Asian Stock Market: Cautions soars amid Fed rate hike fears, PBoC promises expansionary policy

Markets in the Asian domain are demonstrating precaution as enlarging consumer spending in the United States has propelled the risk of more rates by the Federal Reserve (Fed). S&P500 futures have managed to add some gains after a weak Friday, however, the downside seems warranted. The strong labor market in the US economy despite the lay-off saga by big techies has propelled the chances of a 5% terminal rate achievement by the Fed sooner.

At the press time, Japan’s Nikkei225 eased 0.19%, SZSE Component dropped 0.48%, Hang Seng surrendered 0.49%, and Nifty50 tumbled 0.63%.

Investors are confused about the US labor market as at one place, payrolls are skyrocketing and at another big tech boys are laying-off employees. Whatever the case, consumer spending looks no stopping around and is fueling the expectations of further policy contraction.

Chinese stocks have failed to find strength despite a dovish People’s Bank of China (PBoC) report. The central bank has promised to accelerate overall consumption as the economy needs monetary stimulus after the rollback of pandemic controls. The report conveys “This year's monetary policy should be precise and strong, and not only focus on supporting the expansion of domestic demand, but also take into account longer-term economic growth and price stability.”

Meanwhile, Japanese equities are facing immense heat as the successor of Bank of Japan (BoJ) Governor Haruhiko Kuroda is considering the current expansionary policy as appropriate to keep inflation at heights. BoJ Governor Nominee Kazuo Ueda is of the view that the current rise in inflation is backed by international forces, therefore achievement of pre-pandemic levels is highly required to keep inflation elevated.

On the oil front, the oil price has corrected to near $76.00 after a sharp upside move. However, the upside looks favored as supply worries have deepened after Russia opt for significant supply cuts to retaliate against sanctions imposed by Western allies.