Asian Equity Markets Trying to Find Direction Amid Heightened Volatility

The Asian stock markets were chaotic on Wednesday as investors seemingly tried to match the volatility of Wall Street on Tuesday. The Greater Chinese indexes initially posted gains early in the session, but fell lower by 0200 GMT. The volatility wasn’t fueled by one particular event. Currently, investors have a boatload of problems on their collective plates including rising U.S. interest rates, Saudi Arabia’s problems with Western Powers, Brexit delays and the lingering tensions between the European Union and the Italian government.

At 0242 GMT, China’s Shanghai Index was trading 2597.00, up 2.17 or +0.08%. Hong Kong’s Hang Seng Index was 25353.58, up 7.03 or +0.03% and Australia’s S&P/ASX 200 was at 5825.00, down 16.10 or -0.28%.

U.S. Stock Markets

The three major U.S. stock indices finished lower on Tuesday, posting a steep sell-off early in the session then a dramatic attempted recovery into the close. Sellers hit the markets hard on the opening after earnings reports from Caterpillar and 3M disappointed investors. Value buyers stepped in later in the session after the indices hit new lows for the month. A shift into defensive stocks like McDonald’s and Procter & Gamble helped lead the charge higher.

Earnings continued to remain in focus on Tuesday. The data shows companies are beating expectations, but by less than usual. More than 150 members of the S&P 500 are set to report this week. According to FactSet, of the companies that have reported thus far this earnings season, 79.6 percent have topped analyst estimates for earnings.

U.S. Treasury Markets

Treasury yields fell and government debt instruments rose on Tuesday as stock market investors sought shelter in safe-haven assets during the stock market rout. At the end of the session, the benchmark 10-year U.S. Treasury yield was at 3.153 percent, down 0.013. The 30-year U.S. Treasury yield was 3.353, down 0.011 percent.

Gold

Gold prices jumped to their highest levels since July 26 on Tuesday, with investors drawn to its safe haven appeal during a rout in the global equity markets that was fueled by rising geopolitical and economic uncertainty, including a potential showdown between the European Union and the Italian government over the country’s budget.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil tumbled more than 4 percent on Tuesday. The catalysts behind the sell-off were a steep sell-off in the global equity markets and renewed pledges by top oil exporter Saudi Arabia to meet the demands of the world’s oil consumers once the sanctions begin against Iran on November 4.