Mumbai: Indian markets are expected to rise on firm global equities support. Asian shares rose on Monday after the United States dropped its threat to impose tariffs on Mexico in a deal to combat illegal migration from Central America, while the weak US jobs data raised hopes for US interest rate cuts.
Relief was widespread, as global investors had feared that opening up another trade conflict, while still battling with China, could tip the US and other economies into recession.
China’s trade data due later in the day will be keenly watched for the impact of the Sino-US trade war. Group of 20 finance leaders on Sunday said that trade and geopolitical tensions have “intensified", raising risks to improving global growth, but they stopped short of calling for a resolution of the deepening US-China trade conflict.
Japan’s Nikkei gained 1.2% and South Korea’s Kospi rose 0.55% while Australian markets were closed for a holiday, with MSCI’s index of Asia-Pacific shares outside Japan almost flat.
Back home, DHFL and other housing finance companies will be watched out as default in its debt repayment, last week, hit banks and fund houses which have exposure to its debt. Mutual funds continue to have a massive ₹3.12 lakh crore exposure to non-banking financial companies (NBFCs) and HFCs, a Mint analysis of the latest data available till 31 April showed, adding up to 12.5% of their overall assets under management.
Meanwhile, as investors eye the union budget in July, Finance minister Nirmala Sitharaman is not expected to cut the tax rate for large companies to 25% from 30% and may raise the long-term capital gains tax, as the government grapples with a potential revenue shortfall and additional spending commitments.
Globally, improved risk sentiment helped lift the dollar against the yen 0.15% to 108.38 yen. The Mexican peso jumped 1.75% in early Monday trade to 19.2579 on the dollar on news of the removal of the tariff threat.
The euro was little changed at $1.13 near a 2-2.5-month high of $1.1348 touched on Friday. The common currency held firm near five-month highs against sterling at 88.965 pence. Gold slipped 0.2% but stood not far from Friday’s 14-month high of $1,348.1 per ounce, near a major resistance around $1,350.
The Chinese yuan was soft. The offshore yuan traded at 6.9385 yuan per dollar, having hit a seven-month low of 6.9616 on Friday.
Oil prices extended gains after Saudi Arabia said on Friday OPEC and non-member Russia were close to agreeing to extend an output production cut beyond June and as Wall Street rallied. Brent futures rose 0.8% to $63.79 per barrel while US crude futures rose 0.8% to $54.44.
(Reuters contributed to the story)