Asian Stock Market: Shanghai firms ahead of Fed policy and US debt ceiling issues, oil consolidates

Markets in the Asian domain are showing caution amid sheer volatility in the United States markets as investors are worried over mounting US debt ceiling issues and the monetary policy action from the Federal Reserve (Fed). S&P500 witnessed a massive sell-off on Thursday after US Treasury Secretary Janet Yellen reported that the Treasury will be out of funds in early June if the debt ceiling won’t get an extension approval.

This could force the White House to come forward for negotiations with the House of Republicans, which earlier demanded negotiations in the President’s spending initiative against the proposal of raising the debt ceiling.

At the press time, SZSE Component climbs above 1.08%, Hang Seng plunged 1.86%, KOSPI tumbled 1%, and Nifty50 dropped 0.36%.

Japanese markets are closed on account of Constitution Day.

The US Dollar Index has found an intermediate cushion after a sheer sell-off to near 101.70. The further downside in the USD Index looks genuine as the Fed is expected to sound neutral on interest rate guidance. However, an interest rate hike by 25 basis points (bps) cannot be ruled out.

Chinese equities are showing strength despite the turbulent trading environment. Indices are performing better ahead of the Caixin Manufacturing PMI data, which will release on Thursday. The economic data is expected to land at 50.3 lower than the former figure of 50.0. The Chinese economy is in recovery mode after a long period of lockdown due to pandemic curbs.

On the oil front, the oil price displayed a blood bath as central banks are preparing for accelerating interest rates further to arrest sticky inflation. Going forward, investors will keep an eye on oil inventories data, which will be released by US Energy Information Administration (EIA) for the week ending April 28.