Oil settles down on Florida fuel demand worries, Mideast risk drives weekly gains

HOUSTON – Oil prices settled lower on Friday but rose for the second straight week as investors weighed factors such as possible supply disruptions in the Middle East and Hurricane Milton’s impact on fuel demand in Florida.

Brent crude oil futures settled down 36 cents, or 0.45%, at USD 79.04 a barrel. EDT. US West Texas Intermediate crude futures settled down 29 cents, 0.38%, to USD 75.56 per barrel.

For the week however, both benchmarks rose by more than 1%. Money managers raised their net long positions on Brent crude by 123,226 contracts to 165,008 in the week to Oct. 8, according to the Intercontinental Exchange.

“Markets can feel the tension, as Israel contemplates the size and form of their response to Iran’s massive missile attack. If Israel destroys Iran’s oil & gas infrastructure, prices will rise,” said chief economist at Matador Economics, Tim Snyder, in a note on Friday.

Crude benchmarks spiked so far this month after Iran launched more than 180 missiles against Israel on Oct. 1, raising the prospect of retaliation against Iranian oil facilities. Israel has yet to respond.

“USD 75 per barrel for WTI is sort of the fair value area for elevated tensions,” said John Kilduff, partner at Again Capital in New York.

Israeli Defence Minister Yoav Gallant has said that any strike against Iran would be “lethal, precise and surprising.”

“We need to wait and see how Israel responds, but I think until that point the oil market will keep a risk premium,” said UBS analyst Giovanni Staunovo.

Iran is backing several groups fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza, and the Houthis in Yemen.

Gulf states are lobbying Washington to stop Israel from attacking Iran’s oil sites out of concern their own oil facilities could come under fire from Tehran’s allies if the conflict escalates, three Gulf sources told Reuters.

Weighing on prices, Hurricane Milton plowed into the Atlantic Ocean on Thursday after cutting a destructive path across Florida, killing at least 10 people and leaving millions without power.

Gasoline shortages gripped the state earlier in the week as drivers stocked up ahead of the hurricane, with nearly a quarter of 7,912 gasoline stations in Florida out of fuel by Wednesday morning, but the destruction could go on to dampen fuel consumption in the hurricane’s aftermath.

Florida is the third-largest gasoline consumer in the US, but there are no refineries in the state, making it dependent on waterborne imports.

And reservations over high crude inventories and a possibly more gradual monetary easing by the US Federal Reserve have also helped put the recent rally in oil prices on hold, said Yeap Jun Rong, market strategist at IG.

On the supply side, Libya’s national oil corporation (NOC) said on Friday it had restored oil production to levels before the country’s central bank crisis as it reached 1.25 million barrels.

Meanwhile, easing third quarter earnings for big oil may have also weighed on investor sentiment, with weak refining margins due to a slowdown in global demand for fuel and lower oil trading, putting a dent in BP’s BP.L third-quarter profit by up to USD 600 million, the British oil major said on Friday.

(Reporting by Georgina McCartney in Houston, Ahmad Ghaddar, and Paul Carsten in London, Yuka Obayashi in Tokyo, and Jeslyn Lerh in Singapore; Editing by Emelia Sithole-Matarise, Jonathan Oatis, Ros Russell, Diane Craft, and David Gregorio)

Wall Street ends slightly lower after higher than expected inflation, jobless claims

Wall Street’s main indexes closed lower on Thursday as investors looked to higher-than-expected inflation and unemployment claims for indications on the health of the US economy and the path for interest rates.

The closely watched Consumer Price Index rose 0.2% on a monthly basis in September and 2.4% on an annual basis, with both figures being slightly higher than estimated by economists polled by Reuters.

The core figure, which excludes volatile food and energy prices, rose 3.3% year-over-year, versus an estimate of 3.2%.

In a separate report released on Thursday, jobless claims also rose to 258,000 for the week ending Oct. 5, versus an estimate of 230,000.

