Wall Street stocks crashed on rising cases of covid-19 in the US and because of the Fed's gloomy outlook
Oil prices tumbled on renewed demand concerns while safe-haven assets--gold, yen, Swiss franc and dollar--rose
MUMBAI: Indian markets are expected to come under severe selling pressure on Friday following weakness in global peers. The SGX Nifty was down nearly 3% in early deals indicating deep losses for Indian benchmarks at open.
Asian equities fell sharply on Friday after stocks on Wall Street and crude oil tumbled due to growing concerns that a resurgence of coronavirus infections could stunt the pace of reopening economies. The three major US stock indices fell more than 5%, posting their worst day since mid-March, when markets had gone into a tailspin because of lockdowns imposed to contain the pandemic.
Cases have jumped in several US states in recent days, raising concern among experts who say authorities have loosened restrictions put in place to contain the spread too early.
The US Federal Reserve released a gloomy economic outlook at the end of its two-day monetary policy meeting on Wednesday. Chair Jerome Powell warned of a "long road" to recovery. Economic data appeared to back the Fed's projections, with jobless claims still more than double their peak during the Great Recession and continuing claims at an astoundingly high 20.9 million.
On the Wall Street, the Dow Jones Industrial Average dropped 6.9%, the S&P 500 lost 5.89%, while the Nasdaq Composite shed 5.27%.
Back home, retail sales of passenger vehicles plunged 87% in May from a year earlier to 30,749 units as dealerships gradually reopened but the lockdown aimed at arresting the spread of the coronavirus pandemic and fears of contracting the infection kept most customers away.
The country’s largest lender State Bank of India (SBI) has said it will sell 2.1 crore shares or 2.10% stake in SBI Life Insurance Co Ltd through an offer for sale. The public sector lender held 57.60% stake in the company as on 31 March. SBI Life's offer for sale opens on 12 June for non-retail Investors and 15 June for retail Investors.
M&M, Eicher, Hindalco, among others, will announce their March quarter later today.
HDFC Ltd said it will raise up to ₹4,000 crore by issuing bonds on private placement basis. The issue size of the secured redeemable non-convertible debentures, to open on 15 June, is of ₹2,100 crore with an option to retain over-subscription of up to ₹1,900 crore, HDFC said in a regulatory filing.
Telecom stocks Vodafone Idea and Bharti Airtel may continue to be in focus.
The Reserve Bank of India (RBI) on Thursday issued a discussion paper to set new and contemporary standards of governance at commercial banks. The discussion paper lays higher responsibilities on the bank board to ensure that the banks as agents of financial intermediation maintain highest standards of governance and avoid conflict of interest.
Meanwhile, oil prices tumbled on renewed concerns about demand because of new cases of the coronavirus disease rise globally and a large buildup of US crude inventories. Benchmark Brent crude futures settled 7.6% lower at $38.55 a barrel in during the US trading hours, before sliding further in Asia on Friday. US crude oil futures settled at $36.34 a barrel, down $3.26, or 8.23%.
US Treasury and euro zone government bonds rallied after the Fed on Wednesday signalled it plans years of extraordinary support to counter the economic fallout of the pandemic.
Yields on the 10-year Treasury notes dropped sharply from last week's peak of 0.96%. The 10-year Treasury note fell 8.6 basis points to yield 0.6625%, while Germany's 10-year benchmark fell 10 basis points to a nine-day low of -0.43%.
Gold futures settled more than 1% higher and the dollar, yen and Swiss franc all benefited from safe-haven flows.
The yen rose to a one-month high against the dollar, while the Swiss franc climbed to a three-month peak. The dollar also rose 0.4% to 96.556 against a basket of currencies.
US gold futures settled 1.1% higher at $1,739.80 an ounce.