Asian Stock Market: Softer US Inflation infuses adrenaline rush, oil soars

Markets in the Asian domain have jumped sharply as investors’ risk appetite has improved dramatically after a soft landing of the US Consumer Price Index (CPI) on Wednesday. US equities remained upbeat after the US Bureau of Labor Statistics reported the plain-vanilla inflation rate at 8.5% on an annual basis, lower than the already downward consensus of 8.7%. At the same time, the core CPI that doesn’t inculcate volatile food and oil prices remained unchanged at 5.9%.

At the press time, China A50 surged 1.40%, Hang Seng jumped 1.90%, Nifty50 gained 0.80%, and Japan’s Nikkei 225 surrendered 0.65%.

The market participants were cautious as the Federal Reserve (Fed) was expected to remain harsh on interest rates after the release of the upbeat US Nonfarm Payrolls (NFP). Well, hawkish bets are still not down as the Fed has a long way to go to reach the neutral rate. But signs of exhaustion in the runaway inflation have cheered the risk-sensitive currencies.

Meanwhile, the US dollar index (DXY) is facing barricades around 105.40, and a downside move could resume as the lower inflation rate has not only trimmed the odds of prolonged hawkish guidance but has also trimmed recession fears.

Oil prices have swiftly crossed the psychological resistance of $90.00 as recession fears have trimmed. This could be a pullback move as the Energy Information Administration (EIA) reported a decent buildup of oil inventories last week. The EIA oil stockpiles landed higher at 5.458 million barrels than the prior release of 4.467 million barrels.