Financial Market Overview
09th January, 2019
- The Indian rupee fell to a more-than-three-week low against the dollar, underperforming most Asian currencies as continuous uptick in crude oil prices renewed concerns of foreign fund outflows amid expectation of wider current account deficit.
- The rupee settled at 70.46 to a dollar, its lowest since Dec. 17, and against 70.20 at previous close. It opened higher at 70.05 as optimism over the U.S.-China trade deal lifted other Asian currencies. However, the rupee then fell to the day’s low of 70.64 despite greenback sales by at least two state-run banks and a private lender, likely on the instructions of the Reserve Bank of India at several intervals.
- Indian shares finished higher for the fourth consecutive session, as risk appetite improved on hopes of a positive outcome from the U.S.-China trade talks, while domestic investors remained optimistic about a strong results season. The benchmark BSE index closed the session 0.64 percent higher at 36,212.91, while the broader NSE index ended up 0.49 percent at 10,855.15.
- Gains on NSE were driven by shares of ITC Ltd and Axis Bank both gaining as much as 2.29 percent and 3.25 percent, respectively.
- European markets are broadly higher today with shares in France leading the region. The CAC 40 is up 1.12% while London’s FTSE 100 is up 0.98% and Germany’s DAX is up 0.96%.
- The S&P 500 climbed to a three-week high on Tuesday, led by Apple, Amazon, Facebook and a rally in industrials on bets that the United States and China would strike a deal to end a trade war.
- The Dow Jones Industrial Average rose 256.64 points, or 1.09 percent, to 23,787.99, the S&P 500 gained 24.74 points, or 0.97 percent, to 2,574.43 and the Nasdaq Composite added 73.53 points, or 1.08 percent, to 6,897.00.
- Unemployment in the euro zone unexpectedly fell in November to its lowest rate in more than ten years, official estimates released on Wednesday showed. The EU statistics office Eurostat said unemployment in the 19-country currency bloc dropped to 7.9 percent in November, the lowest level since October 2008, and below economists’ forecasts of an 8.1 percent rate. Eurostat also revised down its October reading to 8.0 percent from a previous estimate of 8.1 percent.
- There is no avenue for fresh dollar inflows in local assets. Local shares are trading at a significant premium as compared to the global equities, foreign investors are unlikely to pump in money in India until risk from higher crude prices and general elections stays “Concerns over fiscal deficit is not creating an atmosphere for these investors to purchase local debt as well despite higher real interest rates and benign inflation. Carry traders may be still tempted to play the carry but fear of global volatility and political risk may prevent large-scale bets.
- China’s Finance Ministry is set to propose a small increase in the targeted budget deficit for this year as officials seek to balance support for the economy with the need to keep control of debt levels. The ministry agreed the proposed deficit target of 2.8 percent of gross domestic product at its annual work conference in December.