- Chinese equities have tumbled amid renewed lockdown fears in Shanghai.
- S&P500 futures have slipped on accelerating odds of one more 75 bps rate hike by the Fed.
- Unavailability of the cheaper money will result in lower investment by US corporate.
Markets in the Asian domain are displaying a mixed performance as the Chinese equities have displayed a vulnerable performance. The Chinese indices have witnessed a steep fall amid escalating lockdown worries in Shanghai. The Shanghai administration reported the initial case of the highly infectious BA.5 omicron sub-variant and has warned of “very high” risks. This has escalated the lockdown worries in Shanghai. It is worth noting that the city has yet not recovered substantially from the prior lockdown.
At the press time, Japan Nikkei225 added 1.13% while China A50 eroded 2.03%, Hang Seng nosedived more than 3% and Nifty50 eased 0.40%.
A slippage in the S&P500 has also underpinned bears in the Asian markets. The US futures are underperforming on escalating odds of a consecutive 75 basis points (bps) interest rate hike by the Federal Reserve (Fed). Higher consensus for US Consumer Price Index (CPI), which is due on Wednesday and the outstanding US Nonfarm Payrolls (NFP) released on Friday have delighted the Fed.
An elevation in the interest rates will restrict the flow of a major chunk of funds in the economy. This will force the corporate sector to inject more filters into investment opportunities. Lower investment by the corporate due to the unavailability of cheap money will trim their earnings.
Meanwhile, the US dollar index (DXY) has recaptured the crucial resistance of 107.00 as investors are channelizing their funds into the DXY on soaring hawkish Fed bets.
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