Asian Stock Market: Plunges in sync with Wall Street as Fed’s Powell underpins a 50 bps rate hike

• Asian markets have followed the footprints of Wall Street on Friday.
• The testimony from Fed’s Powell has validated the 50 bps rate hike expectation.
• Oil prices stuck around $103.00 on supply worries and expectations of a slump in global demand.

Markets in the Asian domain dives on Friday after the testimony of Federal Reserve (Fed)’ chair Jerome Powell renewed fears of significant liquidity shrinkage from the economy.

At the press time, Nikkie225 plunged 1.77%, Hang Seng eased 0.60%, China SZEZ tumbles 0.76%, and Nifty50 dropped 0.90%.

In his speech at the International Monetary Fund (IMF) meeting, Fed’s Powell dictated that a rate hike of 50 basis points (bps) is on the cards. Earlier, various Fed policymakers played the same tune and the markets were acting accordingly. Now, the confirmation news from the highest official of the Fed has bolstered the expectation of a jumbo rate hike. Fed’s Powell warned about rising inflation, citing that the pace of bringing the rates back to neutrality will be faster than the pace witnessed in previous hike cycles. This has not only firmer the jumbo rate hike expectations for May monetary policy but has also escalated the odds of a spree of big-figure hikes. The dictation of hawkish guidance brought an intense sell-off in the US equities whose effect got carry-forward to the Asian indices.

Meanwhile, oil prices are oscillating at $103.00 amid the absence of a potential trigger that could bring a decent move in the asset. The renewed supply fears and cut in global growth forecast by the IMF have triggered a complex situation for the market participants.

Going forward, markets will focus on the testimonies from European Central Bank (ECB) President Christine Lagarde and Bank of England (BOE) Governor Andrew Bailey.