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Mumbai: Indian stock markets will likely remain under pressure on Wednesday amid weakness in global peers. Asian stocks eased in early deals on Wednesday after poor US economic data stoked fears of global recession, souring investor sentiment already hurt by heightened trade war concerns.

Safe-haven government bonds fared well in the wake of risk aversion in the broader market, with the benchmark US Treasury yield touching its lowest level in three years.

The US manufacturing sector contracted in August for the first time since 2016 amid worries about a weakening global economy and rising trade tensions between China and the US, the Institute for Supply Management’s (ISM) report on Tuesday showed.

On Wednesday, MSCI’s broadest index of Asia-Pacific shares outside Japan was a shade lower after losing 0.85% the previous day. Australian stocks lost 0.8% and Japan’s Nikkei fell 0.3%.

The 10-year US Treasury yielded 1.459%, having declined to 1.429% on Tuesday, its lowest since July 2016.

While a decline in US yields typically weighs on the dollar, the greenback was partially underpinned by safe-haven demand generated by worries of a possible chaotic British exit from the European Union - though that possibility later diminished with a setback in Parliament late Tuesday for British Prime Minister Boris Johnson.

Back home, with consumption demand not showing any signs of recovery, automobile dealers do not expect sales to grow significantly during the festival months (September and October) vis-a-vis last year. Most of them are gearing up for a flat or marginal growth for the second successive year. Last year, automobile manufacturing companies experienced one of the worst festival season sales in last five years, in the aftermath of the bankruptcy of IL&FS and the lack of liquidity in the banking system.

IDBI Bank Ltd, the country’s weakest bank, will get a 9,300 crore infusion from its parent, Life Insurance Corporation of India, and the government to help narrow the ailing lender’s losses and boost its lending capacity.

Among currencies, the dollar index against a basket of six major currencies stood at 98.939 after rising overnight to 99.37, its highest level since May 2017. Sterling was last at $1.2090 after falling on Tuesday to $1.1959, the lowest level since October 2016.

The pound’s strengthening to about $1.20 came after a cross-party alliance defeated Johnson in an effort to block a “no-deal" Brexit, leading the premier to push for a snap election.

The euro was steady at $1.0973 after sliding to a 28-month low of $1.0926 overnight as investors braced for a potential interest rate cut by the European Central Bank next week.

The US crude oil futures dipped 0.04% to $53.92 per barrel, adding to the previous day’s losses. The contracts had shed more than 2% on Tuesday after weak economic data out of the US.

(Reuters contributed to the story)

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