Asian Stock Market: Indices fly on jubilant market mood, yields witness bloodbath, oil above $86.00

• Asian equities have soared following the footprints of the S&P500.
• A noteworthy decline in US inflation has brought a global market rally.
• Nikkei225 has been delighted amid a sharp recovery in the Japanese yen.

Markets in the Asian domain are displaying bumper gains after sensing ultra-bullish cues from the US equity market. S&P500 soared like there is no tomorrow after a sheer decline in US inflation for October. Investors flushed money into the risk-sensitive assets as a slowdown in inflationary pressures could result in a slowdown in policy tightening by the Federal Reserve (Fed).

At the press time, Japan’s Nikkei225 soared 2.74%, ChinaA50 climbed 2.24%, Hang Seng upsurged 5.57% and Nifty50 gained 1.53%.

Market euphoria brought a bloodbath in US Treasury yields as investors rushed toward US government bonds by dumping the US dollar index (DXY). The 10-year US Treasury yields plummeted to 3.81% while the DXY plunged to near a two-month low of around 107.70.

The headline inflation rate dropped to 7.7% vs. the projections of 8.0% while the core Consumer Price Index (CPI) declined to 6.3%. A cool off in red-hot inflation was highly expected as consumer spending slumped to 1.4% in the third quarter, as recorded from Fed’s Beige Book.

Japanese equities have rebounded amid a significant appreciation in the Japanese yen vs. the mighty Greenback. A prolonged weaker yen has been hurting firms that are highly dependent on raw materials imported from external economies. Now, a relief rally in the domestic currency will support corporate and eventually their profit margins.

On the oil front, oil prices have recovered above $86.00 as inflationary pressures have been curtailed and recession fears have been postponed. This has brought a sense of optimism in the oil demand prospects. Also, investors are shrugging off Covid-related risk in China.