BackMarkets likely to be volatile, investors eye US Fed rate decision
All eyes are on the interest rate decision by the US Federal ReserveWhile China's flu-like illness, which has killed more than 100, continues to keep markets on edge, there were signs investors see the recent rout in asset prices as overdone
-kiyD--621x414@LiveMint_1580266427178.JPG "Photo: Hemant Mishra/Mint")
PremiumIndian stock markets are likely to be volatile on Wednesday after Asian peers edged up driven by corporate earnings of some companies. All eyes are on the interest rate decision by the US Federal Reserve after a two-day meeting that ends tonight.
Asian shares rose on Wednesday as better-than-expected earnings from Apple Inc earnings some regional tech gains, although broader confidence was capped by worries about the economic impact of the virus outbreak in China.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.2%, ending four days of losses. Australian shares rose 0.4%, while Japan's Nikkei stock index rose about 0.3%.
While China's flu-like illness, which has killed more than 100, continues to keep markets on edge, there were signs investors see the recent rout in asset prices as overdone.
Back home, Bank of India plans to raise ₹1,000 crore by selling its shares to institutional investors in February, the first time a state-run lender will do so in more than two years, according to a Mint report. The last time public sector banks tapped the equity market for funds was in December 2017, when Punjab National Bank, Union Bank of India, Syndicate Bank and Bank of Maharashtra raised funds through their respective qualified institutional placement offerings (QIPs).
The National Highways Authority of India (NHAI) will initially raise ₹15,000-20,000 crore in its maiden InvIT offer and then go for a larger round, depending on the response it receives from investors, Union minister Nitin Gadkari said.
Meanwhile, long-term US Treasury yields traded above short-term yields and the Japanese yen nursed losses as investors pulled back from safe-havens in favor of more risky assets like equities.
Oil futures extended gains in Asia as pessimism about the virus eased somewhat and after reports quoted OPEC that the cartel wants to extend crude output cuts by three months to June, easing concern about excess supplies. Other investors say the growing number of travel restrictions within China and the cancellation of international flights could prevent a significant worsening of the virus.
US stock futures fell 0.12% in Asia on Wednesday. The S&P 500 rose 1.01% on Tuesday, rebounding from its worst daily decline in four months on Monday, as shares of Apple Inc ahead of its fourth-quarter results.
Post market close, Apple reported better-than-expected profits for the fourth quarter and forecast revenue in the current quarter above Wall Street expectations.
The yield on benchmark 10-year Treasury notes rose to 1.6493% versus a yield of 1.5821% on three-month Treasury bills in another sign that sentiment has stabilized. The yield curve briefly inverted on Tuesday when 10-year yields fell below their 3-month counterparts for the first time since October. An inverted yield curve has historically been an indicator of looming recession.
Markets in Asia could be subdued before the US Federal Reserve meeting later on Wednesday. The Fed is expected to reiterate its desire to keep rates unchanged at least through this year.
In currency markets, the safe-haven yen was quoted at 109.13 per dollar following a 0.2% loss on Tuesday. The Swiss franc, another popular safe haven, traded at 0.9730 versus the dollar, close to its lowest in almost three weeks. In the offshore market, the yuan rose for a second day to 6.9605 per dollar. China's onshore markets are closed for the Lunar New Year holidays.
US crude ticked up 0.47% to $53.73 a barrel in Asian trading. OPEC wants to extend current oil output cuts until at least June from March, with the possibility of deeper reductions on the table if oil demand in China is significantly impacted by the spread of a new coronavirus.
Sterling edged lower to $1.3022, on course for its fifth day of declines due to worries about Britain's trading relationship with the European Union. Investors are also cautious ahead of a Bank of England policy decision on Thursday, which many analysts say is too close to call.
(Reuters contributed to the story)
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
