Asian Stock Market: Dovish BoJ and monetary support from China uplift market mood, oil stabilizes

• Asian stocks have shown an overall recovery after the BoJ continued its expansionary policy.
• Chinese big banks have announced rate cuts to stimulate capacity expansion.
• The oil price is consolidating above $70.00 after a V-shape recovery.

Markets in the Asian domain are demonstrating overall optimism as each economy has added significant gains. A continuation of the ultra-dovish interest rate decision by the Bank of Japan (BoJ) rate cuts by China’s big banks to accelerate overall demand in the economy has uplifted market sentiment. Apart from them, positive sentiment from the super bullish settlement by S&P500 on Thursday has also been carry-forwarded into Asian economies.

At the press time, Japan’s Nikkei225 added 0.21%, SZSE Component gained 0.56%, Hang Seng jumped 0.80%, and Nifty50 climbed 0.43%.

BoJ Governor Kazuo Ueda kept interest rates steady at -0.10% and 10-year Japan Government Bonds (JGBs) yield target at up and down 0.5% each. The central bank believes that domestic core consumer inflation is likely to slow the pace of increase towards the middle of the current fiscal year. Inflation expectations are moving sideways after heightening and uncertainty regarding Japan's economy is very high.

Meanwhile, rate cuts by China’s big banks to stimulate capacity expansion and overall demand is fueling hopes among market participants that the economy will be out of pessimism. Firms have been failing to lift prices due to weak domestic demand and lower exports to global customers.

On the oil front, the oil price has stabilized above the crucial resistance of $70.00 after a V-shape recovery from $68.00 as investors believe that monetary stimulus in China and a short-term pause in the policy-tightening spell by the Federal Reserve (Fed) would shore up its demand. Also, minutes from the latest oil market report published by the International Economic Agency (IEA) state that “global oil demand will grow by 2.4 million bpd this year, to a record 102.3 million bpd.” Global oil demand will rise by 6% between 2022 and 2028 to 105.7 mln bpd.