Mumbai: Indian stock markets are expected to be volatile on Tuesday, while a fragile calm gripped Asian shares in early deals today as investors waited anxiously to see if Beijing could stem the rout in Chinese assets. Crude oil hit 13-month lows as the fast spreading novel coronavirus throttled demand in the world’s biggest importer of fuel.
Brent crude futures crashed to $54.11 a barrel, bringing losses for the year so far to 18%, while US crude sank to $49.99.
China’s central bank has flooded its economy with cash while trimming some key lending rates, but analysts suspect more will have to be done to offset the economic fallout from the virus.
The death toll in China touched 425 as of Monday, with reported cases rising to 20,438.
A swath of commodities from copper to iron ore joined crude oil to head south amid fears that the drag on Chinese industry and travel would sharply curb demand for fuel and resources.
Early on Tuesday, the MSCI's broadest index of Asia-Pacific shares outside Japan had inched up 0.1%, led by gains in South Korea and Australia. Japan's Nikkei pared opening losses to be off 0.2%.
Wall Street had taken comfort in a surprisingly solid reading of US manufacturing and the Dow Jones ended Monday with a rise of 0.5%, while the S&P 500 gained 0.7% and the Nasdaq 1.4%.
US factory activity rebounded in January after contracting for five straight months amid a surge in new orders. The upbeat report nudged Treasury yields up from deep lows and gave the US dollar a modest lift.
Back home, after the Union budget dashed hopes of a fiscal stimulus, it may be the central bank’s turn to disappoint on monetary stimulus. The Reserve Bank of India’s monetary policy committee (MPC) may keep the repo rate unchanged at 5.15% at its meeting on Thursday as inflation remains high, a Mint survey found. Repo rate is the rate at which banks borrow from RBI.
The Centre has excluded dues pertaining to adjusted gross revenue that the Supreme Court has directed telecom companies to pay to the department of telecommunications in its revenue calculations for the current and the next fiscal year as the matter is subjudice, economic affairs secretary Atanu Chakraborty said on Monday.
The dollar firmed to 108.68 yen, from an overnight low of 108.30, while the euro faded a fraction to $1.1059 but remained well within recent snug ranges.
Against a basket of currencies, the dollar bounced back to 97.837 from a trough of 97.406. Sterling was nursing a grudge at $1.2990 having shed 1.6% overnight when the UK government laid out a tough opening stance for future trade talks with the European Union following its departure from the bloc last week.
The fall erased all the gains made after the Bank of England’s decision last week to keep interest rates on hold.
Spot gold was off at $1,577.48 per ounce, from a top of $1,591.46, as the dollar firmed and safe haven demand waned a little.
(Reuters contributed to the story)