Asian Stock Market: Trades mix as S&P 500 loses traction ahead of Fed policy, oil sees $100.00

  • Asian equities have displayed a mixed performance as investors are cautious ahead of Fed policy.
  • A downbeat performance of various US economic catalysts has triggered recession fears.
  • Oil prices have advanced as Russia cut gas supply to Europe.

Markets in the Asian domain are trading mixed as S&P500 has turned negative overnight in New York. It seems like pre-Federal Reserve (Fed) anxiety has kicked in, and risk-sensitive assets are misbehaving. The market participants are expected to remain anxious as the Fed is likely to step up interest rates by 75 basis points to 2.25-2.50%.

At the press time, Japan’s Nikkei225 remained flat; Shanghai Composite gained 0.81%, Hong Kong surged 1.46%, while Nifty50 eased 0.58%.

Investors are turning cautious ahead of the interest rate event by the Federal Reserve (Fed) on Wednesday. Earlier, the market participants were betting over a rate hike announcement by 100 basis points (bps) as the inflation rate climbed to 9.1%. Now, the resurgence of recession fears after the subdued PMI data, lower consensus for Durable Goods Orders, and seven-month high Initial Jobless Claims have evaporated the option of a 1% rate hike. And, the Fed will paddle up its interest rates by 75 bps.

Meanwhile, the release of the dovish Bank of Japan (BOJ) minutes has failed to support the Japanese equities.  The BOJ is committed to its ultra-loose monetary policy, considering its fragile economy after the pandemic.

On the oil front, oil prices have extended their recovery above $97.00 as supply worries have accelerated after Russia cut gas supply to Europe through a major pipeline. The European nations have undoubtedly shifted their energy demand to other suppliers but still cater most of their energy demand from Russia.

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