Asian Stock Market: Plunges on an escalation in US Inflation, oil rebounds from around $85.00

• Asian stocks have fallen like a house of cards amid soaring US inflation rate.
• Considering the higher core CPI, the Fed will continue the pace of hiking interest rates.
•  The depreciating yen is creating troubles for import-oriented firms.

Markets in the Asian domain have witnessed an intense sell-off at open as the US dollar index (DXY) has reclaimed the auction area around the psychological resistance of 110.00. Asian equities are going through a bloodbath as a higher US Consumer Price Index (CPI) print has led to a resurgence in expectations of a bumper rate hike by the Federal Reserve (Fed).

At the press time, Japan’s Nikkei225 nosedived 2.50%, China A50 tumbled almost 1% and Hang Seng plummets 2.64%.

The headline US CPI landed higher at 8.3% than the expectations of 8.3% but remained lower from the prior release of 8.5%. Thanks to the falling gasoline prices that the inflation rate is on a downward spree but the decline doesn’t justify a ‘relaxation’ mode for the Federal Reserve (Fed) policymakers. The troublesome job of Fed policymakers is going to be more laborious now as core CPI that excludes food and oil prices has stepped up to 6.3% vs. the expectations of 6.1% and 40 basis points (bps) higher than the prior release.

In Tokyo, the continuously depreciating yen is creating troubles for the Japanese administration. Companies that are highly import-dependent to cater to their input requirements are forced to pay higher. Adding to that, import-dependent firms are failing to pass on the impact of costly input prices, which are impacting their operating margins.

On the oil front, oil prices have rebounded after dropping to near the critical support of $85.00. The black gold is expected to remain in the grip of bulls as European nations are looking to consume oil in place of energy to cater to the demand. Energy prices are not taking a sigh of relief and are aiming higher ahead of the winter season.