“Investors were torn between a stronger than expected CPI report and a weaker than expected unemployment claims report,” said Jack Ablin, chief investment officer at Cresset Capital in Chicago. “One showed inflation running hotter than expected and the other showed the economy looking weaker than expected. It’s the worst of both worlds.”

After the economic data, traders were pricing in a roughly 80% probability that the Federal Reserve will cut rates by 25 basis points at its meeting in November and a roughly 20% chance it would leave rates unchanged, according to CME’s FedWatch.

Atlanta Federal Reserve Bank President Raphael Bostic on Thursday said he would be “totally comfortable” skipping an interest-rate cut at an upcoming meeting of the US central bank, adding that the “choppiness” in recent data on inflation and employment may warrant leaving rates on hold in November.

Chicago Fed President Austan Goolsbee said he sees “gradual” rate cuts over the next year-and-a-half, while the New York Fed’s John Williams said he still sees rate reductions ahead.

The Dow Jones Industrial Average fell 57.88 points, or 0.14%, to 42,454.12, the S&P 500 lost 11.99 points, or 0.21%, to 5,780.05 and the Nasdaq Composite lost 9.57 points, or 0.05%, to 18,282.05.

Both the S&P 500 and the Dow had notched record closing highs in the previous day’s session.

Only three of the S&P 500’s 11 major industry sectors advanced on Thursday with energy, adding 0.8% and outperforming the rest as oil prices rose.

Oil futures rallied as US fuel use spiked ahead of Hurricane Milton, which made landfall on Florida’s west coast late on Wednesday. Oil prices are also being supported by supply concerns related to conflicts in the Middle East.

Investors are also preparing for the third-quarter earnings season, with major banks scheduled to report results on Friday.

The third-quarter earnings growth rate for the S&P 500 is estimated to come in at 5% year-over-year, according to estimates compiled by LSEG.

In individual stocks, Delta Air Lines fell 1% after it forecast quarterly revenue below expectations in anticipation of slower travel spending. Other airlines also lost ground with American Airlines, ending down 1.4%.

Shares of Pfizer fell 2.8% as former executives distanced themselves from activist investor Starboard’s campaign against the drugmaker.

On US exchanges, 11.02 billion shares changed hands compared with the 12.06 billion moving average for the last 20 sessions.

Declining issues outnumbered advancers by a 1.39-to-1 ratio on the NYSE where there were 185 new highs and 55 new lows.

On the Nasdaq, 1,616 stocks rose and 2,576 fell as declining issues outnumbered advancers by a 1.59-to-1 ratio. The S&P 500 posted 22 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 60 new highs and 163 new lows.

(Reporting by Sinéad Carew, Lisa Mattackal, and Pranav Kashyap in Bengaluru; Editing by Pooja Desai and Aurora Ellis)

S&P 500 earnings to put investor focus on tech, AI

NEW YORK – Investors will be looking for evidence that investment in artificial intelligence among S&P 500 companies is beginning to pay off as the reporting season progresses, despite the fact that analysts expect profit growth to decelerate from the previous quarter.

S&P 500 earnings are estimated to have increased 5.3% over the year-ago quarter, down from a second-quarter gain of 13.2%, but technology and communication services sectors are forecast to have the strongest year-over-year growth, according to LSEG data as of Friday.

The earnings period unofficially kicks off this week, with reports from major financial firms including JPMorgan Chase and Wells Fargo due Friday.

AI-related companies have dominated earnings since last year, and optimism over AI plans has helped to drive strong gains in the market. The S&P 500 is at record high levels and up roughly 21% for the year so far, with tech and communication services leading sector gains since Dec. 31.

“Many analysts will start looking at how and if a lot of these larger companies can monetize the model that they’re training, and we’ve seen the ones that have been able to do so have been rewarded quite well,” said Howard Chan, chief executive officer of Kurv Investment Management in San Francisco.

