Market Movers: Trade tensions simmer, oil prices surge and look out for more NPAs
Here’s a lowdown on top macro triggers that may move market on Wednesday. This report was compiled from agency feeds.
Trade Tensions Simmer
Even as the U.S. House of Representatives passed a bill on Tuesday to tighten foreign investment rules, China's state-run tabloid Global Times said China should take “self defense measures” against US tariffs by offering subsidies to companies and industries that may suffer losses from trade frictions. Meanwhile, cracks showed in US too as President Donald Trump accused Harley-Davidson Inc. of using new tariffs on trade as cover to shift some production abroad as he threatened the motorcycle manufacturer with a "big tax" on bikes imported to the US. An automotive trade group says 25% tariff on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle. On a more cheery note, China has decided to cut import tariff on soybean and some other goods imported from India and other Asian countries to zero.
Oil Prices Surge
US crude oil futures jumped 3.6% on Tuesday after news broke that Washington was pushing allies to halt imports of Iranian crude. WTI is back above $70 per barrel for the first time in over a month.The market rallied further after the American Petroleum Institute said U.S. crude inventories had fallen by much more than expected. Early Wednesday, US. crude CLc1 was up 8 cents at $70.61, while Brent LCOc1 climbed 24 cents to $76.55 a barrel.
Brace for More NPAs
The gross non-performing asset ratio of scheduled commercial banks could rise up to 12.2% by March 2019 from 11.6% in March 2018, according to RBI's Financial Stability Report. The estimate is based on a baseline scenario which assumes continuation of the current economic situation. In the worst case scenario, the bad loan ratio could rise up to 13.3% by the end of the current financial year, according to the report.
Gold Hovers Near 6-month Low
Gold prices sat near a more than six-month high low hit in the previous session, as the dollar firmed amid easing risk aversion and expectations of further interest. Spot gold XAU= dipped 0.1% to $1,257.81 an ounce, as of 0045 GMT. It touched its lowest since mid-December at $1,254.16 in the prior session.rate hikes by the U.S. Federal Reserve.
EPFO Withdrawal Norms Eased
EPFO has decided to allow members to withdraw 75% of their funds after one month of unemployment and keep their PF account with the body. The members could also withdraw the remaining 25% of their funds and go for final settlement of account after completion of two months of unemployment under the new provision in the Employee Provident Fund Scheme 1952.
Brexit Bill Now A Law
A bill enacting Britain's decision to leave the European Union has become law after months of debate, the House of Commons speaker announced Tuesday, to cheers from eurosceptic lawmakers. The EU (Withdrawal) Bill, which repeals the 1972 European Communities Act through which Britain became a member of the bloc, had received royal assent from Queen Elizabeth II. However, Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit may be rejected by France, Germany and Spain.
No Overtime
An order issued by the Personnel Ministry has discontinued overtime allowance for employees except operational staff, in line with a recommendation of the Seventh Central Pay Commission.The operational staff are all non-ministerial non-gazetted central government servants directly involved in smooth operation of the office including those tasked with operation of some electrical or mechanical equipment.
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FUNDAMENTALS
Rupee Down: The rupee lost further ground to end at a fresh one-week low of 68.24, depreciating by 11 paise against the US currency on increased dollar demand amid global policy uncertainties.
Long-term Bonds Mixed: Government bonds (G-Secs) ended mixed in a quitrade following alternate bouts of buying and selling. The 7.17% 10-year benchmark bond maturing in 2028 eased to Rs 95.63 from Rs 95.66, while its yield inched up to 7.83% from 7.82%. The 6.84% G-Secs maturing in 2022 rose to Rs 96.2250 from Rs 96.22, while its yield held stable at 7.86%. The 6.68% G-Secs maturing in 2031 slipped to Rs 89.21 from Rs 89.25, while its yield inched up to 8.02% from 8.01%.
Shorter Term Bonds Mixed: The 7.59% G-Secs maturing in 2026 declined to Rs 97.2975 from Rs 97.35, while its yield moved up to 8.07% from 8.06%. The 6.65% G-Secs maturing in 2020 gained to Rs 98.69 from Rs 97.35, while its yield declined to 7.44% from 8.06%.
Call Rates Down: The overnight call money rates ended lower to 6.10% from it's Monday's level of 6.20%. It resumed higher at 6.35% and moved in a range 6.35% and 6.00%.
Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 4,841 crore in 6-bids at the overnight repo operation at a fixed rate of 6.25% as on Tuesday while it sold securities worth Rs 12,133 crore in 42-bids at the overnight reverse repo auction at a fixed rate of 6.00% as on June 25.
