I. Yesterday's News
International News
1. North Korea will develop a plan by mid-August to launch four intermediate range missiles at the U.S. territory of Guam before presenting it to leader Kim Jong Un who will make a decision on whether to proceed, the North's state media said on Thursday. "The Hwasong-12 rockets to be launched by the KPA (Korean People's Army) will cross the sky above Shimane, Hiroshima and Koichi Prefectures of Japan," the report said, citing General Kim Rak Gyom, commander of the Strategic Force of the KPA. North Korea's official news agency KCNA described Trump's threat as a "load of nonsense", saying "only absolute force can work on him." Increased tensions between the United States and North Korea led investors to look for assets deemed as less risky. But U.S. stocks clawed back losses late on Wednesday as investors appeared to brush off geopolitical concerns.

2. U.S. productivity grew more than expected in the second quarter as hours worked rose at their fastest pace in 1-1/2 years, leading to a modest increase in labor costs that could keep inflation muted in the near term. The trend in productivity, however, remains weak, suggesting robust economic growth will be hard to achieve. The Labor Department said on Wednesday that nonfarm productivity rose at a 0.9 percent annualized rate in the April-June period. First-quarter productivity was revised to show it edging up at a 0.1 percent pace instead of being unchanged as previously reported. Compared to the second quarter of 2016, productivity increased at a 1.2 percent rate, the strongest performance in two years. Unit labor costs, the price of labor per single unit of output, increased at only a 0.6 percent pace in the second quarter after jumping at a 5.4 percent rate in the January-March period.

3. New Zealand's central bank held rates at a record low of 1.75 percent on Thursday and reiterated that policy would stay loose for a considerable time to come. Reserve Bank of New Zealand (RBNZ) Governor Graeme Wheeler said a lower local dollar was needed to increase tradable inflation, and monetary policy will remain accommodative for a considerable period.

4. French police shot and arrested a man on Wednesday suspected of deliberately ramming his car into a group of soldiers in a Parisian suburb hours earlier, injuring six of them in what the government called a deliberate attack, Reuters reports. The suspect was unarmed when he was cornered by police, a judicial source said. There was no immediate word on his condition. French stocks lowered 1.4 percent after the news.

Domestic News
5. China's consumer inflation steadied in July, signaling moderate economic activity throughout the year, in line with market forecast. Analysts expected moderate inflation in the second half of this year, warning rising prices at year-end. Risk prevention and restructuring are expected to prevail in policy-making.

6. China has achieved initial results in lowering corporate leverage as rates of borrowing have started to decline, the state planner said on Wednesday, adding that corporate debt risks have been effectively contained. China will use market-based and legal means including the debt-for-equity scheme to address "zombie companies", the NDRC said.

7. At least nine people were killed, 164 more injured and over 30,000 tourists were evacuated late Tuesday when a 7.0-magnitude earthquake struck a popular tourist area of Jiuzhaigou County in southwest China's Sichuan Province, according to state-owned media outlet Xinhua.

8.A 6.6-magnitude earthquake jolted Jinghe County in Bortala Mongolian Autonomous Prefecture in northwest China's Xinjiang at 7:27 a.m. Wednesday (Beijing Time), according to the China Earthquake Networks Center (CENC). The epicenter was monitored at 44.27 degrees north latitude and 82.89 degrees east longitude. The quake struck at a depth of 11 km, the center said in a statement.

II. Market Overview
FX
1. Global Market
The Swiss franc rallied hard against the euro and the U.S. dollar on Wednesday, as increased tensions between the United States and North Korea led investors to look for assets deemed as less risky. The Swiss franc was on pace for one of the largest single-day jumps against the euro since the Swiss National Bank removed its cap on the currency in January 2015. The greenback was down 1.1 against the franc, its worst drop in more than six weeks. The dollar also slipped 0.26 percent lower against the yen to 110.01 yen. The dollar index, which tracks the greenback against six rival currencies, was down 0.12 percent to 93.53, after rising as high as 93.888 earlier in the session. Sterling was little changed at $1.3 and near a 2-1/2-week low.

