Asian Stock Market: Rebounds sharply as investors shrug off US Inflation fears

• Asian stocks have bounced back as DXY is performing lackluster ahead of the US inflation release.
• Chinese indices are outperforming as the US drops some tariffs imposed on Chinese imports.
• Oil prices have tumbled below the $100.00 mark on rising demand worries.

Markets in the Asian domain have witnessed a decent reversal after a spree of bearish trading sessions. This has come after the investors shrug off the anxiety over the US inflation release. Easing uncertainty in the Asian markets has also been accompanied by falling oil prices, which have brought a power-pack responsive buying action on Wednesday.

At the press time, Japan’s Nikkie225 gained 0.30%, India’s Nifty50 added 0.25%, Hang Seng jumped 1.50% and China’s SZSE Component surged 2.86%.

A strong rebound in the Chinese indices has been backed by the announcement of tariff withdrawal on Chinese imports by the US. US President Joe Biden on Tuesday announced that the administration could some of the tariffs imposed against Chinese imports to lower inflation. Meanwhile, China’s yearly inflation has landed at 2.1%, higher than the forecasts of 1.7%. Also, the Producer Price Index (PPI) remained higher at 8% against the estimates of 7.7%.

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Meanwhile, the US dollar index (DXY) has struggled to breach the round levels resistance of 104.00. The DXY is trading lackluster as investors are on the sidelines ahead of the US Inflation release. The yearly US inflation is expected to land at 8.1% while the core CPI may print at 6%.

On the oil front, rising odds of a 75 basis point (bps) interest rate hike by the Federal Reserve (Fed) have elevated the demand worries. The aggregate demand may nosedive on liquidity contraction from the economy. Easy money will move out and the labor market could be hit hard. This has hammered oil prices below the psychological support of $100.00. Lower oil prices are boon for the Asian economies as they are the leading importers of fossil fuels.