Asian Stock market: Bleed on cautious market mood, oil tumbles, Fed’s policy in focus

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  • Asian equities are witnessing a bloodbath amid a cautious market mood on higher US Inflation.
  • The odds of a 75 bps rate hike by the Fed have improved strongly.
  • Oil prices are slipped on hopes of a slump in the aggregate demand.

Markets in the Asian domain have witnessed a bloodbath as higher US Inflation figures, released on Friday in the New York session, have underpinned the negative market sentiment. Asian equities have fallen like a house of cards as the firmer US Consumer Price Index (CPI) has bolstered the odds of a 75 basis point (bps) rate hike by the Federal Reserve (Fed) in its monetary policy meeting, which is due on Wednesday.

At the press time, Japan’s Nikkei225 plunged 2.81%, China A50 eroded 2.15%, Hang Seng dived 2.85%, and Nifty50 dropped 2.58%.

Advancing odds of a rate hike by the Fed have brought an extreme sell-off in the global equities. The scenario of a 75 bps rate hike by the Fed will squeeze liquidity from the market, which will result in multi-filtered investment opportunities. Also, the soaring price pressures are indicating that the aggregate demand will tumble sharply and a recession situation could take place.

Meanwhile, oil prices have also witnessed a steep fall on Friday after the US Bureau of Labor Statistics reported the annual US Inflation figure at 8.6%. This has strengthened the recession fears in western economies. Higher inflation figures are majorly contributed by soaring oil prices lately. Mounting inflation will eat the wallets of the households and therefore lower oil demand will be the outcome. Apart from that, renewed lockdown curbs in China to contain the Covid-19 have bolstered the fears of a slump in aggregate demand.