Asian Stock Market: Traces bearish cues from S&P500, muddled Fed rate peak-inspired risk still breaths

• Bearish S&P500 has faded optimism in Asian indices.
• China’s easing Covid-19 restrictions-inspired optimism has dwindled the impact of a weaker Trade Balance.
• The oil price has refreshed its 11-month low at $74.54 amid downside revision in economic forecasts.

Markets in the Asian domain have failed to continue Tuesday’s optimism and are facing pressure due to negative market sentiment. Indices are following bearish cues from S&P500 as the latter has witnessed selling pressure consecutively for two trading sessions. Volatility inspired by Federal Reserve (Fed)’s interest rate peak chaos is still breathing and impacting risk-sensitive assets.

At the press time, Japan’s Nikkei225 dropped 0.69%, ChinaA50 added 0.20%, Hang Seng eased 0.10%, and Nifty50 slipped 0.35%.

Growing concerns over Fed’s interest rate peak have strengthened the risk-off mood in global markets. Evidence of fresh strength in the United States economy is compelling for a higher neutral rate as inflation is set to rebound again amid rising fears of wage inflation. No doubt, a higher interest rate peak by the Fed will accelerate recession fears ahead.

Meanwhile, optimism in Chinese equities led by easing Covid-19 lockdown restrictions has faded weaker Trade Balance data. In US Dollar terms, Exports dropped by 8.6% against the consensus of 3.5% and Imports tumbled by 10.6% vs. the projections of 6.0%. China’s Trade Balance has slipped sharply to $69.84B in comparison with the estimates of $78.1B.

Meanwhile, Indian indices are displaying volatility as the Reserve bank of India (RBI) has raised the repo rate by 35 basis points (bps). Also, RBI Governor Shaktikanta das has trimmed Gross Domestic Product (GDP) forecast to 6.8% for FY2023. The 50-stock Indian basket has slipped by 0.35%.

On the oil front, the oil price has refreshed its 11-month low at $74.54 as expectations for a higher interest rate peak by the Fed have revised down economic projections. A fresh downside revision in the growth forecast has offset supply worries from Russia.