Following Wall Street's sell-off following Iran's ballistic missile launch on Israel, which sparked worries of a larger regional confrontation, most Asian stock markets fell on Wednesday. Meanwhile, crude oil increased due to the possibility of supply interruptions.
As gold was trading close to an all-time high, investors flocked to safer assets, keeping U.S. Treasury rates low throughout Asian trading hours.
In relation to the euro, the safe-haven dollar was trading around its highest level in three weeks. The robust U.S. labour market supported a smaller Federal Reserve interest rate decrease in November, while the euro zone's inflation trends supported an easing by the European Central Bank this month, contributing to the macroeconomic factors that supported the dollar.
Both the Japanese and South Korean markets slid lower. But on the other side, the Hang Seng in Hong Kong surged 6% as Beijing's stimulus drive kept the market optimistic.
This contributed to a 0.6% increase in MSCI's broadest Asia-Pacific share index, amid generally negative investor sentiment.
On the war front, Israel and the United States pledged retaliation even though Iran declared early on Wednesday that its missile strike on Israel was complete, barring more provocation.
The 2.5% increase on Tuesday was maintained by the 1.5% gain in Brent oil prices. WTI futures in the US increased 1.7% following Tuesday's 2.4% surge.
Back to the West, bets on a quarter-point rate cut on October 17 gained support after statistics from the euro area on Tuesday revealed that inflation slipped below the ECB's 2% objective last month.
A day after Fed Chair Jerome Powell retreated from the prospect of a second 50 basis point rate decrease at the U.S. central bank meeting next month, U.S. data released overnight revealed a strong economy.
After two consecutive months of declines, job vacancies surprisingly surged in August, although hiring was modest and in line with a declining labour market.
Later on Wednesday, private payroll data is expected, before the possibly significant monthly non-farm payrolls figures on Friday.
(Sources: investing.com, reuters.com)
