BackIndian equities may remain under pressure; crude oil prices rise again
Monetary easing by the US Fed this week and by the ECB last week underpinned investor sentimentFinance minister Nirmala Sitharaman is likely to unveil measures to boost economic growth
PremiumMumbai: India stock markets may continue to trade sluggish on Friday in absence of positive triggers. Asian stocks, however, inched higher on Friday as announcements of loose monetary policy by central banks around the world eased fears of an economic deceleration. Crude oil prices climbed higher on concern that the attacks on Saudi Arabia’s oil facilities still pose supply risks.
Overnight, the S&P 500 ended flat, staying than less than 1% below its closing record high hit in July, while the pan-European 300 index also came within sight of this year’s peak.
On Friday, Japan’s Nikkei rose 0.34% to come within striking distance of its year-to-date peak.
Asian shares have been lagging global peers in recent months and MSCI’s broadest index of Asia-Pacific shares outside Japan is on course to post its first weekly loss in five, although it rose 0.08% early on Friday.
Monetary easing by the US Federal Reserve this week and by the European Central Bank last week underpinned investor sentiment, while the latest US economic data also eased worries about slowdown in the world’s largest economy.
US and Chinese deputy trade negotiators resumed face-to-face talks for the first time in nearly two months on Thursday, trying to lay the groundwork for high-level talks scheduled for early October. Hope of a deal was so strong that the markets shrugged off a media report that a trade adviser to US President Donald Trump has said the US president was ready to raise tariffs to 50 or 100%.
India Prime Minister Narendra Modi is travelling to the US to speak at the UN General Assembly. Before travelling to the United Nations headquarters in New York, Modi will address a rally in Houston that Trump has also agreed to attend.
Meanwhile, Reserve Bank of India governor Shaktikanta Das said there was room for further interest rate cuts to bolster economic growth given inflation continues to remain within the central bank’s target. Finance minister Nirmala Sitharaman is likely to unveil measures to boost economic growth, which slipped to a six-year low of 5% in the April-June quarter. The measures include a review of import tariffs on certain items.
Sitharaman has asked banks not to declare stressed assets of MSMEs as non-performing asset (NPA) till 31 March 2020, invoking the existing guidelines of the Reserve Bank of India.
Essel Group chairman Subhash Chandra has secured a six-month extension from lenders to repay debt given its inability to pay back more than half of its dues by 30 September as agreed earlier. A standstill agreement with mutual funds and non-bank lenders that was inked in February has now been extended to 31 March, according to a Mint report.
In currency markets, the British pound kept its uptrend after European Commission President Jean-Claude Juncker said a Brexit deal is possible and that if the Irish border backstop which the British government wants removed could be replaced with alternatives, it would not be needed.
Sterling traded at $1.2525, up 0.02% so far on the day, having hit a two-month high of $1.2560 on Thursday. The British unit stood near its highest levels in almost four months versus the euro at 88.19 pence per euro. The euro was at $1.10455, staying in a holding pattern this week. The yen traded flat at 108.03 yen to the dollar, off 1-1.5 month low of 108.48 yen hit on Wednesday.
The Brazilian real fell 1.4% on Thursday to 4.167 to the dollar after the central bank slashed borrowing costs to an all-time low and signaled it was prepared to do so again in the coming months.
Oil prices bounced back on lingering concern over oil supply as tensions between Saudi Arabia and Iran showed little signs of abating after a weekend attack on Saudi oil facilities.
Saudi-led forces on Friday launched a military operation on northern Yemen against what it described as “legitimate military targets", an incident that could aggravate regional tensions. Washington said on Thursday it was building a coalition to deter Iranian threats while Tehran has warned Trump against being dragged into a war in the Middle East and said it would meet any offensive action with a crushing response.
(Reuters contributed to the story)
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