Asian Stock Market: Fears of recession and upcoming result season weigh, oil attempts recovery
- Asian stocks are facing the heat of negative market sentiment due to deepening fears of global recession.
- Japanese stocks have come under pressure as BoJ Summary of Opinions showed that one of the policymakers favored an early revision of the YCC.
- Chinese firms are reluctant to tap credit despite rate cuts by the PBoC.
Markets in the Asian domain are facing severe pressures as fears of a recession in the global economy have climbed the rooftop due to extremely restrictive interest rate policies by giant economies. In the battle against stubborn inflation, higher interest rates by central banks are dampening the world economic outlook.
The appeal for equities has turned vulnerable following negative cues from US markets. S&P500 was heavily sold on Friday as investors are cautious due to lofty valuations. The Refinitiv Datastream showed that US 500 stock basket is trading at 19 times its expected 12-month earnings, well above its historic average of 15.6x.
At the press time, Japan’s Nikkei 225 slipped 0.24%, ChinaA50 tumbled 1.13%, Hang Seng dropped 0.20% and Nifty50 remained flat.
Japanese stocks have come under pressure as the Bank of Japan (BoJ) Summary of Opinions showed that one of the policymakers favored an early revision of the Yield Curve Control (YCC) citing the need to prevent sharp fluctuations in interest rates. The statement looks contrary to BoJ Governor Kazuo Ueda who believes no tweak in current interest rate policy for now to achieve stable 2% inflation.
Meanwhile, Chinese equities are facing pressure as investors are expecting that the administration should announce stimulus sooner if wants to save economic prospects. Chinese firms are reluctant to tap credit despite rate cuts by the People’s Bank of China (PBoC). The overall demand is extremely poor keeping consumer and producer inflation at ground levels.
On the oil front, oil prices have attempted a recovery after a mild correction to near $69.00. Minor strength in the oil price has come from some sell-off in the US Dollar Index (DXY) on early Monday.