Technology sector earnings in aggregate are expected to have gained 15.4% from the year-ago quarter, while communication services earnings are seen up 12.3%, based on LSEG data.

Shares of Meta Platforms jumped on Aug. 1, a day after it issued an upbeat sales forecast for the third quarter, signaling that digital-ad spending on its social media platforms can cover the cost of its AI investments.

“Companies like Microsoft and Google, they’re spending quite a bit, but it’s a little bit less understood… how that will interplay with their existing businesses,” Chan said.

Investors may also be hoping earnings can justify higher stock prices. With the S&P 500 at record high levels, the index is now trading at 22.3 times future 12-month earnings estimates, well above its long-term average of 15.7, according to LSEG Datastream.

Solita Marcelli, chief investment officer for Americas at UBS Global Wealth Management, wrote in a note Wednesday that third-quarter results could provide a catalyst for gains as investors focus on tech fundamentals and AI.

“We continue to favor the semiconductor space and megacaps for AI exposure,” she wrote, noting that she expects tech and AI companies to beat results for the quarter ended in September and also raise their outlooks.

UBS expects overall AI semiconductor industry revenues to grow sharply, and reach USD 168 billion by the end of this year, according to the note.

Earnings growth in most S&P 500 sectors is seen as lower than in the previous quarter.

Investors had been worried the economy may have been getting too weak. The Federal Reserve last month kicked off a monetary easing cycle by cutting its benchmark interest rate by an unusually large 50 basis points, the first reduction in borrowing costs since 2020, amid signs the labor market was weakening.

Those concerns eased a bit with last week’s monthly US jobs data, which showed that US job gains increased in September by the most in six months, and that the unemployment rate fell to 4.1%.

Still, company comments about consumer health will be scrutinized. “Lower front-end rates are more helpful to consumers than companies … So the Fed policy is more something that consumer-driven companies could benefit from,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

At the same time, some strategists said, investors may be eager to hear from companies about what the recent surge in oil prices might mean for businesses. Oil prices have gained as Middle East tensions have escalated.

Earnings for the energy sector are expected to have fallen 19.7% in the third quarter from a year ago, LSEG data shows.

(Reporting by Caroline Valetkevitch; Editing by Alden Bentley and Nick Zieminski)

Gold extends gains as rate cut bets strengthen after US economic data

Gold prices extended gains on Thursday after traders added to bets that the Federal Reserve will deliver an interest-rate cut next month following the latest US economic data.

Spot gold was up 0.6% at USD 2,623.58 per ounce as of 1:59 p.m. ET (1759 GMT), on track to snap a six-session losing streak. US gold futures settled 0.5% higher to USD 2,639.30.

US consumer prices rose slightly more than expected in September, but the annual increase in inflation was the smallest in more than 3-1/2 years. Another report showed that weekly jobless claims rose to 258,000 for the week ending Oct. 5, versus estimates of 230,000.

The CPI report didn’t bring much of a surprise and the jobs numbers show a trend of weakening, which puts the notion that the Fed is on track to cut rates, helping gold, said Alex Ebkarian, chief operating officer at Allegiance Gold.

“Last few days, saw cooling in gold’s rally, so it is in a good position to go back up,” Ebkarian added.

Markets now see an 80% likelihood of a 25-basis-point cut from the Fed next month versus 76% before the data, according to the CME FedWatch tool.

Zero-yield bullion is a preferred investment amid lower interest rates.

Investors’ focus will shift to US Producer Price Index data on Friday for additional insights on rate cuts.

Heightened geopolitical events and strong demand led by central banks are the other positive catalysts for gold, Ebkarian added.

In the Middle East, Israel pressed its assault on Hezbollah and told Lebanese civilians not to return to homes in the south.

Spot silver rose 1.7% to USD 31.02 per ounce.

“Easing monetary policy and an undersupplied market will likely attract investor interest, with silver remaining an inexpensive alternative to gold,” ANZ said in a note.

