BackMarkets may continue to sink; bank, telcom stocks in focus
US stock futures fell 2%. The Australian dollar was crushed, falling 3.3% to a more than 17-year lowIndusInd Bank deposit base has eroded by nearly 2% as some state governments shifted their deposits
PremiumFollowing weak global cues, Indian stock markets are likely sink deeper into losses on Thursday. The dollar surged, bonds slumped and global markets struggled to find their footing on Thursday as the European Central Bank’s latest promise of stimulus provided only a brief solace while the world scrambled to contain the novel coronavirus pandemic.
US stock futures fell 2%. The Australian dollar was crushed, falling 3.3% to a more than 17-year low, and Asian markets gave up initial gains made after the ECB had announced a bond-buying program.
By midmorning, MSCI’s broadest index of Asia-Pacific shares outside Japan had fallen 4% to an almost four-year low. Australia’s benchmark erased an early 3% rise to trade 2% in the red.
Korea's Kospi fell 6% and the won hit a decade’s low even as the central bank was buying dollars to prop up the currency. Markets in Hong Kong and China fell.
Overnight, on the Wall Street, the S&P 500 fell 5% and is down nearly 30% over a month.
The ECB on Wednesday pledged to buy 750 billion euro ($820 billion) in bonds through 2020, with Greek debt and non-financial commercial paper eligible under the program for the first time.
This follows emergency interest rate cuts around the world, enormous fiscal support packages and six central banks promising discount dollars to alleviate a squeeze in greenback funding. But so far none of it has been able to mitigate the pessimism which has wiped out some $15 trillion in shareholder value in little more than a month of heavy selling.
Selling extended across almost all asset classes. Benchmark 10-year sovereign bond yields in Australia, New Zealand, Malaysia, Korea and Singapore and Thailand surged.
Back home, the Supreme Court (SC) on Wednesday shot down a telecom ministry directive that allowed operators to reassess their dues related to a court order and asked the government to stick to its original demand for ₹1.69 trillion, dealing a further blow to India’s struggling telcos.
IndusInd Bank Ltd’s deposit base has eroded by nearly 2% as some state governments shifted deposits from the private lender. The bank is working with the customers to reassure them against potential risks, IndusInd Bank said in a regulatory filing late on Tuesday.
The Enforcement Directorate (ED) is likely to question Reliance Group chairman Anil Ambani over loans given by Reliance Home Finance Ltd and Reliance Commercial Finance Ltd to companies linked to Yes Bank Ltd co-founder Rana Kapoor, as the agency suspects possible quid pro quo in these transactions, according to a Mint report.
In currency markets, everything except the dollar and - thanks to the ECB, the euro - collapsed. Sterling fell 1% to $1.1495. The New Zealand dollar fell 3% to $0.5540 and the Aussie was pounded to $0.5592.
U.S. 10-year Treasuries, usually a haven in times of turmoil, were steady but have suffered their sharpest two-day selloff in nearly 20 years.
Gold is down 3% for the week.
Italy on Wednesday reported the largest single-day death toll increase from coronavirus since the outbreak began in China in late 2019. It has killed more than 8,700 people globally, infected more than 212,000 and prompted emergency lockdowns on a scale not seen in living memory.
Oil bounced back in Asian trade, with U.S. crude last up 12% at $22.73 and Brent up $1.66 at $26.54.
(Reuters contributed to the story)
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