Asian Stock Market: Rebound on subdued DXY despite fears of stagflation and poor Japan’s GDP

Markets in the Asian domain part ways with the Chinese equities as the former are trading higher on subdued DXY while the latter slips more than 1% on China’s galloping inflation print. The monthly Consumer Price Index (CPI) print landed at 0.6%, much higher than the market estimates and prior figure of 0.3% and 0.4% respectively while the yearly CPI printed at 0.9% in line with the previous figure but higher than the street estimate of 0.8%.

At the press time, Japan’s Nikkei 225 surges 0.5%, and Nifty 50 jumps 0.8% while the China A50 tumbles 0.75%.

The underperformance from Japan’s Gross Domestic Product (GDP) has not impacted the rally in Japan’s equities. The Cabinet Office of Japan reported quarterly GDP at 1.1%, lower than the street estimates and previous print of 1.4% and 1.3% respectively.

Asian markets have witnessed a carry-forward buying after a positive Tuesday despite the intensifying fears of stagflation in Europe. A situation of soaring inflation with stagnant growth rate results in setbacks for equities.

However, a rebound in the Asian markets should not be considered a reversal as risk-perceived currencies are still trading vulnerably and are likely to face more heat on rising oil prices amid the prohibition of Russian oil on the US ports.

Meanwhile, the US dollar index (DXY) has slipped below 99.00 after struggling to kiss 100.00. The 10-year US Treasury yields are holding above 1.85% on rising expectation of a 50 basis point (bps) interest rate hike in March’s monetary policy meeting.