Asian Stock Market: Tumbles on downbeat US Consumer Confidence, focus is on Fed Powell

Markets in the Asian domain have witnessed a steep fall as the downbeat US Consumer Confidence has crossed the boundaries and has dented the sentiment of investors globally. The downwardly revised US Consumer Confidence brought a significant sell-off in the Wall Street on Tuesday and a similar pattern has been followed in the Asian indices. The US Conference Board reported the Consumer Confidence at 98.7, lower than the estimates of 100, and the former release of 103.2.

At the press time, Japan’s Nikkei225 tumbled 1.18%, China A50 surrendered 1.00%, Hang Seng plunged 1.51%, and Nifty50 eased 0.66%.

A downbeat US Consumer Confidence displays less confidence of the US individuals in the growth prospects of the US economy. No doubt, the soaring fossil fuels, and food prices have cut the growth forecasts and the households are facing the headwinds of lower-valued ‘paychecks’. This also results in lower consumer spending on durables and consumer products and eventually a slump in aggregate demand.

Meanwhile, the US dollar index (DXY) is hovering below 104.50 and is awaiting the speech from Federal Reserve (Fed) chair Jerome Powell. Fed Powell is expected to sound hawkish while providing hints of likely monetary policy action in July.  Apart from that, the US economic data holds significant importance. The release of the US Personal Consumption Expenditure (PCE) will hog the limelight. The market consensus states an unchanged US PCE at 7% on an annual basis, which is also vulnerable for the US Consumer Confidence. A significant slump in the US PCE price-wise is the need of the hour.

On the oil front, oil prices have witnessed a minor correction after a firmer recovery. The black gold is holding itself above $111.00 in the early European session. The supply constraints will continue to stay prolonged as the OPEC cartel is unable to fill the restricted supply from Moscow.