Asian Stock Market: Caution triggers as global growth encounters a downward revision

Markets in the Asian domain are showing signs of caution amid the release of corporate earnings worldwide and ahead of the United States Gross Domestic Product (GDP) data. The US Dollar Index (DXY) is gauging a cushion around seven-month low at 101.10, however, the downside bias is extremely solid. S&P500 futures are displaying modest gains recorded in early Asia after settling Wednesday’s trading session on a flat note. The risk profile is positive, however, anxiety among investors will remain high ahead of the US GDP and other economic data.

At the press time, Japan’s Nikkei225 eased 0.20%, KOSPI gained 0.70%, Hang Seng soared 1.75%, Chinese markets are closed on account of the Lunar New Year while Indian markets are closed due to Republic Day.

A poll conducted by Reuters on global growth indicates that the global economy will grow by 2.1% in 2023; 2.8% in 2024 vs. 2.3% and 3.0%, respectively, in an October poll. Reuters stated that 'Falling energy prices, a slowdown in inflation in most economies from multi-decade highs, an unexpectedly resilient euro zone economy and China's economic reopening have led traders to speculate the downturn will be milder.''

Japanese equities are facing caution despite the Bank of Japan (BoJ) Governor Haruhiko Kuroda favored of a continuation of expansionary monetary policy. BoJ Kuroda has confirmed that the central bank “will resolutely keep the monetary environment easy.” He added that “the BoJ aims to regain market functionality by tweaking yield curve control operations while maintaining an easy monetary environment.

On the oil front, oil prices have surrendered the $80.50 support as the US recession is still in the picture despite rising bets for a smaller interest rate hike by the Federal Reserve (Fed). The Fed could not achieve price stability without entering into recession as retail demand needed to get squeezed and producers would be needed to drop output prices to maintain the harmony.