Markets more upbeat as South Korea leads gains among Asian currencies

Hong Kong/London — Shares, oil and Asian currencies all steadied on Wednesday as investors weighed up the gradual opening of economies worldwide against rising cases of the Covid-19 Delta variant.

European shares edged up with the benchmark Stoxx index rising 0.3% after MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.46%, snapping five successive sessions of decline but still only a little above year-to-date lows.

Oil also recovered slightly after four days of straight declines as investors fret over demand for fuel as the virus continues its spread worldwide.

Brent crude was up 47c or 0.68% at $69.5 a barrel by 8.05am GMT. US oil gained 33c or 0.4% to $66.9 a barrel.

“Investors are trying to balance the reopening of economies as vaccination rates go up, but also seeing the effects of the spreading Delta variant and that’s being reflected in the slowing economic data most of which has been surprising on the downside in the last two weeks,” said Kerry Craig, global market strategist at JPMorgan Asset Management.

S&P 500 futures rose 0.03%.

The South Korean won led gains among Asian currencies after a six-day hammering prompted the finance ministry to monitor the currency market more closely.

The New Zealand dollar recouped losses made after the Reserve Bank of New Zealand delayed a widely expected rise in interest rates as the country was put into a snap Covid-19 lockdown.

The kiwi fell to a nine-month low of $0.6868 after the decision although it soon recovered, climbing back to $0.6919, as investors absorbed RBNZ projections showing policymakers still expected to raise rates over coming months.

“Theyve said no go, because you've got Covid-19 and too much uncertainty. Give it a few weeks, let the smoke clear then the tightening cycle is still on the table,” said Imre Speizer, head of NZ strategy at Westpac.

Meanwhile, the dollar weakened slightly having earlier hit a nine-month high against the euro.

Fed watching

Safe-haven assets continued to benefit from uncertainty over the spread of the coronavirus, with gold prices rising to near two-week highs on Wednesday.

Spot gold was up 0.1% at $1,788/oz by 8.05am GMT, after hitting its highest since Aug. 6 at $1,795.25 in the previous session.

eurozone bond yields dipped but held above lows touched a day earlier as investors sought direction ahead of US Federal Reserve meeting minutes due later in the day.

Germany's 10-year yield, the benchmark for the euro area, was down 1 basis point at -0.475% by 0805 GMT, above the lowest in nearly two weeks of -0.501% touched on Tuesday.

The yield on benchmark 10-year Treasury notes rose to 1.2767% compared to its US close of 1.258% on Tuesday.

Investors will scan the Fed minutes due at 6pm GMT for further clues on when the bank might start tapering its bond purchases.

“To see a successful taper in the next few months, we need to see more of those strong job prints,” said John Luke Tyner, fixed income analyst and portfolio manager at Aptus Capital advisers.

“I don't see the Fed backing out of support yet, I think we need to see the unemployment rate fall below 5%.”

Reuters