2. Home Market
Spot yuan and the midpoint rates rose to a 10-month peak against the dollar. China's yuan is expected to sustain recent strength on mounting appetite for forex settlement and lowering buying demand, brushing off external factors and a steadying dollar.

Precious Metals
Gold rose to the highest in nearly two months on Wednesday, after North Korea said it is considering an attack on the U.S. Pacific territory of Guam and U.S. President Donald Trump boasted of the strength of the American nuclear arsenal. Spot gold was up percent at $1,277.15 an ounce. U.S. gold futures for December delivery settled up 1.3 percent at $1,279.30. Platinum gained to $971.50 per ounce, having hit a 3-1/2-month high.

Commodities
1.Crude Oil
Oil prices were about 1 percent higher on Wednesday after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories, although a surprise jump in gasoline stockpiles limited price gains. Brent crude, the global benchmark, ended the session up 56 cents, or 1.1 percent, at $52.70, after two days of declines. U.S. West Texas Intermediate (WTI) crude gained 39 cents, or 0.8 percent to settle at $49.56.

2.Base Metals
Aluminium prices climbed to their highest in more than two years on Wednesday as expectations of capacity cuts in top producer China, where the government is waging a war on pollution, were reinforced by a lower dollar. Benchmark aluminium on the London Metal Exchange ended down 0.1 percent at $2,027.5 on profit-taking. Earlier it touched $2,043, its highest since November 2014, a gain of around 20 percent this year. Copper ended down 0.4 percent to $6,455 as funds took profits. Earlier it touched $6,515, its highest since December 2014.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields fell on Wednesday, and yields on the benchmark 10-year note hit a six-week low, as escalating tensions between the United States and North Korea spurred demand for safe-haven assets such as government debt. In late trading, U.S. 10-year yields were at 2.237. They hit 2.212 percent earlier, the lowest level since June 28 and nearly 7 basis points lower than Tuesday's close, Reuters data showed. U.S. 30-year bond yields slid to a six-week trough of 2.790 percent. Yields were last at 2.815 percent. U.S. 2-year yields touched a low of 1.323 percent, matching a low hit four weeks ago.

2. Chinese bonds
China's central bank will inject 140 billion yuan into money markets on Tuesday, traders said. The People's Bank of China is injecting 70 billion yuan through seven-day reverse bond repurchase agreements and 70 billion yuan through 14-day reverse repos, they said. On a net basis, the PBOC will neither inject nor drain any funds from the market via its open market operations for the day.

Stock Market
1. U.S. Equities
U.S. stocks clawed back losses late on Wednesday as investors appeared to brush off geopolitical concerns after falling in the wake of U.S. President Donald Trump's "fire and fury" warning to North Korea. The Dow Jones Industrial Average fell 36.64 points, or 0.17 percent, to end at 22,048.7, the S&P 500 lost 0.9 point, or 0.04 percent, to 2,474.02 and the Nasdaq Composite dropped 18.13 points, or 0.28 percent, to 6,352.33. The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63.

2. Hong Kong Equities
Hong Kong shares closed lower, mirroring regional peers hurt by mounting tensions on the Korean peninsula, but property firms rose, encouraged by a spin-off plan by a local developer. The Hang Seng index fell 0.4 percent to 27,757.09 points, easing off more than two-year highs hit on Tuesday, while the China Enterprises Index lost 1.1 percent to 10,962.60 points.

3. China Equities
China's Shanghai Composite Index edged slightly lower on Wednesday in quiet trading, shrugging off the impact of earthquake in Sichuan and Xinjiang. Financial sector was corrected, while pharmaceutic, food & beverage stocks rebounded. Lack of strong drivers, market is expected to keep consolidating.