Financial Market Overview
04th January, 2019
- The Indian rupee rose for a third straight week against the dollar, as weak U.S. manufacturing data added to global growth worries and reduced expectation of more interest rate hikes by the Federal Reserve. The rupee settled higher at 69.72 to a dollar, against 70.19 at close yesterday. The local unit gained 0.7% today, marking its biggest single-session rise since Dec. 20, helping eke out 0.3% gains for the week. Most Asian currencies also gained against the greenback.
- Some weakness in the dollar on expectation of a dovish Fed going ahead and rebound in domestic equities supported gains in the rupee. However, trajectory for the local unit may not be smooth as there are concerns lingering over global growth slowdown and trade war worries.
- Indian shares traded flat on Friday after two straight sessions of sharp falls with gains in financials such as Housing Development Finance Corp and HDFC Bank offsetting losses in IT stocks. Broader Asia was on the edge as weak U.S. economic data pushed investors to bet that the Federal Reserve could reverse its policy and start cutting interest rates before the end of this year. But nerves were soothed somewhat by news that the United States and China would hold vice-ministerial level trade talks next week
- The broader NSE index was up 0.03 percent at 10,675.35, while the benchmark BSE index was 0.04 percent higher at 35,527.10. Both indexes have shed about 1.5 percent so far this week.
- European markets are sharply higher today with shares in Germany leading the region. The DAX is up 1.42% while London’s FTSE 100 is up 1.08% and France’s CAC 40 is up 1.05%.
- U.S. stocks plunged on Thursday, with the S&P 500 down more than 2 percent, after slowing U.S. factory activity on the heels of a dire revenue warning from Apple fueled fears of a global economic slowdown. Based on the latest available data, the Dow Jones Industrial Average fell 660.02 points, or 2.83 percent, to 22,686.22, the S&P 500 lost 57.19 points, or 2.28 percent, to 2,452.84 and the Nasdaq Composite dropped 185.10 points, or 2.78 percent, to 6,480.84.
- U.S. job growth likely picked up in December with wages expected to have increased solidly, which could help to allay a recent upsurge in fears about the economy’s health that have roiled financial markets. Nonfarm payrolls probably increased by 177,000 jobs last month, after rising 155,000 in November. Slow job gains in November were largely blamed on unseasonably chilly temperatures, which stymied hiring at construction sites.
- Euro zone consumer prices rose at a slower-than-expected pace in December, according to a flash estimate released on Friday. The bloc’s statistics agency Eurostat said its consumer price index rose 1.6% in December from the same month a year earlier. Core inflation, which excludes energy, food, alcohol and tobacco prices, was unchanged at 1.0%. The European Central Bank targets a headline inflation rate of close to, but just below 2%. The numbers came just after ECB policymaker Benoit Coeure said that interest rates in the EU are likely to remain at low levels until the target 2% is reached.