Asian Stock Market: Tumbles on lockdown worries in China, DXY soars, oil surrenders $100.00

• Asian equities have slipped strongly as lockdown worries in China have progressed.
• A back-to-back resurgence of Covid-19 in China has worsened the supply chain mechanism.
• The DXY has printed a fresh 19-year high of 108.47 as investors are focusing on US inflation.

Markets in the Asian domain are declining swiftly as escalating lockdown worries in the Chinese economy on the resurgence of Covid-19 have spooked the market sentiment. A back-to-back resurgence of the coronavirus in China has dampened the supply chain mechanism. Also, the accelerating fears of lockdown curbs to contain the pandemic are affecting the corporate sector in China to invest without hesitation.

At the press time, Japan’s Nikkei225 tumbled 1.85%, China A50 surrendered 1.43%, Hang Seng dropped 1.46%, and Nifty50 eased 0.55%.

The US dollar index (DXY) has printed a fresh 19-year high of 108.47 as investors are channelizing their funds into the safe haven on expectations of a higher inflation rate. The catalyst is seen at 8.8%, higher than the former release of 8.6%. This is strengthening the case for a bumper rate hike announcement by the Federal Reserve (Fed). The central bank announced a rate hike by 75 basis points (bps) in June and a similar kind of announcement is expected in July monetary policy.

On the oil front, soaring lockdown worries have pushed the oil prices below the psychological support of $100.00. It is worth noting that China is the largest importer of oil in the world and expectations of a slump in the demand for oil in the largest oil importing country are sufficient to drag the oil prices lower. Apart from that, a higher inflation rate in the US economy will compel the Fed to hike rates significantly, which will eventually trigger recession fears.