Dec 31 2018

Rupee Opened Higher On Easing US-China Trade Tensions

Financial Market Overview

31st December, 2018

Morning Coffee:-                                                                        

MARKETS AT OPEN:-

Rupee:-

  • The Indian rupee opened higher today as upbeat remarks by U.S. President Donald Trump on a trade deal with China boosted investors’ risk appetite.
  • The rupee opened at 69.80 versus its previous close of 69.94. The last week’s closing above 70 for the rupee has “set up it up well,” and the next crucial level will be the November low of 69.50-69.60. With Brent crude oil “holding up” near its recent lows, the rupee has a “realistic chance of gunning for the more crucial level of 68.80-68.90 if risk appetite holds up. Trading volumes are expected to remain lower than average over the next couple of days with a majority of regional markets closed for the New Year holiday.
  • We expect USD/INR to trade in a range between 69.60 to 70.10 today.

Indian Equities:-

  • Equity benchmarks have had a good start in opening trade. The Nifty is above 10,800 level.
  • The Sensex is up 170 points or 0.47% at 36247, and the Nifty up 56.30 points or 0.52% at 10916.00.

Global Markets:-

  • Shares in Hong Kong are higher today as the Hang Seng gains 1.43%. The stock markets in Tokyo and Shanghai is trading at -0.31% and 0.44%. The Australia ASX is trading down by -8 points or -0.14%.
  • European markets closed sharply higher on Friday with shares in London leading the region. The FTSE 100 is up 2.27% while France’s CAC 40 is up 1.74% and Germany’s DAX is up 1.71%.
  • The S&P 500 ended marginally lower in a choppy session on Friday, but major indexes posted weekly gains for the first time in December following a wild few days of trading that saw equities rebound from a prolonged slide.
  • The Dow Jones Industrial Average fell 77.03 points, or 0.33 percent, to 23,061.79, the S&P 500 lost 3.18 points, or 0.13 percent, to 2,485.65, and the Nasdaq Composite added 5.03 points, or 0.08 percent, to 6,584.52.
  • The market will keep a close eye on any news regarding ongoing dialogue on trade between the U.S. and China ahead of the March 1 deadline for the current truce. The markets will be relieved if there are any signs of progress. The U.S. government shutdown is expected to drag on through the start of 2019. While the economic and market impacts are limited, it is one more distraction that heightens concerns regarding Washington D.C.’s ability to function and navigate the choppy waters that lie ahead in 2019. The market will also pay close attention to any news on Brexit as UK Prime Minister May struggles to get a deal through parliament.
  • Data released earlier today showed that manufacturing activity in China contracted for the first time in two years. The official December Purchasing Managers’ Index (PMI) fell to 49.4, according to data released by the National Bureau of Statistics (NBS), down from 50 in the previous month and lower than the 49.9 reading.Washington and Beijing are involved in negotiations to resolve a trade dispute that has prompted both nations to impose tariffs on each other’s imports worth billions of dollars. At a recent G-20 gathering, the countries agreed to a temporary truce to find a resolution to their longstanding dispute, which has undermined the outlook for the global economy.