Concerns about supply chain bottlenecks continue to weigh on investor sentiment
Wall Street stocks closed higher overnight, with companies reporting strong third-quarter earnings despite the pandemic. The Dow Jones Industrial Average rose 0.56%, the S&P 500 advanced 0.74%, and the Nasdaq Composite climbed 0.71%. On the data front, construction on new homes in the US came in at 1.56 million in September, a 1.6% decrease from the previous month while the pace of permitting for new housing units dropped 7.7% from August. Meanwhile, Federal Reserve Governor Christopher Waller pointed to “a significant slowdown” in gross domestic product growth during the third quarter.
Asian equities were mixed on Wednesday as concerns about slowing growth amid supply chain bottlenecks continue to weigh on investor sentiment. Furthermore, the International Monetary Fund slashed its 2021 economic growth outlook for Asia. As such, China’s Shanghai Composite lost 0.17% and the Kospi in Seoul shed 0.53%. On the positive side, Japan’s Nikkei 225 and Sydney’s S&P-ASX 200 added 0.14% and 0.53%, respectively.
In Europe, stocks opened marginally lower today, as investors are getting cautious following the recent gains in equity markets. The pan-European Stoxx 600 hovered fractionally above the flat-line in early tradeб struggling for direction. On the data front, the UK inflation slowed marginally last month, rising 3.1% in annual terms after a 3.2% climb in August.
In currencies, the dollar looks mixed on Wednesday, with trading ranges relatively tight as traders await fresh cues to decide on a further direction. EURUSD peaked at 1.1670 yesterday but failed to preserve gains and was last seen changing hands around 1.1625, marginally lower on the day. On the other hand, the common currency derives support from the 20-DMA. As long as the pair stays above this moving average, downside risks are limited.
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