Platinum added 2.4% to USD 967.17, and palladium was up 3% to USD 1,070.50.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid and Vijay Kishore)

US inflation, China plans spell caution; BOK set to cut

Investors in Asia enter the final trading day of the week with sentiment dented a bit by surprisingly sticky US inflation the day before, and with a sense of caution ahead of keenly-awaited news on China’s stimulus plans from Beijing the following day.

Wall Street only posted mild losses on Thursday, the downside perhaps cushioned by soft weekly jobless claims figures that would suggest the Fed remains on track to cut interest rates a further 50 basis points this year.

Asia will struggle to get much of a steer from Treasuries or the dollar either – the greenback ended flat on Thursday, and yields were mixed across the curve in narrow ranges.

Traders have scaled back their expectations of Fed rate cuts since last week’s stellar US employment report, but are not quite at the point of pricing in a pause in the cycle. Yet that’s what Atlanta Fed president Raphael Bostic floated on Thursday. Could incoming data really lead to a skip soon?

The highlight in Asia’s calendar on Friday is the Bank of Korea’s interest rate decision. Economists expect the BOK to deliver its first interest rate cut since the pandemic, kicking off the easing cycle with a 25 basis point cut to 3.25%.

All but three of the 37 economists in a Reuters poll expect that from the BOK, and the rest said they expect no change. Analysts generally expect the BOK to move more slowly than its regional peers in the coming months.

Inflation eased rapidly to 1.6% in September from 2% in August, the lowest since early 2021 and below the BOK’s 2% target, but household debt and property prices are high.

Indian trade data, industrial output figures from Malaysia and New Zealand’s manufacturing purchasing managers index for September make up the rest of the region’s calendar on Friday.

New Zealand’s manufacturing activity has been shrinking every month since March last year, the PMIs show, although the pace of contraction has slowed sharply the last two months.

This release comes days after the country’s central bank cut interest rates by half a percentage point and signaled that further easing will follow.

Looking ahead to Saturday, all eyes will be on Beijing, where China’s finance ministry will detail plans on fiscal stimulus to boost the economy. It is unclear whether this means fresh fiscal steps to revive growth will be taken, or that the package of measures announced recently will be explained in greater detail.

Hope, if not expectation, is building that it’s the former. If it’s the latter, investors are likely to be disappointed and there’s a good chance that the stunning rally in Chinese stocks over the last two weeks reverses on Monday, perhaps significantly.

Here are key developments that could provide more direction to markets on Friday:

– South Korea interest rate decision

– India trade (September)

– New Zealand manufacturing PMI (September)

(Reporting by Jamie McGeever, Editing by Deepa Babington)

US yields boosted by Fed minutes, 10-year note auction

NEW YORK – US Treasury yields rose on Wednesday in volatile trading, as investors continued to price in a less aggressive monetary easing cycle from the Federal Reserve, with gains further boosted by a weaker-than-expected auction of 10-year notes.

The US benchmark 10-year yield hit a fresh seven-week high of 4.078%, while two-year yields, which are more sensitive to interest rate expectations, rose in five of the last six sessions.

Dallas Fed President Lorie Logan, who is not a voter at this year’s Federal Open Market Committee (FOMC), expressed the US central bank’s gradual approach in remarks on Wednesday, fueling a rise in Treasury yields. She said she supported last month’s big interest-rate cut but wants smaller reductions ahead, given “still real” upside risks to inflation and “meaningful uncertainties” over the economic outlook.

Chip Hughey, managing director of fixed income at Truist Advisory Services in Richmond, Virginia, said he understood why the Fed is leaning toward smaller rate cuts.

“The reality is that the Fed is still in restrictive territory,” he noted. “There is plenty of room for the Fed to reduce the fed funds rate over a year and a half to get it down to the neutral level.”

US yields rose after Logan’s comments. US two-year yields, were last up 4 basis points (bps) at 4.019%, gaining in five of the last six trading days.

