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Photo: Reuters
Photo: Reuters

Markets may continue to consolidate, Hero MotoCorp in focus; Asian shares climb

  • Global markets have been encouraged by a May US jobs report last week that showed a surprise fall in the unemployment rate
  • Hero MotoCorp will announce its March quarter results today

Indian equity markets on Tuesday may continue to consolidate, with trends in SGX Nifty indicating a positive opening. Asian stocks climbed in early deals tracking overnight gains in the US, where confidence in an economic recovery pushed the US benchmark, Nasdaq, to a record high, though doubts about crude supply cuts are likely to keep oil prices under pressure.

Markets have been encouraged by a May US jobs report last week that showed a surprise fall in the unemployment rate, bolstering views that the worst of the downturn is over and that the economy was moving towards a quick rebound.

The Nasdaq hit a record high close on Monday, becoming the first of Wall Street's three main indexes to bounce back from the market crash caused by the pandemic. Financial, automotive and retail-oriented and energy shares - the stocks most beaten-down since the pandemic slammed markets - have been leading equity indices higher recently.

US stocks also added to gains late in the trading session after the Federal Reserve eased the terms of its "Main Street" lending program to encourage more businesses and banks to participate.

On Wall Street, the Dow Jones Industrial Average rose 1.7%, the S&P 500 gained 1.20% and the Nasdaq Composite added 1.13%.

Back home, Finance minister Nirmala Sitharaman on Monday said she will consider extending the deadline for availing a lower tax rate on new investments in manufacturing as the government weighs options to ease strain on companies.

The World Bank on Monday projected India’s economy to contract 3.2% in FY21 as stringent measures to restrict the spread of the coronavirus pandemic have heavily curtailed activity in Asia’s third largest economy.

Agrochemicals major, UPL Ltd, plans to raise $500 million through a dollar-bond issuance, which will make it the first Indian private sector firm to tap the dollar bond market since covid-19 disrupted businesses in March.

India’s largest lender State Bank of India (SBI) lowered its marginal cost of funds-based lending rate (MCLR) by 25 basis points (bps) across all tenors.

Among others, Hero MotoCorp will announce its March quarter results today.

Meanwhile, oil prices fell after Saudi energy minister Prince Abdulaziz bin Salman said on Monday that the kingdom and Gulf allies Kuwait and the United Arab Emirates (UAE) would not cut an extra 1.18 million bpd in July as they are doing this month.

The Organization of the Petroleum Exporting Countries (Opec) and others had on Saturday agreed to sustain cuts equal to about 10% of global oil supply. US benchmark crude fell $1.36 a barrel to settle at $38.19 a barrel, while Brent closed down $1.50 at $40.80 a barrel.

In currency market, the dollar slid and commodity currencies gained as risk appetite ramped up. The New Zealand dollar rose to its highest in nearly four months after the government said it had stopped local transmission of the coronavirus.

The dollar index fell 0.053%, with the euro rose 0.02% to $1.1294. The Japanese yen weakened 0.01% versus the US greenback at 108.44, while sterling was traded at $1.2733, up 0.09% on the day.

Yields on top-rated German government bonds dipped but remained near more than two-month highs hit last week on the back of improving sentiment in world markets. US Treasury yields also fell, with the 10-year note down 2.8 bps at 0.8785%. Gold rose after a steep decline, boosted by hopes of a dovish monetary policy outlook from the Federal Reserve after the US central bank ends a two-day meeting on Wednesday.

Investors are now seeking clarity from Fed Chair Jerome Powell on monetary and fiscal policies.

US gold futures settled up 1.3% at $1,705.1 an ounce.

Reuters contributed to the story.

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