years.

On the oil supply front, the market is awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports.

The European Union and United States said on Tuesday they were studying Iran’s response to what the EU has called its “final” proposal to save the deal.

Analysts at Goldman Sachs said a return of Iranian crude supply would reduce their 2023 forecast by USD 5-10 per barrel from USD 125 per barrel.

(Additional reporting by Alex Lawler in London, Yuka Obayashi in Tokyo and Emily Chow in Kuala Lumpur; Editing by David Evans, Kirsten Donovan, Deepa Babington, Alexander Smith and Richard Chang)

Dow, S&P 500 climb as upbeat results from Walmart, others boost optimism

NEW YORK, Aug 16 (Reuters) – The Dow and S&P 500 rose on Tuesday as stronger-than-expected results and outlooks from Walmart and Home Depot bolstered views on the health of consumers, while technology shares declined and weighed on the Nasdaq.

The S&P 500 consumer discretionary and staples sectors, gave the benchmark index its biggest lift, while the S&P 500 retail index rose 1.9%.

The S&P 500 also came close to breaking above its 200-day moving average, a key technical level. The benchmark index has not closed above that level since early April.

Walmart Inc. (WMT) shares jumped 5.1% after the retailer forecast a smaller drop in full-year profit than previously projected, while Home Depot Inc. (HD) gained 4.1% after it surpassed estimates for quarterly sales.

At the same time, the 10-year US Treasury yield rose, weighing on technology and other high-growth stocks. Shares of Microsoft Corp. (MSFT) were down 0.3% on Tuesday after recent gains.

After a harsh first half of the year, the S&P 500 is up nearly 14% since the start of July, helped in part by better-than-expected earnings from Corporate America.

Investors have also been optimistic lately that the Federal Reserve can achieve a soft landing for the economy as it tightens policy and raises interest rates to reduce decades-high inflation.

“When you transition from a bear market to a bull market, especially one where the Fed is raising rates and there are concerns over the consumer, you really want to see consumer discretionary underpinned by enthusiasm. And today’s move in discretionary names is positive for the market,” said Quincy Krosby, chief global strategist for LPL Financial in Charlotte, North Carolina.

Walmart in July slashed its profit forecast amid surging prices for food and fuel.

The Dow Jones Industrial Average rose 239.57 points, or 0.71%, to 34,152.01, the S&P 500 gained 8.06 points, or 0.19%, to 4,305.2 and the Nasdaq Composite dropped 25.50 points, or 0.19%, to 13,102.55.

With results in from the majority of S&P 500 companies, second-quarter earnings are expected to have risen 9.7% from a year earlier, compared with 5.6% estimated on July 1, according to IBES data from Refinitiv.

Shares of Target Corp. (TGT), which reports quarterly results early on Wednesday, closed 4.6% higher.

Still, investors will be anxious to see July US retail sales data, which is due on Wednesday as well. Also on Wednesday, the Fed is scheduled to release minutes from its July policy meeting.

Investor sentiment is still bearish, but no longer “apocalyptically” so, according to BofA’s monthly survey of global fund managers in August.

Volume on US exchanges was 10.92 billion shares, compared with the 10.96 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.22-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted 8 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 82 new highs and 40 new lows.

(Reporting by Caroline Valetkevitch in New York; Additional reporting by Bansari Mayur Kamdar, Susan Mathew and Anisha Sircar in Bengaluru; Editing by Anil D’Silva and Matthew Lewis)

Global stocks steady, US Treasury yields rise as recession worries persist

NEW YORK, Aug 16 (Reuters) – Global equity markets were flat while US Treasury yields rose on Tuesday, as recession worries persisted amid concern the Federal Reserve will continue its steep interest rate hikes despite nascent signs of a slowdown in inflation.

The yield curve between two- and 10-year Treasury notes, viewed as an indicator of impending recession, remained inverted at minus 40 basis points on Tuesday.

“It seems that the bond market doesn’t quite reflect the inflation happening in the economy,” said George Young, a portfolio manager at Villere & Company in New Orleans.

“The weird thing is that in the last couple of weeks bond yields have gone up and stayed up so there’s kind of a disconnect. There’s kind of a question maybe inflation isn’t that bad and we may actually be going into a recession. Market participants are all over the place,” he added.

MSCI’s gauge of stocks in 50 countries across the globe was up 0.05%. Overnight in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.07% lower, while Japan’s Nikkei lost 0.01%.

US Treasury yields edged higher as encouraging data from US retail giants suggested the Fed has room to further raise rates to cool inflation. Benchmark 10-year Treasury yields were at 2.8077% from 2.791% on Monday.

On Wall Street, the benchmark S&P 500 and the Dow reversed earlier losses and closed higher, with stocks in consumer discretionary, consumer staples, financials and industrials leading the rebound.

The Dow Jones Industrial Average rose 0.71% to 34,152.01, the S&P 500 gained 0.19% to 4,305.2 and the Nasdaq Composite dropped 0.19% to 13,102.55.

Oil prices dropped nearly 3% in volatile trading as recession worries raised uncertainty over global crude demand, even as markets awaited clarity on talks to revive a deal that could allow more Iranian oil exports.

Brent crude futures fell 2.9% to settle at USD 92.84 a barrel, after hitting a session high of USD 95.95. West Texas Intermediate crude (WTI) decreased 3.2%, settling at USD 86.53 a barrel, after rising to USD 90.65.

The dollar was flat, pulling back from earlier gains, amid expectations the US economy would be stronger than peers in the event of a slowdown in growth.

The dollar index was down 0.009%, with the euro up 0.1% to USD 1.017.

Safe-haven gold fell for a second straight session on Tuesday as an initially firmer dollar made the greenback-denominated metal more expensive.

Spot gold dropped 0.2% to USD 1,774.91 an ounce, while US gold futures fell 0.36% to USD 1,774.90 an ounce.

(Reporting by Chibuike Oguh; Editing by Sandra Maler/Alex Richardson/Ken Ferris)

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