Forex News

09:03:39 26-09-2022

Asian Stock Market: Nikkei225 nosedives on BOJ intervention, oil establishes below $80.00

  • Japanese indices plunged as BOJ’s intervention forced a sell-off in export-oriented firms.

  • The DXY is aiming to recapture 114.53 amid the risk-off market mood.

  • Oil prices have dropped below $80.00 as global recession fears soar.

Markets in the Asian domain are displaying a wide divergence in performance as the Japanese equities are facing an intense sell-off amid the Bank of Japan (BOJ)’s intervention in the currency markets while Chinese equities are performing firmer despite the house arrest of the Chinese leader Xi Jinping.

At the press time, Japan’s Nikkei225 plummeted 2.55%, ChinaA50 jumped almost 1% while Hang Seng eased 0.20%.

An intervention in the currency markets by the BOJ has cleared that the economy is worried about the depreciating yen, which has forced investors to dump equities belonging to export-oriented firms and the tourism industry as their revenue will fall ahead. Meanwhile, Jibun Bank PMI numbers have failed to make any impact.

The Manufacturing PMI has trimmed to 51.0 against the expectations of 51.1 while the Services PMI has accelerated to 51.9 against the forecasts of 49.3.

Chinese indices are performing well despite the signs of political instability. The House arrest of Chinese leader Xi Jinping has underperined risk-off market mood.

The US dollar index (DXY) is facing barricades around 114.00, however, the odds are favoring recapturing the two-decade high of 114.52.

On the oil front, a fresh rate hike cycle by western central banks has bolstered the chances of a global recession. In order to corner the soaring price pressures, central banks are accelerating interest rates vigorously despite knowing the fact that their economic fundamentals are not supportive. Higher interest rates will for sure trim the overall demand and eventually the demand for oil.


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