Markets may be firm, Asia stocks gain as Fed chairman hints for rate cut2 min read . Updated: 11 Jul 2019, 08:37 AM IST
- Among global markets, Asian stocks gained
- Shares of Axis Bank, IndiGo likely to be in focus today
Mumbai: Indian stock markets may gain on Thursday but most investors are cautious due to corporate earnings for June quarter. Analysts feel that companies performance in April-June is likely to be soft across sectors.
Among global markets, Asian stocks gained and the dollar dropped on Thursday after Federal Reserve chairman Jerome Powell reinforced prospects of a US interest rate cut later this month.
In an appearance before his congressional overseers on Wednesday, Powell confirmed that the US economy is still under threat from disappointing factory activity, tame inflation and a simmering trade war. Powell said the central bank stands ready to “act as appropriate".
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8%, while Japan’s Nikkei added 0.4%. The Shanghai Composite Index advanced 0.8%, South Korea’s KOSPI climbed 1% and Australian stocks edged up 0.3%.
The US stocks ended higher on Wednesday and the S&P 500 briefly crossed the 3,000-point mark for the first time following Powell’s remarks.
A strong June US jobs report released earlier this month had curbed market expectations that the Fed could lower rates by 50 basis points (bps), and the markets had viewed a 25 bps cut as a more likely option. But the Fed chair’s cautious stance on the world’s largest economy helped revive some bets on heftier easing at its next policy meeting on July 30-31.
Minutes from the Fed’ last meeting in mid-June, however, showed some policymakers felt there was not yet a strong case for easing.
In the domestic market, as the IndiGo saga continues, shares of InterGlobe Aviation Ltd may stay in focus. The government will now scrutinize a disputed shareholder pact between Rakesh Gangwal and Rahul Bhatia, the founders of InterGlobe Aviation Ltd that runs India’s largest airline IndiGo, even as it will let the markets regulator look into Gangwal’s allegations of governance failure in the company.
Private sector lender Axis Bank Ltd has appointed investment banks Citigroup, JPMorgan and its investment banking arm Axis Capital to help it raise up to $1.3 billion through a share sale, according to a Mint report.
Meanwhile, the dollar index against a basket of six major currencies stood little changed at 97.001 after falling 0.4% overnight, when it pulled back from a three-week peak of 97.588 in the wake of Powell’s comments.
The greenback was down 0.35% at 108.080 yen, forced off a six-week high of 108.990 scaled the previous day. The euro nudged up 0.1% to $1.1263 after gaining 0.4% on Wednesday. The Australian dollar was steady at $0.6962 following an overnight rise of 0.5% against the broadly weaker dollar. The surge helped the Aussie pull away from a 2.5-week trough of $0.6910.
The 10-year US Treasury yield was at 2.038% after dropping on Wednesday from a three-week high of 2.113% following the Fed chair’s congressional testimony.
In commodities, US crude oil futures extended the previous day’s large gains to touch $60.67 per barrel, their highest since 23 May. The contract had surged 4.5% on Wednesday after U.S. crude inventories shrank and as major producers cut nearly a third of offshore Gulf of Mexico production ahead of an expected storm. Brent crude brushed a six-week high of $67.15 per barrel and last traded at $66.91.
Spot gold rose to $1,426 an ounce, its highest since July 3 as reinforced expectations for a Fed rate cut boosted the non-yielding precious metal.
(Reuters contributed to the story)