Trade Tensions Simmer
Even as the U.S. House of Representatives passed a bill on Tuesday to tighten foreign investment rules, China's state-run tabloid Global Times said China should take “self defense measures” against US tariffs by offering subsidies to companies and industries that may suffer losses from trade frictions. Meanwhile, cracks showed in US too as President Donald Trump accused Harley-Davidson Inc. of using new tariffs on trade as cover to shift some production abroad as he threatened the motorcycle manufacturer with a "big tax" on bikes imported to the US. An automotive trade group says 25% tariff on imported passenger vehicles would cost American consumers $45 billion annually, or $5,800 per vehicle. On a more cheery note, China has decided to cut import tariff on soybean and some other goods imported from India and other Asian countries to zero.
Oil Prices Surge
US crude oil futures jumped 3.6% on Tuesday after news broke that Washington was pushing allies to halt imports of Iranian crude. WTI is back above $70 per barrel for the first time in over a month.The market rallied further after the American Petroleum Institute said U.S. crude inventories had fallen by much more than expected. Early Wednesday, US. crude CLc1 was up 8 cents at $70.61, while Brent LCOc1 climbed 24 cents to $76.55 a barrel.
Brace for More NPAs
The gross non-performing asset ratio of scheduled commercial banks could rise up to 12.2% by March 2019 from 11.6% in March 2018, according to RBI's Financial Stability Report. The estimate is based on a baseline scenario which assumes continuation of the current economic situation. In the worst case scenario, the bad loan ratio could rise up to 13.3% by the end of the current financial year, according to the report.
Gold Hovers Near 6-month Low
Gold prices sat near a more than six-month high low hit in the previous session, as the dollar firmed amid easing risk aversion and expectations of further interest. Spot gold XAU= dipped 0.1% to $1,257.81 an ounce, as of 0045 GMT. It touched its lowest since mid-December at $1,254.16 in the prior session.rate hikes by the U.S. Federal Reserve.
EPFO Withdrawal Norms Eased
EPFO has decided to allow members to withdraw 75% of their funds after one month of unemployment and keep their PF account with the body. The members could also withdraw the remaining 25% of their funds and go for final settlement of account after completion of two months of unemployment under the new provision in the Employee Provident Fund Scheme 1952.
Brexit Bill Now A Law
A bill enacting Britain's decision to leave the European Union has become law after months of debate, the House of Commons speaker announced Tuesday, to cheers from eurosceptic lawmakers. The EU (Withdrawal) Bill, which repeals the 1972 European Communities Act through which Britain became a member of the bloc, had received royal assent from Queen Elizabeth II. However, Theresa May’s plan to protect British industry by keeping the UK in a single market for goods without respecting the free movement of people after Brexit may be rejected by France, Germany and Spain.
No Overtime
An order issued by the Personnel Ministry has discontinued overtime allowance for employees except operational staff, in line with a recommendation of the Seventh Central Pay Commission.The operational staff are all non-ministerial non-gazetted central government servants directly involved in smooth operation of the office including those tasked with operation of some electrical or mechanical equipment.
POLICIES & MORE
Top Video
Harley Move Abroad Beginning of the End: Trump
Top Quote
FUNDAMENTALS
Rupee Down: The rupee lost further ground to end at a fresh one-week low of 68.24, depreciating by 11 paise against the US currency on increased dollar demand amid global policy uncertainties.
Long-term Bonds Mixed: Government bonds (G-Secs) ended mixed in a quitrade following alternate bouts of buying and selling. The 7.17% 10-year benchmark bond maturing in 2028 eased to Rs 95.63 from Rs 95.66, while its yield inched up to 7.83% from 7.82%. The 6.84% G-Secs maturing in 2022 rose to Rs 96.2250 from Rs 96.22, while its yield held stable at 7.86%. The 6.68% G-Secs maturing in 2031 slipped to Rs 89.21 from Rs 89.25, while its yield inched up to 8.02% from 8.01%.
Shorter Term Bonds Mixed: The 7.59% G-Secs maturing in 2026 declined to Rs 97.2975 from Rs 97.35, while its yield moved up to 8.07% from 8.06%. The 6.65% G-Secs maturing in 2020 gained to Rs 98.69 from Rs 97.35, while its yield declined to 7.44% from 8.06%.
Call Rates Down: The overnight call money rates ended lower to 6.10% from it's Monday's level of 6.20%. It resumed higher at 6.35% and moved in a range 6.35% and 6.00%.
Liquidity: The Reserve Bank of India, under the Liquidity Adjustment Facility, purchased securities worth Rs 4,841 crore in 6-bids at the overnight repo operation at a fixed rate of 6.25% as on Tuesday while it sold securities worth Rs 12,133 crore in 42-bids at the overnight reverse repo auction at a fixed rate of 6.00% as on June 25.