BackIndian markets eye Union Budget, hope for stimulus to boost growth
Nirmala Sitharaman will present the first full budget of the new government todayIt is expected to boost spending at the cost of short-term slippage in fiscal deficit targets as she lays down the Modi 2.0 government's road map for the economy
PremiumIndian stock market investors are watching out for the Union Budget on Friday. Finance Minister Nirmala Sitharaman will present the first full budget of the new government at 11 am. The FM is expected to balance the needs of the economy and fiscal constraints in her maiden Budget.
It is expected to boost spending at the cost of short-term slippage in fiscal deficit targets as she lays down the Modi 2.0 government's road map for the economy and the nation in the next five years.
In the annual economic survey presented to parliament, the government forecast on Thursday that economic growth could get back up to 7% this year, but cautioned it will face challenges keeping its fiscal deficit in check. India’s growth cooled to 6.8% in the year that ended on March 31, its slowest rate of expansion in five years.
Meanwhile, Asian shares hovered near two-month highs on Friday, holding recent gains as investors awaited US employment data, a key release that could make or break market expectations about aggressive policy easing by the Federal Reserve.
Trade in global markets is expected to remain subdued following the US Independence Day holiday on Thursday and ahead of the non-farm payrolls report.
The MSCI's broadest index of Asia-Pacific shares outside Japan was set for its fifth straight weekly rise. World stocks and bonds have rallied since June on hopes global central banks will keep policy easy to support growth.
Investors worldwide are waiting for US non-farm payrolls, due later in the day, which is expected to have jumped by 160,000 in June compared with 75,000 in May.
The Fed holds its two-day policy meeting on 30-31 July and futures are fully pricing in a 25-basis-point cut. Investors also see a 25% chance of a 50 basis point reduction.
The Fed is not alone in embarking on easier monetary policy. Australia’s central bank has cut its cash rate by 50 basis points since June while leaving the door ajar for a third move this year. In the eurozone, financial markets expect the bloc’s central bank to lay out the landscape for further monetary easing at its July 25 meeting.
Prospects of global easing have sent government bond yields to multi-year lows around the world.
Germany’s 10-year government bond yield, a benchmark for eurozone debt, fell to -0.4% and matched the European Central Bank’s deposit rate for the first time — a sign that markets are expecting rate cuts.
Yields on US 10-year Treasuries hit their lowest since November 2016 on Wednesday.
The currency market was mostly sidelined ahead of the US jobs figures. The dollar index was a tick lower at 96.725, drifting away from recent two-week highs. The index, which measures the greenback against a basket of major currencies, fell 1.7% just last month as investors priced in a 50 basis point cut from the Fed. Those expectations had faded in recent days on more reserved Fed commentary and signs of improvement in Sino-US trade relations, but have since come back on weak US economic data.
A weaker greenback has boosted the Australian dollar despite a rate cut on Tuesday. The Aussie is so far up 1.4% this week and last held at $0.7026.
In commodity markets, oil fell on data showing a smaller-than-expected decline in US crude stockpiles and worries about the global economy. Brent crude futures, the international benchmark for oil prices, were a tick weaker at $63.23 per barrel while US crude eased to $56.69.
(Reuters contributed to the story)
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