Mumbai: The flight to safety has intensified. Benchmark US treasury yields fell to their lowest levels in at least 60 years as investors exited risky assets. Fuelling concerns is the surging bond yields in Spain and Italy.
Spain’s 10-year bond yield climbed 21 basis points to a record 6.66%. The sharp surge in borrowing costs could amplify the economic crisis in the country and make it difficult for the government to recapitalise the banks.
The concerns have dragged the US markets lower. S&P 500 lost 1.43% to 1,313. Investor sentiment took a knock after data released by the National Association of Realtors said the Pending Home Sales Index fell 5.5% to 95.5. According to Reuters, it’s the lowest reading since December.
The heightened risk aversion is weighing on the commodity markets. Brent crude fell below $104 to $103.25 a barrel on speculation that economic crisis in Europe could crimp demand for petroleum products.
Asian markets also opened on a weak note. Japan’s Nikkei slumped 1.93% to 8,466 on weak economic data. Industrial production in Japan rose less than forecast in April. Analysts were expecting factory output to rise by 0.5%.
Back home, the demand environment is steadily weakening for Indian companies. According to the Business Standard fourth quarter sales growth of 10.3% for manufacturing and services firms has been the slowest in ten quarters.
ONGC is planning to focus on shale and deep-water areas to double production. The company plans to spend Rs 1.25 trillion ($22.4 billion) to increase output in the next five years and an additional $1 billion to acquire shale assets in the US. Read the Mint report.
Jaguar Land Rover (JLR), a unit of Tata Motors, will be developing a co-branded model with its joint venture partner Chery Automobile Co. for the Chinese market, reports Mint. This is also a regulatory requirement for setting up its $2.78 billion (around Rs 15,290 crore) venture in China.
Reliance Power and Hindalco stocks could witness some action. According to The Economic Times, a group of ministers have recommended that conditional forest clearances be given for the coal blocks allotted to these companies.
GMR Infrastructure has posted a loss of Rs 366 crore for the March quarter. Revenue dropped 3% to Rs 1,911 crore. The company blamed the losses on “pending tariff revision at the Delhi airport”. Read the Mint report.
Education firm Aptech is aiming to earn 50% of its revenues from overseas markets. To reach the target, the company is planning to enter Poland, Rwanda and Senegal markets. Read the Mint report.
DLF stock could also be in focus. The company reported a 39% fall in its consolidated net profit to Rs 211.7 crore for the March quarter. High interest costs have crimped the company’s earnings. In the year-ago period the company posted a net profit of Rs 344.5 crore.
Finally, Apple Inc. is working intensely on a new kind of television. According to analysts, the company may unveil the product this year and launch it in 2013. Read the Bloomberg report.