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Asian Stock Market: Extensively bullish on subdued DXY, oil slips to near $85.00

  • Asian indices are advancing amid DXY’s lackluster performance ahead of US CPI.
  • Chinese equities have carry-forwarded their buying spree on expectations of PBOC’s dovish stance.
  • The black gold is facing the heat on lower consensus for oil demand.

Markets in the Asian domain are displaying a rock-solid performance, following the footprints of Wall Street performance on Friday. Asian indices have been infused with fresh blood as the US dollar index (DXY) is displaying a subdued performance in the Asian session. The DXY is oscillating in a narrow range of 108.58-108.85 after a subpar opening as investors are awaiting the release of the US Consumer Price Index (CPI).

At the press time, Japan’s Nikkei225 jumped 1.06%, ChinaA50 soared 1.68%, Hang Seng mounts 2.69%, and Nifty50 gained 0.64%.

The DXY is displaying a lackluster performance ahead of the US inflation, which will release on Tuesday. The headline US CPI is seen lower at 8.1% against the prior release of 8.5%. As gasoline prices in the US have fallen significantly and interest rates are continuously elevating, price pressures are highly expected to cool down further.

On Monday, Chinese equities carry-forwarded their Friday’s bullish stance on a decline in China’s inflation data. The economic data landed at 2.5%, lower than the expectations and the prior release of 2.8% and 2.7% respectively on an annual basis. A decline in China’s inflation will force the People’s Bank of China (PBOC) to sound dovish and trim the Prime Lending Rate (PLR) further. And, more liquidity flush into the economy will spurt the volumes in economic activities.

On the oil front, oil prices have declined as oil demand in China is expected to contract for the first time in the last two decades. The lockdown curbs to contain the spread of Covid-19 have restricted the movement of men, materials, and machines. Therefore, the upcoming holiday week and households staying at home will keep the oil demand on the tenterhooks.