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Asian Stock Market: Carry-forward optimism on weaker oil prices, DXY awaits US NFP

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  • Asian equities are performing well as oil prices have slipped sharply.
  • The RBI is expected to announce a 50 bps rate hike to combat soaring inflation.
  • The release of the US NFP will provide a decisive move to the DXY.

Markets in the Asian domain have carry-forwarded their optimism on Friday as oil prices are nose-diving after various supply catalysts. Oil prices printed a low of $87.00 on Thursday after six months as higher oil stock buildup in the last week reported by the Energy Information Administration (EIA) and a promise of supplying more oil into the global supply by the OPEC+ have trimmed supply worries.

Also, the ongoing Sino-US tensions over Taiwan could underpin sanctions on China, which could trigger demand worries. The collaboration of supply triggers and demand worries has weighed pressure on oil prices. It is worth noting that oil carries a significant portion of total imports made by Asian nations. Therefore, demand worries in China, which is a leading oil consumer, are sufficient to impact oil prices. Now, lower oil prices will result in a lower fiscal deficit for the countries in Asia.

At the press time, Japan’s Nikkei225 gained 0.83%, China A50 added 0.16%, Hang Seng shows an uptick of 0.18%, and Nifty50 climbed 0.35%.

Indian indices are likely to dance to the tunes of the Reserve Bank of India (RBI) as the central bank will announce the interest rate decision taken in the two-day monetary policy committee (MPC). RBI Governor Shaktikanta Das is expected to hike the repo rate by 50 basis points (bps). A rate hike of 50 bps will push the repo rate to its pre-pandemic levels at 5.40%, which were earlier recorded in August 2019.

Meanwhile, the mighty US dollar index (DXY) is awaiting the release of the US Nonfarm Payrolls (NFP) for a decisive move. The job additions in July are seen at 250k, lower than the prior release of 372k. While the jobless data is seen unchanged at 3.6%.