5 things that changed for market over weekend: Gift Nifty, China loan prime rates to global market cues for Sensex today
- A sharp spike in domestic retail inflation, weak industrial production for June, worries over likely another interest rate hike by the US Federal Reserve, depreciation in rupee against US dollar, FII outflow, rising US bond yields and slowing China’s economy weighed on investors sentiment.
The Indian stock market is expected to open on a flat note Monday following mixed global cues.
The domestic benchmark equity indices ended lower for the fourth consecutive week, the longest stretch of weekly declines in over a year.
A sharp spike in domestic retail inflation, weak industrial production for June, worries over likely another interest rate hike by the US Federal Reserve, depreciation in rupee against US dollar, FII outflow, rising US bond yields and slowing China’s economy weighed on investors sentiment.
“Global markets extended their losses as concerns over higher interest rates and slowing China’s economy weighed on investors. Even domestically, markets have been consolidating in the absence of any positive trigger and consistent selling by FIIs,” said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.
Also Read: Ahead on D-Street: New listings, FII mood & more; check key triggers for stock markets this week
Here are key triggers that will guide the Indian markets today.
Asian Markets
Asian markets traded mixed on Monday ahead of China’s announcement for its loan prime rates.
Japan’s Nikkei 225 rose 0.31% and the Topix gained 0.28%. South Korea’s Kospi added 0.45%, while the Kosdaq gained 0.38%.
Hong Kong’s Hang Seng index futures traded lower at 17,794, its lowest since November 2022, as compared with its Friday close of 17,950.85.
Australia’s S&P/ASX 200 declined 0.13%.
Meanwhile Gift Nifty was trading higher at 19,312, as compared to the Nifty futures’ previous close of 19,316, indicating a flat start for the Indian benchmark indices.
Wall Street
US stock indices ended flat on Friday as gains in defensive and energy sectors offset weakness in megacap growth stocks.
The S&P 500 fell 0.65 points, or 0.01%, to 4,369.71 and the Nasdaq Composite declined 26.16 points, or 0.2%, to 13,290.78. The Dow Jones Industrial Average gained 25.83 points, or 0.07%, to 34,500.66 points.
Among stocks, Alphabet share price fell 1.9%, while Tesla shares dropped 1.7%. Exxon Mobil shares gained 1.5%. Estee Lauder shares dipped 3.3%, Hawaiian Electric shares surged 14%.
Shares of cryptocurrency firm Coinbase Global declined 3% and Riot Platform plunged nearly 5.5% as bitcoin hit a two-month low.
Also Read: Wall Street week ahead: Surge in bond yields, China's economic crisis leave US stocks vulnerable
China Cuts Prime Loan Rates
The People’s Bank of China cut its one-year loan prime rates (LPR) by 10 basis points (bps) to 3.45% from 3.55% earlier, in its efforts to propel demand in the slowing economy. The five-year LPR was kept unchanged at 4.2% in a monthly meeting on Monday.
The central bank had, last week, unexpectedly cut its medium-term financing rate.
US Dollar and Treasury Yields
The US dollar remained firm on Monday, following five straight weeks of gains, ahead of the Federal Reserve's Jackson Hole symposium this week wherein investors will take cues on further interest rates trajectory.
The dollar gained 0.7% against the euro last week, inched ahead on the yen and surged by more than 1% on the Antipodean currencies as US Treasury yields leapt in anticipation of interest rates staying higher for longer, Reuters reported.
The yuan steadied at 7.3084 per dollar in offshore trade, the yen was at 145.19 per dollar, while the euro held at $1.0883 and Sterling hovered at $1.2738.
Ten-year yields rose 14 basis points for the week and touched a 10-month high of 4.328%, within a whisker of a 15-year high, on Friday. Thirty-year yields rose nearly 11 bps to their highest in more than a decade, Reuters reported.
China vows to resolve local government debt risks
China will coordinate financial support to resolve local government debt problems, the central bank said in a statement on Sunday, as policymakers look to shore up an increasingly shaky economic recovery and reassure worried investors, Reuters reported.
The statement, following a joint meeting on Friday by the People's Bank of China (PBOC), comes amid growing concerns that China's deepening property crisis is starting to spillover into its financial system.
(With inputs from Reuters)
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