Remains mixed amid sheer fall in China’s PPI, oil corrects

• Asian stocks are demonstrating mixed performance despite negative cues from S&P500.
• China’s consumer and producer inflation has softened extremely due to vulnerable demand.
• Japan equities have faced immense pressure despite registering a surplus in the current account straight for four months.

Markets in the Asian domain have shown a decent recovery on Monday despite a sheer slowdown in China’s consumer and Producer Price Index (PPI) and wage pressures in the United States remained upbeat. S&P500 futures remained on the backfoot on Friday as wage inflation in the US remained upbeat in June and strengthened expectations of more interest rate hikes from the Federal Reserve (Fed).

The US Dollar Index (DXY) has recovered to near 102.47 after a vertical fall as hopes of further policy-tightening have solidified. Rising wage inflation indicated that inflationary pressures would remain extremely stubborn.

At the press time, Japan’s Nikkei 225 dropped 0.32%, China A50 jumped 0.56%, Hang Sang gained 0.38%, and Nifty50 added 0.52%.

The sheer slowdown in China’s inflationary pressures has indicated that overall demand is extremely weak due to which firms are forced to reduce prices of goods and services offered at factory gates. The monthly Consumer Price Index (CPI) in China for June remained stagnant vs. a figure of 0.2%. Annual CPI remained decelerated at 0.2%, similar to its prior release. Meanwhile, annual PPI has further decelerated to -5.4% vs. the former release of -4.6%.

Meanwhile, Japanese equities have faced immense pressure despite the economy having registered a surplus in the current account straight for four months. The current account surplus soared to 1.86 trillion yen in May vs. 773 billion yen reported in the same month a year ago. While a Reuters poll forecast a surplus of 1.88 trillion yen.

On the oil front, oil prices have corrected after printing a fresh monthly high of $73.87 as fears of more interest rate hikes from global central banks have deepened. Hopes of global recession have elevated as inflation is turning out more resilient worldwide. While bleak demand in China has also terrified the oil demand outlook.

It is worth noting that China is the leading importer of oil in the world and weak demand from China is sufficient to impact oil prices.