Asian Stock Market: Plunges on Fed’s hawkish stance, oil climbs to near $94.00

  • Asian indices are trading in deeply red ahead of the fresh rate hike cycle.
  • Fed’s preference for bringing price stability over growth prospects has underpinned the risk-off mood.
  • Oil prices have recovered their recent losses and have climbed to nearly $94.00.

Markets in the Asian domain are displaying a vulnerable performance as indices have fallen like a house of cards. Indices have witnessed an intense sell-off as the Federal Reserve (Fed) chose price stability over growth while addressing the world economy at the Jackson Hole Economic Symposium on Friday.

At the press time, Japan’s Nikkei225 plunged 2.66%, China A50 surrendered 1%, Hang Seng shed 0.76%, and Nifty50 tumbled 1.40%.

Considering the price pressures in the US economy, the inflation rate is 8.5% and the Fed is on a spree of hiking interest rates. No doubt, a meaningful impact of liquidity squeeze has been on the US growth rate but price stability demands huge sacrifices from growth rate and employment generation. And, its pain is visible on the Asian equities.

Meanwhile, the Chinese economy is facing the headwinds of a resurgence in Covid-19. Headlines from Reuters that China has reported 1,344 new asymptomatic coronavirus cases in the mainland on Aug 28 vs. 1,137 a day earlier has triggered lockdown fears to contain the spread. This has triggered recession fears in the Chinese economy as a restriction of the movement of men, materials, and machines will halt the production processes.

On the oil front, oil prices have rebounded firmly and have climbed to nearly $94.00. It is worth noting that investors are betting over supply issues amid the announcement of production cuts by OPEC to fix the recent carnage in the prices. Rather than focusing on a dent in global growth prospects ahead of a fresh rate hike cycle.

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