I. Yesterday's News
International News
1. A top North Korean diplomat on Tuesday warned that his country is ready to send "more gift packages" to the United States as world powers struggled for a response to Pyongyang's latest nuclear weapons test. Han Tae Song, ambassador to the United Nations in Geneva, confirmed that North Korea had successfully conducted its sixth and largest nuclear bomb test on Sunday. "The recent self-defence measures by my country, DPRK, are a gift package addressed to none other than the U.S.," Han said. "The U.S. will receive more 'gift packages' ... as long as it relies on reckless provocations and futile attempts to put pressure on the DPRK," he added without elaborating. Analysts and South Korean policymakers believe North Korea may test another weapon on or around Sept. 9, its founding day.

2. The Federal Reserve is getting more dovish in the face of weak inflation data. One influential policymaker called for a delay in raising U.S. interest rates until the Fed is confident inflation will rebound. Another policymaker blamed the Fed's rate hikes to date not only for weak inflation, but also for undermining the recovery in the labor market that many policymakers including Fed Chair Janet Yellen have cited as they have justified raising rates.

3. Republican U.S. senators on Tuesday called on the Trump administration to increase pressure on China to remove foreign ownership curbs that bar American financial companies from freely operating in the world's second largest economy. Foreign banks, securities firms and insurers seeking to conduct certain kinds of business in China are required to partner with local firms that retain a majority interest in the joint venture.

4. Factory goods orders tumbled 3.3 percent amid a slump in demand for transportation equipment, the Commerce Department said on Tuesday. That was the biggest drop since August 2014. Tuesday's report also showed orders for non-defense capital goods excluding aircraft - seen as a measure of business spending plans - increased 1.0 percent in July instead of gaining 0.4 percent as reported last month. Shipments of core capital goods, which are used to calculate business equipment spending in the gross domestic product report, jumped 1.2 percent instead of the previously reported 1.0 percent rise. The surge in shipments suggests that business spending on equipment strengthened further early in the third quarter. Business investment on equipment increased at an 8.8 percent annualized rate in the April-June quarter, the fastest pace since the third quarter of 2015.

Domestic News
5. China and India should adhere to the basic thought that both countries present development opportunities rather than threats for the other, Chinese President Xi Jinping said at the meeting. China hopes India will maintain a proper and reasonable attitude toward China's development, Xi said, adding that the two countries should show the world that peaceful coexistence and cooperation for mutual benefit is the only correct choice for China and India.

6. Chinese President Xi Jinping pledged to provide $500 million in aid to help developing nations address challenges on issues such as famine, refugees, climate change and public health. Xi spoke while presiding over the Dialogue of Emerging Market and Developing Countries. BRICS leaders believe that practical cooperation is the root of BRICS cooperation. A tree will only flourish when its root goes deep. We will, in line with the principle of mutual benefit, step up macro policy coordination, synergize development strategies and deepen all-round cooperation in areas such as economy, trade, finance, industry and sustainable development so as to bring about interconnected development.

7. The director-general of China's General Administration of Customs, signed the Strategic Framework of BRICS Customs Cooperation with other BRICS representatives in the southeastern Chinese city of Xiamen. The group will use the World Trade Organization's Trade Facilitation Agreement to enhance cooperation.

8. China will start trial operation of an electricity spot market, with Guangdong, west Inner Mongolia, Zhejiang, Shanxi, Shandong, Fujian, Sichuan and Gansu among the first pilot areas, said a document the National Development and Reform Commission (NDRC).

II. Market Overview
FX
1. Global Market
The U.S. dollar was on course for its biggest daily percentage decline against the safe-haven yen in more than three months on Tuesday on concern about North Korea's largest nuclear test and a Federal Reserve official's comments about low U.S. Inflation. The dollar fell as much as 1 percent against the Japanese currency to 108.65 yen, its lowest since Aug. 29. The dollar index, which measures the greenback against a basket of six major rivals, fell as much as 0.5 percent to a session low of 92.183 and was set for its biggest daily percentage decline in eight days. The dollar fell as much as 0.4 percent against the Swiss franc, another safe-haven currency, to a session low of 0.9545 franc. The euro gained as much as 0.4 percent to $1.1939. That was still below a more than 2-1/2-year high of $1.2069 touched last week.

