Asian Stock Market: Displays subdued response to potential credit tightening from US banks

Markets in the Asian domain are displaying subdued performance on Thursday as investors are still digesting distinct commentaries from Federal Reserve (Fed) chair Jerome Powell while delivering a monetary policy statement.

Asian equities are confused about whether to cheer signals of a rate-hike pause or to outrage on potential credit tightening from US banks to remain cautious after the collapse of three mid-size US banks in one week. Tightening credit conditions from US banks might impact advances to households and businesses. This could also impact the outflow of funds to developing Asian nations.

Fed Powell has continued its heroic battle against persistent inflation claiming that one more rate hike is on cards and the central bank won’t cut rates this year.

At the press time, Japan’s Nikkei225 eased 0.27% while ChinaA50 jumped 0.27% and Hang Seng climbed 0.80%. Meanwhile, Nifty50 remains choppy.

The US Dollar Index (DXY) looks vulnerable above 102.00 and is likely to display more downside as safe-haven assets are losing charm led by expectations of a few rate hikes are further required by the Fed to scale US Consumer Price Index (CPI) to 2%.

Japanese stocks are likely to remain on tenterhooks ahead of the inflation data, which will release on Friday. According to the consensus, annual headline CPI is expected to decline to 4.1% from the former release of 4.3%. While the core CPI that strips off oil and food prices is seen higher at 3.4% against the prior release of 3.2%.

On the oil front, oil price is aiming to sustain above $70.00 amid optimism about fewer rate hikes from the Fed. This has receded fears of deep recession but further contraction in economic activities cannot be ruled out. Apart from that, investors have ignored the build-up of oil inventories last week. The US Energy Information Administration (EIA) reported a build-up of oil stockpiles by 1.117 million barrels for the week ending March 17.