The Fed minutes were also released on Wednesday and offered very little surprises for the market. US yields did drift higher after they came out.

The minutes showed that a “substantial majority” of Fed officials at the September meeting supported launching the easing cycle with an outsized half-point rate cut. There was also broad agreement that the initial move would not commit the Fed to a particular pace of cuts in the future.

The US rate futures market has factored in an 83% chance of a 25-bp rate cut at the November meeting, and 17% chance of a pause, higher than the 12% seen on Tuesday, according to LSEG calculations.

The futures market also showed about 47 bps of easing this year, down from more than 50 bps early this week. It also priced in about 94 bps of Fed cuts in 2025. Next year’s rate cut probability was a sharp decline from the roughly 200-250 bps reductions being estimated prior to last Friday’s blowout US nonfarm payrolls report that recalibrated Fed easing expectations.

In afternoon trading, the yield on the benchmark US 10-year note climbed 3.6 bps to 4.071%.

The 10-year note auction was lackluster overall, with a yield of 4.066%, higher than the rate forecast at the bid deadline. Much like the three-year note sale on Tuesday, investors demanded a higher yield to buy the benchmark note.

The bid-to-cover ratio, another measure of demand, was 2.48, the lowest since August.

In other maturities, US 30-year bond yields, were up 2.1 bps at 4.346%.

The yield curve flattened a little bit on Wednesday, with the spread between US two-year and 10-year yields at 4.8 bps, from 5 bps late on Tuesday. The flattening suggested that the rates market expects a slower pace of Fed easing, or smaller rate cuts, in the coming months.

For Thursday, the US consumer price index will be in focus after the labor market showed little signs of slowing.

Vishal Khanduja, co-head of Broad Markets Fixed Income at Morgan Stanley Investment Management in Boston, believes the disinflation trend will continue.

“There could be some disruptions in the fourth quarter because of the (Middle East) war and now the hurricanes. But the overall trend will continue to be lower.”

(Reporting by Gertrude Chavez-Dreyfuss; Editing by Emelia Sithole-Matarise and Daniel Wallis)

Gold eases for sixth session as dollar marches upward

Gold retreated for the sixth straight day on Wednesday on an advancing dollar and diminished expectations for a larger rate cut from the Federal Reserve in November.

Spot gold fell 0.5% to USD 2,607.93 per ounce by 02:39 p.m. ET (1839 GMT). US gold futures for December delivery settled 0.4% lower at USD 2,626.

“The markets aren’t moving because the extraordinary payrolls report may require a recalibration by the FOMC. It’s why gold hasn’t budged and looks to be down for the sixth straight session though the pullback has been modest,” said Tai Wong, a New York-based independent metals trader.

“The dollar has surged over the past few sessions that’s adding downward pressure to gold,” he added.

The dollar index hit a near two-month high, making bullion more expensive for holders of other currencies.

The minutes of the Sept. 17-18 session, at which the Fed lowered the benchmark policy rate by half a percentage point, noted the future pace of cuts will not be determined by large initial reduction.

Markets now see a 76% likelihood of a 25-basis-point cut from the Fed next month, according to the CME FedWatch tool. Zero-yield bullion is a preferred investment amid lower interest rates.

Dallas Fed Bank President Lorie Logan said she wants
smaller reductions ahead, given the “still real” upside risks to inflation and “meaningful uncertainties” over the economic outlook.

Investors now await US Consumer Price Index (CPI) and Producer Price Index (PPI) data due on Thursday and Friday, respectively, for further insights on the interest rate outlook.

“Despite the modest pull-back, expectations of lower interest rates and ongoing geopolitical tensions suggest the backdrop for gold is likely to remain supportive over the long term,” said Kinesis Money market analyst Carlo Alberto De Casa in a note.

Spot silver slipped 0.8% to USD 30.46 per ounce. Platinum was steady at USD 949.91, while palladium rose 1.6% to USD 1,038.25.

