Indian stock markets are expected to be volatile on Monday as December quarter corporate earnings have kick-started. Asian shares paused near 19-month peaks on Monday ahead of the expected signing of the Sino-US trade deal, though talks on a phase two package are likely to drag on for months.
MSCI's broadest index of Asia-Pacific shares outside Japan barely budged, having hit the highest since mid-2018 last week. Japan's Nikkei was closed for a holiday. It fell sharply early last week when Iran attacked bases hosting U.S. military in Iraq, only to rally almost a thousand points when the two countries stepped back from hostilities.
The main event of the week will be the signing of the phase 1 trade deal between the United States and China on Wednesday. The Donald Trump administration has invited at least 200 people to the White House for the ceremony.
Washington has reserved the right to re‑impose tariffs if it judges China is not abiding by the deal.
Back home, private banks were the slowest to pass on the benefits of falling interest rates to their customers in 2019 compared to their state-run and foreign rivals, Reserve Bank of India (RBI) data showed.
The median one-year marginal cost of funds-based lending rate (MCLR) for private banks fell a meagre 12 basis points (bps) to 9.18% between January and December 2019, compared to RBI’s cumulative 135 bps cut in its key policy rate to 5.15%. Most bank loans are typically priced over the one-year MCLR, making it the most tracked rate.
Finance Minister Nirmala Sitharaman may announce second-round capital infusion for public sector general insurance companies in the upcoming Budget to improve their financial health.
The government infused ₹2,500 crore in the three insurers -- National Insurance, Oriental Insurance and United India Insurance -- through first supplementary demands for grants for 2019-20 last month.
Infosys shares may be in focus on Monday after the IT major declared its December quarter earnings last week post trading hours. It's third quarter results are broadly in-line with expectations with the revision in revenue guidance to 10-10.5% constant currency growth for FY20 along with the outcome of the internal enquiry encouraging.
Emkay Global Financial Services expects a mild positive reaction to the stock post the results. "We expect marginal increases to our FY21/22 earnings of ₹41.5/46 respectively. Given the discount to TCS at 25%, we expect some narrowing driven by these results," it said in a report.
Meanwhile, Wall Street slipped and bonds rallied on Friday when data showed US nonfarm payrolls missed forecasts with a rise of 145,000, while wages and hours worked were soft.
Early Monday, the euro was idling at $1.1117 having edged up from a $1.1083 low on Friday. Support comes in around $1.1060, while the recent peak at $1.1239 marks stiff resistance. The dollar was firm on the yen at 109.53 but faces tough resistance around 109.70 where rallies have repeatedly failed in the past couple of months.
Against a basket of currencies, the dollar was stuck at 97.410, well within the recent trading range of 96.355 to 97.817. The pound dipped to $1.3043 after Bank of England policymaker Gertjan Vlieghe said he will vote for a cut in interest rates later this month, barring an "imminent and significant" improvement in the growth data.
Spot gold slipped to $1,558.84 per ounce, having hit a seven-year top last week of $1,610.90 at the height of Iran-US tensions.
Oil prices consolidated after suffering the first weekly loss since late November. Brent crude futures were down 12 cents at $64.86 a barrel, while US crude eased 14 cents to $58.90 a barrel.
(Reuters contributed to the story)