Dec 20 2018

Rupee Opened Lower As Equities Slip After Fed Move

Financial Market Overview

20th December, 2018

Morning Coffee:-                                                                        

MARKETS AT OPEN:-

Rupee:-

  • The Indian rupee, in line with other regional currencies, rupee opened lower against the dollar, after Asian and U.S. equities declined despite the Federal Reserve lowering its projections for next year’s interest rate increases.
  • The rupee opened at 70.68 versus its previous close of 70.40. It is “quite evident from the price action on Wall Street” that the market expected the Fed to take on a more dovish tone in light of the recent worries over the growth outlook. The U.S. equities touched new multi-month lows following the Fed decision, regional currencies were mostly lower, and the risk-off mood drove the 10-year U.S. yield to below 2.80%.
  • We expect USD/INR to trade in a range between 70.35 – 70.80 today.

Indian Equities:-

  • It’s a negative start for the market in opening trade, with the Nifty down frm 10,900-mark.
  • The Sensex is down 215.79 points or 0.59% at 36268.54, and the Nifty down by 72.80 points or 0.66% at 10894.50.

Global Markets:-

  • Asian markets are lower today as Japanese and Hong Kong shares fall. The Nikkei 225 is off 1.70% while the Hang Seng is down 1.13%. The Shanghai Composite is down by -0.83% trading Australian ASX 200 is down by -32 points or -0.58%.
  • European markets finished higher today with shares in London leading the region. The FTSE 100 is up 0.96% while France’s CAC 40 is up 0.49% and Germany’s DAX is up 0.24%.
  • U.S. stocks declined sharply on Wednesday after the Federal Reserve’s forecast of fewer interest-rate increases in 2019 fell short of investors’ hopes of a more dovish monetary policy. The Dow Jones Industrial Average fell 351.98 points, or 1.49 percent, to 23,323.66, the S&P 500 lost 35.48 points, or 1.39 percent, to 2,510.68, and the Nasdaq Composite dropped 140.80 points, or 2.08 percent, to 6,643.11.
  • The Federal Reserve raised interest rates by a quarter point on Wednesday, but pivoted toward a slower rate-hike cycle as the economy is expected to cool. The Federal Open Market Committee raised the fed funds rate 25 basis points to a range of 2.25% to 2.5%. The decision, while expected, was unwelcome news to the stock market. Equities rallied sharply leading up to the decision.
  • China’s economic growth is likely to slow to 6.2 percent in 2019 from an expected 6.5 percent this year, as headwinds increase due to its trade dispute with the United States, the World Bank said in a report published on Thursday. Its outlook on China’s 2018 economic growth, which would be the weakest in 28 years, remained unchanged from its prediction in April.
  • The annual rate of change in Britain’s consumer price index dropped to its lowest level in 21-months in November, underlining the case for the Bank of England to hold off on further policy tightening.
  • Year-on-year, UK CPI rose 2.3% last month, its lowest level since March 2017, after a 2.4% increase in October. Core CPI, which excludes food, energy, alcohol, and tobacco costs, rose by 1.8% in November, compared to 1.9% a month earlier. That reading was also in line with expectations.