Asian Stock Market: Cheers China’s attempt of making peace with US, Tokyo Inflation softens

• Asian stocks have cheered China’s initiative of making peace with the US.
• Lower Tokyo Inflation has propelled the expectations of more helicopter money from the BoJ.
• An upbeat Caixin Services PMI has trimmed risk of a global recession.

Markets in the Asian domain have shown a broad-based recovery on Friday, following positive cues from S&P500. The 500-stock basket displayed a significant recovery on Thursday after an initiative from China for strengthening bilateral trade with the United States.

In the Asian session, the S&P500 futures have some long liquidations, however, the overall market mood looks moderately optimistic amid subdued performance from the US Dollar Index (DXY). An absence of recovery signs from the USD Index after dropping to near 104.80, indicating weak appeal for the safe-haven assets. The 10-year US Treasury yields have also dropped marginally to 4.05%.

At the press time, Japan’s Nikkei225 soared 1.62%, ChinaA50 added 0.16%, Hang Seng jumped 0.67% and Nifty50 spiked 1.16%.

Japanese stocks are performing stronger after a surprise decline in the Tokyo Inflation data. The annual headline CPI has dropped to 3.4% from the consensus of 4.1% and the prior release of 4.4%. Contrary to that, the core CPI that excludes the impact of energy and food prices have improved to 3.2% from 3.1% as expected and the former release of 3.0%. It seems like the inflationary pressures have been exceptionally battered by the recent fall in food and energy prices.

Tokyo inflation has softened for the first time after nine months of escalation. This might force the Bank of Japan (BoJ) to infuse more helicopter money in the economy in order to spurt the price pressures to keep the Japanese Yen competitive against rival currencies.

Meanwhile, the street is anticipating a sheer economic recovery from China after ditching the lockdown curbs. Reuters reported, “China may aim for a higher 2023 GDP growth target than the 4.5-5.5% proposed in November.” In the Asian session, IHS Market reported solid Caixin Services PMI data. The economic data has landed at 55.0, higher than the consensus of 50.5 and the former release of 52.9.

On the oil front, oil prices are aiming to recapture the critical resistance of $78.00 as China’s economic recovery and a decline in oil stockpiles reported by the US EIA for the week ending February 24 are broadly supporting oil demand recovery.