Financial Market Overview
12th November, 2018
- The Indian rupee fell for the first time in three sessions against the greenback, as the dollar index rose to a more-than-16-month high amid bets of faster pace of U.S. interest rate hikes after robust economic data in the world’s biggest economy.
- The rupee settled at 72.89 to a dollar against 72.49 at close on Nov. 9. It opened at 72.72 and extended fall to 73.07. Some dealers speculated dollar sales by the central bank around 73.06-73.07 to a dollar mark.
- It’s a red start on indices as equity benchmarks witnessed intensified selling pressure in the last hour. The weakness dragged Sensex down by over 340 points, while the Nifty fell below 10,500.
- Investors chose to dump stocks in automobiles, energy, banks, and metal segments. PSU banks, too, saw weak trade, with Nifty PSU bank index ending lower by over 2 percent. Additionally, rise in crude oil prices on the back of Saudi Arabia announcing a supply cut and a resultant weak rupee weighed on indices. At the close of market hours, the Sensex closed down 345.56 points or 0.98% at 34812.99, while the Nifty fell 103 points or 0.97% at 10482.20.
- European markets are mixed today. The FTSE 100 is up 0.34% while the CAC 40 gains 0.03%. The DAX is off 0.60%. The dollar surged to nearly 17-month highs on Monday against a basket of major currencies as investors sought out the liquid and high-yielding currency against a backdrop of global growth worry and rising political risk in Italy and Britain.
- A 2-percent oil price jump initially supported European equities but the gains fizzled rapidly as fears grew for Italian lender Carige whose shares were suspended after reports of a capital hole.
- U.S. trade is likely to be thinned by the Veterans Day holiday, with Treasury bond markets shuttered. Futures for the S&P500 were flat while the Dow Jones was marginally lower and the Nasdaq was indicated 0.2 percent firmer after sharp falls on Friday.
- The other big move was in commodities, where Saudi Arabia’s energy minister took some pressure off last week’s oil price drop, saying on Sunday that Riyadh could reduce supply to world markets by 500,000 barrels per day in December, a global reduction of about 0.5 percent.
- That jolted Brent crude futures up more than 2.07 percent to a high of $71.88 per barrel.
- Brexit developments will continue to overshadow UK economic data when it comes to market-moving influence over GBP this week. Cable slid to 1.2827 on Monday, its lowest level since Nov. 1, as doubts grew that UK PM Theresa May could clinch a Brexit deal with the European Union and then get it approved by parliament. Hope that a Brexit deal might soon be agreed had helped inflate GBP/USD to a three-week high of 1.3176 last week, before the shift in Brexit sentiment.