Financial Market Overview
05th December, 2018
MARKETS AT OPEN:-
- The Indian rupee opened lower against the dollar after growth and trade worries prompted a selloff in U.S. equities, dimming demand for regional assets. The rupee opened at 70.64 versus its previous close of 70.49. While the decline in long-term U.S. yields is an obvious positive for the rupee and other emerging market currencies, the fall in yields and the accompanying flattening of the yield curve suggest a challenging outlook for the world’s largest economy next year. A period of acute risk-off on account of a deceleration in U.S. growth would “not play out well” for the rupee.
- Following a 90-day trade truce with China over the weekend, U.S. President Donald Trump remarked on Twitter that while he wanted a permanent fair deal with Beijing and that it “probably will” happen, he was prepared to charge “major tariffs” if a deal was not reached.
- We expect USD/INR to trade in a range between 70.50 – 70.90 today.
- Another day of choppy movement for Indian markets but this time bears managed to take control of D-Street. The S&P BSE Sensex which rallied by over by -171 points 0.47% at 35963 in the opening trade while the Nifty50 opened down 52 points 0.48% opened at 10,817 today.
- Asian markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 0.40% while the Hang Seng is down 1.47%. The Shanghai Composite is trading down by -0.41. The Australian ASX 200 is down by -60 points or -1.05%.
- European markets finished broadly lower today with shares in Germany leading the region. The DAX is down 1.14% while France’s CAC 40 is off 0.82% and London’s FTSE 100 is lower by 0.56%.
- Wall Street tumbled more than 3 percent on Tuesday, led lower by bank and industrial shares, as the U.S. bond market sent unsettling signs about economic growth and investors worried anew about global trade.
- The Dow Jones Industrial Average fell 784.99 points, or 3.04 percent, to 25,041.44, the S&P 500 lost 89.65 points, or 3.21 percent, to 2,700.72 and the Nasdaq Composite dropped 283.09 points, or 3.8 percent, to 7,158.43.
- The dollar index slipped on Tuesday, adding to yesterday’s trade ceasefire-triggered decline. Data released yesterday showed that the U.S. Manufacturing Index rose to 59.3 last month from 57.5 in October. The reading was better than the 57.6 expected.
- Growth in Japan’s services sector eased slightly in November but remained near six-month highs, bolstering views that the economy is recovering from a recent soft patch, a private survey found. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) stood at 52.3 on a seasonally adjusted basis, slipping only marginally from October’s six-month high of 52.4.
- On the Treasury yield front, the 10-year yields declined seven basis points to 2.92% on Tuesday, the lowest since early September. The yield difference between the 10-year and 2-year dropped to near 10 basis points to the lowest in more than a decade. The difference between the two yields, a closely watched parameter by market participants, is a signal of what bond traders make of the growth and inflation outlook. A flatter curve suggests tepid growth expectations and an inverted yield curve is a sign of declining economic output.