Asian Stock Market: Tumbles as China’s factory activity disappoints, oil remains below $70

Markets in the Asian session have nosedived as investors underpinned the risk-aversion theme after disappointing China’s official Manufacturing PMI data. China’s official PMI data released in Asia remained mixed as manufacturing activities remained downbeat while non-manufacturing PMI outperformed estimates.

Global market mood has turned cautious as investors are awaiting the release of the United States Employment data, which will provide a base to Federal Reserve (Fed) policymakers for building a further roadmap of bringing down stubborn inflation. The rationale is rerating the US Dollar Index (DXY), which has jumped strongly to near 104.40.

At the press time, Japan’s Nikkei225 plunged 1.63%, ChinaA50 dived 1.66%, Hang Seng nosedived 2.56%, and Nifty50 dropped 0.50%.

Chinese equities faced selling pressure after domestic factory activity contracted despite swift reopening measures by the administration after remaining in lockdown curbs for three years. China’s National Bureau of Statistics (NBS) reported Manufacturing PMI at 48.8, lower than the estimates of 49.4 and the former release of 49.2. While Non-Manufacturing PMI jumped to 54.5 from the consensus of 50.7 but remained lower than the former figure of 56.4.

Japanese stocks remained under pressure after downbeat Retail Trade data. Annual Retail Trade data accelerated by 5.0% at a slower pace than expected at 7.0% and the former release of 7.2%. This could have some pressure on the Bank of Japan (BoJ) as weak retail demand could ease inflationary pressures. In early Asia, BoJ Ueda cited that the increase in inflationary pressures has been caused by supply factors such as a rapid rise in commodity prices, labor shortages, and disruptions to supply chains, which is not constructive for the economy.

On the oil front, oil prices are consistently oscillating below the crucial resistance of $70.00. Investors are awaiting the outcome of OPEC’s meeting that will deliver guidance for further action. OPEC members are expected to discuss production cuts to support energy prices. Tensions with Russia are escalating as it is pumping cheap oil into the global economy, disregarding the pledge.