Asian Stock Market: Trades firmly on upbeat market mood, DXY tumbles, oil rebounds

• A rebound in the positive market sentiment has supported the Asian equities.
• Oil prices are in recovery mode as supply constraints to remain for a prolonged period.
• The DXY is expected to extend losses as investors have shrugged-off uncertainty over Fed Powell’s testimony.

Markets in the Asian domain are firmer on the improved risk appetite of investors. A strong rebound in the risk-on impulse has underpinned the risk-perceived assets, whose effect is clearly reflected in the Asian equities. The Asian indices are following the footprints of S&P500 futures and are advancing higher. It seems like the market participants have ignored the uncertainty over the Federal Reserve (Fed) chair Jerome Powell’s testimony and have started pouring funds into the risk-sensitive assets.

At the press time, Japan’s Nikkei225 surged 2.27%, China A50 added 0.33%, Hang Seng gained 1.50%, and Nifty50 jumped 1.25%.

The Chinese economy has shown some signs of reversal in the downside trend of the aggregate demand as their oil imports from Russia have jumped significantly. The economy has recorded a 55% addition in the oil imports in May.

On the oil front, oil prices are picking bids below $110.00 after a significant fall recorded on Friday. The black gold has rebounded strongly as investors are giving more priority to the supply constraints rather than focusing on the expected demand slump due to recession fears going forward. The supply constraints are expected to remain for a prolonged period as gauging an alternative to Russia for addressing the demand for fossil fuels is not a cakewalk.

Meanwhile, the US dollar index (DXY) is hovering around its intraday low at 104.22 and a downside move is expected as investors have shrugged off the uncertainty over the Fed Powell’s testimony. Traders should focus on the guidance to be provided on upcoming monetary policy action.