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Morning Report

Friday, 8 June 2018

Asian shares are set for a soft start on Friday as global risk appetite deteriorated on worries the European Central Bank was ready to start tapering its massive stimulus, although trade was expected to be cautious ahead of big diplomatic meetings.

The ECB will debate next week whether to end bond purchases later this year, the bank’s chief economist said on Wednesday, a hawkish message that sent the euro to a three-week top, hit emerging market currencies, and spurred demand for safe-haven bonds.

In emerging market currencies, the South African rand , Brazil’s real and the Mexican peso were the worst hit overnight. It is likely to have an impact on USD/INR today where a gap up opening is expected with a upward bias.

U.S. 10 year Treasury yields fell sharply on Thursday to 2.942 while Indian 10 year yield jumped to 7.993.

Risk appetite also waned after U.S. jobless claims pointed to a further tightening in labor market conditions, cementing expectations the Federal Reserve will raise benchmark U.S. rates next week and twice again later in the year.

The U.S. dollar .DXY held near three-week lows against a basket of currencies despite the positive jobless numbers. The People’s Bank of China (PBOC) set the Yuan reference rate at 6.3919 vs previous day’s fix of 6.4040.

Oil prices were boosted by from worries over a steep drop in exports from crisis-plagued Venezuela, which faces the threat of U.S. sanctions. U.S. crude rose 6 cents to $66.01 a barrel, while Brent settled at $77.32.

Source : Reuters

Morning Report

Thursday, 7 June 2018

Asian shares rose to 2 1/2-month high on Thursday, supported by strong economic fundamentals, while expectations the European Central Bank could start to wind down its stimulus boosted the euro and global bond yields.

The Dow Jones Industrial Average rose 1.4 percent to 25,146.39, the S&P 500 gained 0.86 percent to 2,772.35 and the Nasdaq Composite added 0.67 percent to hit its record closing high of 7,689.24.

The 10-year U.S. Treasury yield hit a 1 1/2 week peak on Wednesday, after officials said the European Central Bank could wind down its stimulus program by the end of the year.

The dollar index against a basket of six major currencies was down 0.1 percent to 93.565. The People’s Bank of China (PBOC) set the Yuan reference rate at 6.3919 vs previous day’s fix of 6.4040.

Oil prices fell on fears of rising global supply after U.S. inventories rose unexpectedly and Saudi Arabia and other big producers signalled they may raise production.U.S. light crude settled 1.2 percent lower at $64.73 a barrel on Wednesday. The prices have bounced back since, with the WTI gaining 0.7 percent to $65.15.

Source : Reuters

RBI hikes Rate by 25 basis points

• RBI hikes repo rate and reverse repo rate by 25 basis points to 6.25% and 6% respectively, first rate hike since Jan 2014
• MPC maintains ‘neutral’ monetary policy stance, giving the committee flexibility to move in either direction
• On Inflation: MPC Cites Sharp, Durable Crude Price Rise As Key Risk For CPI; Apr-Sep CPI Seen 4.8-4.9% Including Rent Allowance Impact. October-March CPI seen at 4.7% including home rent allowance impact
• RBI retains GDP growth forecast for FY19 at 7.4%; GDP growth projected at 7.5-7.6% in April-September
• RBI On NPAs: Investment Could Get Boost From Swift Bad Loan Resolution

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