Asian Stock Market: Firms on weaker DXY, oil rebounds on tight supply expectations

• Asian equities have displayed a broad-based buying interest amid a fall in the DXY.
• Contaminated US Retails Sales have trimmed the DXY’s safe-haven appeal.
• Oil prices have rebounded firmly as OPEC has not promised any increment in supply.

Markets in the Asian domain are performing strongly as the US dollar index (DXY) has witnessed a steep fall after failing to sustain above the crucial resistance of 109.00. Contaminated US Retail Sales and dull Consumer Confidence have resulted in a steep fall in the DXY.

At the press time, Japan’s Nikkei225 added 0.54%, ChinaA50 gained 0.90%, Hang Seng surged 2.51% and Nifty50 jumped 1.01%.

On Friday, the US Retail Sales remained upbeat after landing at 1%, higher than the estimates of 0.8% and the prior release of -0.3%. One needs to understand that the upbeat economic data is driven by soaring oil prices. Oil prices in June were significantly higher whose effect was accelerating energy bills for the households.

Apart from that, the University of Michigan reported the Consumer Sentiment Index (CSI), which remained minutely above 51. However, the sentiment data is still near the lowest in the past two years. This has brought a significant sell-off in the DXY prices.

On the oil front, expectations of tight supply have brought a rebound in oil prices. U.S. President Joe Biden's trip to Saudi Arabia has failed to bring a promise of more oil supply on the table. OPEC is in no mood in accelerating supplies in the market and a reason behind that could be the high prices. OPEC nations: Saudi Arabia and the United Arab Emirates (UAE) which carries the potential of increasing supplies are getting higher revenues amid higher oil prices and higher supply. This is going to dampen the chances of bringing price stability sooner.

In China, lockdown worries are not finding a sigh of relief as the economy has reported more than 1,200 Covid-19 cases this weekend. The odds of announcing the implementation of the zero-Covid policy by the Chinese administration look favorable. This might impact the Chinese equities principally.