Vulnerable ahead of US Inflation, China jumps on mixed inflation data

  • Asian equities are facing intense selling pressure on the souring market mood.
  • Lower-than-expected Chinese inflation has supported the respective indices.
  • Oil prices are subdued, however, the upside looks favored on an extreme shortage of oil supply.

Markets in the Asian domain are trading weak as investors are speculative over the release of the US inflation. A preliminary estimate for the annual US Consumer Price Index (CPI) states that the inflation rate will stick to the previously reported figure of 8.3%. The US CPI is expected to sustain above 8% consecutively for the third month. This will keep the odds of a prolonged hawkish stance by the Federal Reserve (Fed) higher.

At the press time, Japan’s Nikkei225 erased 1.40%, Nifty50 tumbled 1.23%, and Hang Seng slipped 0.23%. While China A50 jumped 0.30% on mixed inflation data.

China’s National Bureau of Statistics has reported the annual inflation at 2.1%, similar to the prior print but a little lower than the estimates of 2.2%. While the Producer Price Index (PPI) has come in line with the forecast of 6.4% and is significantly lower than the prior print of 8%. This has delighted the People’s Bank of China (PBOC) to keep up with the prudent monetary policy.

On the oil front, oil prices are trading subdued in the Asian session, however, the upside is intact as the shortage of oil in the global supply due to the prohibition of oil imports from Russia won’t get offset with the additional oil promised by the OPEC+. The oil cartel promised to add 648k barrels of oil in July and August, which is extremely low against the mega oil supply by Moscow. Also, the higher oil demand forecasts in the US economy due to the upcoming summer will keep oil prices in the grip of bulls.

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