BackIndian markets seen weak as global peers fall; crude up after Iran fires at US troops
Asian shares and US treasury yields tumbled on Wednesday, while the Japanese yen, gold and oil prices shot higherIran’s missile attacked the Ain Al-Asad air base and another in Erbil, Iraq, early on Wednesday
PremiumIndian stock markets are likely to be under pressure on Wednesday taking cues from their global peers.
Asian shares and US treasury yields tumbled on Wednesday, while the Japanese yen, gold and oil prices shot higher after Iran fired rockets at Iraqi airbases hosting US military forces, stoking fears of a wider conflict in the Middle East.
Iran’s missile attacks on the Ain Al-Asad air base and another in Erbil, Iraq, early on Wednesday, came hours after the funeral of an Iranian commander whose killing in a US drone strike has intensified tensions in the region.
MSCI's broadest index of Asia-Pacific shares outside Japan was 1% lower shortly after China's share markets began trading, with China's blue-chip CSI300 index down 0.56%.
Japan's Nikkei tumbled 2.2% and Australian shares fell more than 1%. US stock futures were also sharply lower, with S&P500 e-minis off nearly 1%.
Back home, India’s economy is expected to grow 5% in the current fiscal, the statistics ministry said on Tuesday, signalling what would be the slowest pace of annual growth since the current 2012-13 data series was introduced. Yet, the estimate, which is in line with the central bank’s latest projection made in December, raises hopes that the second half of the fiscal may turn out to be better than the first.
Reserve Bank of India governor Shaktikanta Das Tuesday said persistently high inflation hurts an economy’s allocative efficiency and impedes growth, dampening hopes of any immediate interest rate cut.
The governor’s comment comes in the wake of hardening domestic inflation and rising crude oil price, and ahead of the February meeting of RBI’s monetary policy committee (MPC).
Following the Securities and Exchange Board of India (Sebi) diktat, over 20 listed companies, for the first time, disclosed loan defaults to stock exchanges on Tuesday. Some of the companies which disclosed default in their loans include Suzlon Energy, Jaypee Infratech Ltd, companies belonging to the Anil Dhirubhai Ambani group.
Sebi on 21 November had mandated that listed entities would need to disclose any default in repayment of principal or interest to lenders, which continues beyond 30 days from the pre-agreed payment date to shareholders within 24 hours of such an event. The rule kicked in from 1 January.
The yield on benchmark 10-year US Treasury notes last stood at 1.7534%, down more than 7 basis points from a US close of 1.825% on Tuesday, though up from session lows. US 10-year Treasury futures had earlier peaked at their highest level since November, and were last up 0.63%.
The two-year yield dropped to 1.4982% compared with a US close of 1.546%.
The dollar slipped against the yen, with the Japanese currency touching its strongest point against the greenback since October. The US currency was last down 0.28% against the yen at 108.11.
The euro was relatively unmoved on the day, rising 0.04% to buy $1.1155. The dollar index, which measures the greenback against six major peers, was 0.19% lower at 96.819.
In commodity markets, global benchmark Brent crude futures shot back above $70 per dollar to their highest level since mid-September, and were last up 3.59% at $70.72 per barrel. US crude soared 3.46% to $64.87 a barrel.
The flight to safety and a falling dollar supported gold, which rocketed 1.80% on the spot market to $1,602.39 per ounce.
Reports of the attack threw the market off balance after better-than-expected data in the US non-manufacturing sector helped to lift the dollar overnight. Markets in Asia had bounced on Tuesday amid easing anxiety over the possibility for further escalation in the Middle East.
(Reuters contributed to the story)
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