Asian Stock Market: Indices tumble as risk-off profile heats, yields reach 4.15%, oil soars

• An escalation in the risk-off impulse has accelerated nervousness in Asian equities.
• An unchanged PBOC monetary policy has triggered a sell-off in China’s indices.
• Oil prices soar as EIA reported a decline in oil stockpiles by 1.725M barrels.

Markets in the Asian domain are displaying a vulnerable performance following the weak trend from S&P500. Equities are facing an intense sell-off amid a firmer rebound in the risk-off sentiment. Upbeat returns on the US government bonds have dragged the risk-sensitive assets into a negative trajectory. The 10-year US Treasury yields have recorded a fresh 14-year high at 4.15%. Returns on US bonds have lured investors, which has resulted in the liquidation of equities.

At the press time, Japan’s Nikkei225 tumbled 1.04%, ChinaA50 dropped almost 1%, Hang Seng plunged 1.66%, and Nifty50 eased 0.27%.

When the mighty US sneezes other countries catch a cold. Weak economic prospects revealed in Federal Reserve (Fed)’s Beige Book triggered the risk-off market mood and a flight of safety to the US dollar index (DXY). The DXY pushed towards the round-level resistance of 113.00. At the time of writing, the DXY has slipped to near 112.80 as S&P500 futures have trimmed their losses, however, the sentiment has not turned positive yet.

An announcement of an emergency bond-buying program worth $667 million by the Bank of Japan (BOJ) has triggered the risk of further weakness in the Japanese yen. The announcement followed commentary from Japan Prime Minister Fumio Kishida in which he cited the risk of weaker economic prospects due to external demand shocks.

Meanwhile, Chinese equities have witnessed an intense sell-off after the People’s Bank of China (PBOC) maintained the status quo by keeping Prime Lending Rate (PLR) unchanged. The one-year and five-year PLR remained steady at 3.65% and 4.30% respectively.

On the oil front, oil prices have climbed above $85.00 firmly after the Energy Information Administration (EIA) disclosed in decline in oil stockpiles by 1.725M barrels last week ending October 16.