Asian Stock Market: Risk-off tone accelerates as DXY recaptures 109.00, US ISM PMI is focus

• Asian equities are witnessing selling pressure amid a risk-off market mood.
• Chinese equities have declined after the downbeat Caixin Manufacturing PMI data.
• The DXY is attempting to establish above 109.00 ahead of US ISM PMI.

Markets in the Asian domain have witnessed a significant fall as investors have turned risk-averse ahead of the US ISM Manufacturing PMI data. Asian equities are facing the wrath of downbeat consensus for the US economic data. Also, the US dollar index (DXY) has displayed limited gains in the Asian session.

At the press time, Japan’s Nikkei225 plunged 1.60%, China A50 surrendered 0.46%, Hang Seng plummeted 1.52%, and Nifty50 surrendered 0.52%, however, the Indian 50-stock basket has recovered a majority of its losses after a gap down opening.

Japanese indices have witnessed a steep fall as the Bank of Japan (BOJ) announced a fixed-rate purchase plan for the cheapest to deliver Japanese Government Bonds (JGBs) consecutively for the 357th time for an extended period of time, as per Reuters. This will weaken the Japanese yen further due to more liquidity infusion in the economy. It will make imports more costly, hence it will impact corporate margins due to costly imported raw materials.

On the China front, the world’s second-largest economy is facing the headwinds of a lower growth rate. Chinese equities have witnessed selling pressure after the release of the downbeat Caixin Manufacturing PMI data. The economic data has been trimmed to 49.5 against the consensus of 50.2 and the prior release of 50.4. This has soared signs of de-growth in China.

Meanwhile, the US dollar index (DXY) is attempting an establishment above 109.00. The DXY is aiming higher as investors have ignored the lower consensus for US ISM Manufacturing PMI and are focusing on more rate hikes by the Federal Reserve (Fed) in its September monetary policy meeting. The Manufacturing PMI data is seen at 52.0 vs. 52.8 in the former release.