(Reporting by Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid, Alan Barona, and Shreya Biswas)

Oil falls as swelling US supply counters Middle East and hurricane risks

NEW YORK – Oil prices fell on Wednesday after US data showed rising crude inventories, but losses were limited by the risk of Iranian supply disruptions caused by the Middle East conflict and Hurricane Milton in the US

Brent crude futures settled at USD 76.58 a barrel, falling 60 cents, or 0.8%. US West Texas Intermediate (WTI) futures settled down 33 cents or 0.5%, at USD 73.24 a barrel.

Crude inventories jumped by 5.8 million barrels to 422.7 million barrels last week, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 2 million-barrel rise.

The build was smaller than estimated on Tuesday by trade group American Petroleum Institute, which also limited declines in oil prices, said Bob Yawger, director of oil futures at Mizuho in New York.

Larger-than-expected drawdowns in gasoline and distillates also helped soften the impact to prices, Yawger said.

“There’s a bullish element in the gasoline number, which might have been a rebound from the hurricane,” said Yawger, referring to Hurricane Helene, which struck the US late last month.

The country is bracing for a second major storm, Hurricane Milton, which spawned tornadoes and lashing rain hours ahead of its expected landfall in Florida on Wednesday. The storm has already driven up demand for gasoline in the state, with about a quarter of fuel stations selling out of supplies, which has helped support crude prices.

MIDDLE EAST IN FOCUS

Markets remained on edge about a potential Israeli attack on Iranian oil infrastructure, even after oil prices tumbled by more than 4% on Tuesday on a possible Hezbollah-Israel ceasefire deal being reached.

US President Joe Biden spoke with Israeli Prime Minister Benjamin Netanyahu about Israel’s plans concerning oil-producer Iran in a call on Wednesday. Neither the White House nor Netanyahu’s office provided details of the discussion.

“We’re still on tenterhooks with the Middle East situation,” said John Kilduff, partner at Again Capital in New York. “Speculation of a strike on Iran is worth about USD 5 a barrel.”

Even with threats to the oil-producing Middle Eastern region top of mind, economic problems in top crude importer China made it difficult for prices to advance.

“Despite the current heightened tensions in the Middle East, it is easy to forget that the oil market is very much vulnerable to corrections due to the ongoing bearish macro narrative centered on China,” said Harry Tchilinguirian, head of research at Onyx Capital Group.

China said on Tuesday it was “fully confident” of achieving its full-year growth target but refrained from introducing stronger fiscal steps, disappointing investors who had banked on more support for the economy.

Investors have worried about slow growth dampening fuel demand in China, the world’s largest crude importer.

Weak demand continues to underpin the fundamental outlook. The US Energy Information Administration (EIA) on Tuesday downgraded its demand forecast for 2025 on weakening economic activity in China and North America.

(Additional reporting by Arunima Kumar in London, Trixie Yap in Singapore, and Colleen Howe in Beijing; Editing by David Goodman, Emelia Sithole-Matarise, Richard Chang, and David Gregorio)

Foreign money is leaving Asian equities ex-China this month, LSEG data shows

Foreign money is leaving Asian equities, excluding China, this month as concerns about hefty stock valuations and conflict in the Middle East spur investors to book profits.

Some investors also appear to be moving money into Chinese and Hong Kong shares after Beijing’s announcement of stimulus measures drove a rally in local shares, analysts said.

According to LSEG data, foreigners have so far divested a net USD 7.61 billion worth of shares in India, Indonesia, Thailand, Vietnam, South Korea, Taiwan, and the Philippines this month, following net purchases of USD 759 million a month ago driven by optimism over a large rate cut by the US Federal Reserve.

“We have seen further profit-taking pressure on Korea and Taiwan due to the shift in momentum on global AI/semiconductor investment theme,” said Jason Lui, head of APAC equity and derivative strategy at BNP Paribas.

