Market news

23 September 2022

Asian Stock Market: Tumbles consecutively as risk-off soars, oil weakens, PMIs in focus

  • Asian indices have fallen consecutive for second following negative cues from S&P500.
  • BOJ’s intervention in currency markets has bewildered investors' approach toward Japanese indices.
  • Global PMIs will remain subdued amid tight monetary policy measures.

Markets in the Asian domain are underperforming consecutively for the second day as S&P500 is going through severe pain. The US equities especially the IT stocks are facing intense selling pressure as harsh-than-expected interest rate guidance by the Federal Reserve (Fed) on Wednesday has triggered the risk of a stagnant growth rate in the world economy.

At the press time, Japan’s Nikkei225 surrendered 0.58%, ChinaA50 eased 0.30%, and Hang Seng trimmed 0.33%. In the Asia-Pacific region, S&P/ASX200 nosedived more than 2% and DJ New Zealand plunged 1.77%.

Achieving the agenda of price stability in the US economy is resulting in a sheer decline in the growth projections and eventually in employment generation. The housing sector is becoming a major victim as higher interest rates are resulting in higher monthly installments, which are forcing them to postpone their home-purchase plans.

Japanese equities are not performing well as the Bank of Japan (BOJ)’s intervention in the currency markets has kept the bulls on the tenterhooks. The prolonged depreciating yen forced BOJ to intervene in the Fx moves as deprivation was not justifying the fundamentals. The move came after the BOJ kept the policy rate unchanged despite an acceleration in the price pressures. BOJ Governor Haruhiko Kuroda believes that the economy needs more monetary easing to contain the impact of the Covid-19 pandemic.

On the oil front, the oil prices are expected to kiss the round-level support of $80.00 sooner. Falling gasoline demand in the US economy and continuous elevation of interest rates by the western central banks are resulting in lower demand for oil.

Going forward, the release of the S&P Global PMI numbers by various G-7 nations including Germany, the US, and the UK will keep investors busy. Supply chain bottlenecks, energy crisis, and inflationary pressures have impacted economic activities in August. Therefore, the economic data is expected to remain vulnerable.

  

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