2. Home Market
China's yuan fell against the dollar in a choppy trading, snapping its recent strength after hitting a 15-month high. The official yuan midpoint also posted an over 15-month high. Forex settlement dominated the market, traders said. Yuan is expected to retain its upward steam as the dollar bulls can hardly fight back and demand for bargain-hunting reduced sharply.

Precious Metals
Gold prices climbed to a one-year high on Tuesday as the U.S. dollar eased and safe-haven buying demand remained robust due to continued concerns over North Korea's nuclear tests. Spot gold was up to $1,337.46 an ounce, after peaking at $1,344.21, its highest since Sept. 8, 2016. U.S. gold futures ended the session up 1 percent at $1,344.50. Much of gold's recent strength can be attributed to the flight to assets perceived as being at less risk from geopolitical uncertainty that has been stoked up by events in the Korean peninsula.

Commodities
1.Crude Oil
Crude oil prices rose and gasoline fell by about 3 percent on Tuesday as the gradual restart of refineries in the U.S. Gulf that were shut by Hurricane Harvey raised demand for crude and eased fears of a fuel supply crunch. U.S. gasoline futures dropped 3.15 percent from their last close to $1.69 per gallon, down from $2.17 on Aug. 31 and back to levels last seen before Harvey hit the U.S. Gulf Coast. U.S. crude futures settled up $1.37 at $48.66 per barrel after trading earlier in the day as high as $48.98, a three-week high. Brent crude ended $1.04, or 2 percent, higher at $53.38 per barrel.

2.Base Metals
Copper touched a three-year high on Tuesday but closed lower after weak U.S. factory orders prompted a pullback across industrial metals. Copper, aluminium, nickel and zinc are trading near multi-year highs after strong Chinese demand, a weaker dollar and supply concerns sparked a surge of speculative buying. Benchmark copper on the London Metal Exchange closed down 0.2 percent at $6,901 a tonne. It had earlier touched $6,970, the highest since September 2014 and near the key psychological level of $7,000. LME aluminium closed down 1.1 percent at $2,096 a tonne; zinc finished 2 percent lower at $3,140 and tin ended 0.3 percent lower at $20,725. Nickel closed down 1.4 percent at $12,080 and lead ended 2.5 percent lower at $2,330.

U.S. Treasuries
1. U.S. Bonds
The U.S. Treasuries market rallied on Tuesday, with the 10-year yield hitting a near 10-month low, as worries about further nuclear tests by North Korea and concerns about Irma, a powerful storm heading toward the southern United States, spurred safety bids. Yields on Treasury bills due in October remained elevated as investors await developments on whether U.S. lawmakers would reach a deal to increase the federal debt ceiling in a bid to avert a default. The yield on benchmark 10-year Treasury notes was down 9 basis points at 2.070 percent. Earlier on Tuesday the yield hit 2.065 percent, which was its lowest level since Nov. 10. Treasury yields posted their biggest one-day decline since May 17.

2. Chinese bonds
The average weighted yields of overnight and 7-day repo fell sharply on loose liquidity in the near term, while the supply of 14-day repo was also ample. Long-dated Shibor rose across the board.

Stock Market
1. U.S. Equities
U.S. stocks sank on Tuesday, with the S&P 500 stumbling to its biggest single-day loss in about three weeks, as investors weighed fresh tensions with North Korea. North Korea on Sunday conducted its sixth nuclear test, which it said was of an advanced hydrogen bomb for a long-range missile, marking a dramatic escalation of the regime's stand-off with the United States and its allies. With U.S. markets closed on Monday for the Labor Day holiday, Tuesday marked the first regular trading since the geopolitical developments.

2. Hong Kong Equities
Hong Kong shares finished unchanged on Tuesday, with investors remaining in a defensive mood on persistent concerns over North Korea. The Hang Seng index was unchanged at 27,741.35 points, while the China Enterprises Index, a gauge of mainland industry leaders listed in Hong Kong, gained 0.1 percent, to 11,191.59 points.