“Some of the capital from East Asia (Japan, Korea, Taiwan) may have been reallocated back to HK/China as well.”

Taiwanese and South Korean stocks saw foreign net outflows of about USD 1.71 billion and USD 426 million, respectively, following USD 2.94 billion and USD 5.73 billion worth of net selling in September.

Overseas investors have, meanwhile, snapped up a net USD 5.81 billion worth of China-focused funds since the beginning of this month, LSEG Lipper data showed.

Indian equities have recorded about USD 5.35 billion worth of foreign net outflows in October, driven by disappointing corporate updates and caution over high valuations, contrasting with USD 6.89 billion in net inflows last month.

Indian equities trade at a price to 12-month forward earnings ratio (P/E) of 23.24 compared with a P/E of 12.63 for Asia. The P/E for Chinese shares is just 10.34.

According to Yeap Jun Rong, market strategist at IG: “The India story remains compelling for foreign investors despite softer growth momentum, as economic fundamentals are still strong.”

Thai and Indonesian stocks also saw USD 375 million and USD 176 million worth of net outflows, respectively, following USD 860 million and USD 1.42 billion worth of net inflows in September.

“We may expect a more cautious stream of inflows for the region as we head into the US election, which adds a layer of uncertainty for global markets,” IG’s Rong said.

(Reporting by Gaurav Dogra in Bengaluru; Editing by Mark Potter)

Reality check for China stocks, dollar rips higher

Attention in Asia on Thursday is likely to center on Chinese stocks, and whether the previous day’s steep selloff extends further, and the US dollar, which is on its longest winning streak in more than two years.

The economic calendar is light, with only wholesale inflation and bank lending figures from Japan, and Philippines trade data, on deck.

Currency and rates markets could get more impetus from Bank of Japan deputy governor Ryozo Himino and Reserve Bank of Australia assistant governor Sarah Hunter, who are scheduled to speak at separate events in Japan and Australia, respectively.

The foreign exchange market, and the US dollar in particular, is increasingly playing on the minds of investors across the continent.

The New Zealand dollar fell 1.3% on Wednesday after the country’s central bank delivered a 50-basis point cut in interest rates and indicated it will ease policy further in the coming months. The kiwi has weakened 5% this month, making it the worst-performing major currency in the world this month.

The greenback rose against a basket of major currencies on Wednesday for an eighth day, its best run since March-April, 2022, as the ongoing resilience of the US economy draws flows into US assets and forces investors to rethink their dovish outlook for US interest rates.

Demand for US assets from Asia is also strong.

Thursday may be a good test for Chinese markets, following Wednesday’s reality check. After surging as much as 40% in just six trading days, benchmark equity indices in China slumped 7% on Wednesday for their biggest one-day losses since February 2020.

Will the pullback provide a more attractive entry point for investors who missed that initial whoosh? If so, the rally may have more to run, but a second day of losses may suggest investors need more from Beijing.

China’s finance ministry will flesh out its plans to boost the economy at a news conference on Saturday, a sign that Beijing may be ready to roll out more forceful policies to revive growth.

The People’s Bank of China, meanwhile, has steered the yuan away from the 7.00 per dollar level, at least for now. Tuesday’s fixing of 7.0709/USD was 0.9% higher than the previous fix, marking the biggest one-day rise since May 2022.

Wednesday’s fix was a bit lower but still comfortably above pre-Golden Week holiday levels.

In Japan, inflationary pressures are expected to have eased in September, with annual wholesale price inflation falling to 2.3% from 2.5% in August. That would be the lowest since April.

The monthly rate of deflation is expected to accelerate to -0.3% from -0.2%, which would be the fastest rate of month-on-month decline since May last year.

Here are key developments that could provide more direction to markets on Thursday:

– Japan wholesale inflation (September)

– BOJ deputy governor Ryozo Himino speaks

– RBA assistant governor Sarah Hunter speaks

(Reporting by Jamie McGeever, Editing by Deepa Babington)

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