SINGAPORE: Japanese futures fell to a three-week low on Wednesday as market participants reacted to the government cutting its view of the economy and the strengthening yen.
The Osaka Exchange (OSE) rubber contract for April delivery was down 1 yen, or 0.4%, at 260 yen ($1.74) per kg at closing. The rubber contract on the Shanghai futures exchange (SHFE) for January delivery was down 355 yuan, or 2.5%, at 13,945 yuan ($1,933.82) per metric ton.
Japan’s government on Wednesday slashed its view on the economy for November in its first such downgrade in 10 months as weak demand weighed on capital spending and consumer expenditure.
The Japanese yen strengthened 0.4% to 148.96 per dollar, after hitting a two-month high of 147.155 on the dollar on Tuesday. A stronger yen makes assets denominated by the currency less affordable for overseas buyers. Japan’s benchmark Nikkei average closed 0.29% higher on Wednesday.
Oil prices barely moved during Asian trade on Wednesday as the market awaited potentially mixed news on the supply front, with the OPEC+ producers group expected to discuss output cuts and US crude stocks forecast to show a big build-up.
Natural rubber often takes direction from oil prices, as it competes for market share with synthetic rubber, which is made from crude oil. Asian stocks backed away from 2-1/2-month highs on Wednesday and the dollar found support as investors’ tempered some of their earlier enthusiasm about the prospect of an end to US interest rate hikes. The front-month rubber contract on Singapore Exchange’s SICOM platform for December delivery last traded at 146 US cents per kg, down 0.9%.
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