Stock markets likely to be tepid on last trading day of 20192 min read . Updated: 31 Dec 2019, 08:33 AM IST
- Shares of Power Finance Corp. Ltd (PFC) and NTPC Ltd will be in focus
- US Treasury futures were lower, reflecting an implied yield of 1.82%
Indian stock markets are expected to be tepid amid thin volume. Asian shares slipped on the last trading day of the decade, echoing fall on Wall Street, as investors locked in gains made since the United States and China reached a preliminary trade deal earlier this month.
Early in the Asian trading session, MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.39%, its weakest performance since 4 December. For the month, the index is still up 5.7%.
The index has gained 16% this year, a sharp turnaround from a 16.2% drop last year but lagging a 23.8% year-to-date gain in MSCI’s global share index. Australian shares were 1.69% lower and Hong Kong's Hang Seng dropped 0.32%.
White House’s trade adviser on Monday said the US-China Phase 1 trade deal would likely be signed in the next week, but said confirmation would come from President Donald Trump or the US Trade Representative.
While easing trade concerns and steps toward a resolution of Britain’s exit from the European Union have helped reduce some near-term market uncertainty, investors remain uneasy with a recession seen as inevitable in the new decade.
Positive Chinese manufacturing data, which showed factory activity in China expanded for a second straight month in December, nudged China's blue-chip CSI300 index 0.1% higher, extending the more than 33% gain seen this year.
China’s modest gains built on Monday’s rally, which was driven by a combination of strong retail sales growth and hopes that a new benchmark for floating-rate loans could lower borrowing costs.
Markets in Japan and South Korea were closed for a holiday.
The falls in Asia came after profit taking pushed the Dow Jones Industrial Average down 0.64% to 28,462.14, the S&P 500 0.58% lower to 3,221.29 and the Nasdaq Composite off 0.67% to 8,945.99.
Back home, the Reserve Bank of India (RBI) on Monday restricted urban cooperative banks (UCBs) from offering large corporate loans through several changes to lending norms, after depositors lost large sums of money following the crisis at Punjab and Maharashtra Cooperative (PMC) Bank.
The regulator slashed single and connected borrower exposure for UCBs, hiked the priority sector lending (PSL) target and specified a portfolio mix for at least half of their loan books. The guidelines will be applicable from 31 March, 2023.
Shares of Power Finance Corp. Ltd (PFC) and NTPC Ltd will be in focus. The government is facing hurdles in trimming its stake in the two companies as the firms may breach a bond covenant that requires the companies to be majority-owned by the government. Reducing the government’s stake to less than 50% will also increase overseas borrowing costs for these companies, as they will lose their quasi-government status as borrowers.
US Treasury futures were lower, reflecting an implied yield of 1.82%. That followed a rise in benchmark US Treasury yields on Monday that pushed the US two-year, 10-year yield curve to its steepest in 14 months.
The dollar continued to weaken against the yen, dropping 0.12% to 108.73, and the euro strengthened to buy $1.1215. The dollar index, which tracks the greenback against a basket of six major rivals, was 0.06% lower at 96.686.
US crude dipped 0.18% to $61.57 a barrel and Brent crude shed 0.15% to $66.57 per barrel.
Gold continued its rally on a weakening dollar. On the spot market, the precious metal was changing hands at $1,520.16 per ounce, up 0.33%.
(Reuters contributed to the story)