Light bullish amid risky momentum, DXY near three-week low, oil declines
Asian indices outperformed on weak DXY and rising oil market sentiment. Chinese shares remain positive despite a fall in Caixin Manufacturing PMI data. Oil prices continued to fall after the EIA reported higher oil reserves last week.
Markets in the Asian region are performing better on positive cues from global indices. Asian indices have followed the optimism displayed by Wall Street on Friday and are moving higher. The risk appetite in the global market has improved the risk appetite of safe haven assets.
At press time, Japan’s Nikkei225 rose 0.60%, China A50 0.50%, Nifty 50 rose 0.61% and Hang Seng was flat.
Chinese stocks are outperforming despite a drop in Caixin Manufacturing data. Economic figures have reached 50.4, lower than estimates of 51.5 and pre-release estimates of 51.7. China’s economy was operating in July with restricted economic activity due to the resurgence of COVID-19.
Meanwhile, the US Dollar Index (DXY) is underperforming as investors are seeing a decline in the US ISM Manufacturing PMI data. Economic data is seen at 52, which is lower than the prior release of 53. However, the US ISM New Orders Index data is expected to report a stellar performance.
The US ISM New Order Index is clocked at 52, which is significantly higher than the prior release of 49.2. Related data shows further demand by households and ultimately, a higher New Order Index indicates higher forward demand.
On the oil front, fall in oil prices has also supported the Asian indices. Oil price turned sideways but remains below $97.00 and is expected to remain weak. Black gold has been trading lower since last week after the Energy Information Administration (EIA) reported oil reserves last week. The EIA reported a drop of 4.5 million barrels in oil reserves last week.