Stimulus planned to fight virus impact
As economic growth comes to standstill amid increasing concerns over the spread of coronavirus, governments are trying to minimize the negative impact.
Reuters reports on RBI's monetary stimulus: "The Reserve Bank of India (RBI) plans to infuse fresh cash liquidity into the system through a second round of long-term repo operations (LTRO), government officials told Reuters, amid fears that the coronavirus outbreak will derail any revival of economic growth.
One official said the RBI might inject as much as 1 trillion rupees ($13.6 billion) in the round that will begin as early as April.
The government is, meanwhile, pushing state-run banks to approve new loans amounting to 500-600 billion rupees by the end of March, according to government sources."
Other economies such as the US, China, and the European Union have also pledged lower interest rates and large fiscal spending packages to the tackle the economic impact of the coronavirus outbreak.
Mukesh Ambani poorer after oil rout
The oil rout has left Mukesh Ambani, the richest Indian, poorer by close to $6 billion, according to the Bloomberg Billionaires Index .
IANS has the details: "Reliance Industries Chairman Mukesh Ambani is no longer the richest man in Asia, owing to the recent freefall in oil prices.
The persistent concerns of severe impact of the coronavirus epidemic coupled with the recent carnage in the oil markets have erased $5.8 billion from the RIL chief’s net worth.
Ambani’s current net worth amounts to $41.8 billion, while that of Jack Ma stands at $44.5 billion. Globally, Ambani is the 19th richest man just behind Jack Ma who is at the 18th rank."
Global oil demand expected to decline for first time in over a decade
The coronavirus scare is set to rattle energy markets in 2020 as demand drops and affect the ability of governments to spend on social sectors, according to the International Energy Agency.
"The IEA now sees global oil demand at 99.9 million barrels a day in 2020, down around 90,000 barrels a day from 2019. This is a sharp downgrade from the IEA’s forecast in February, which predicted global oil demand would grow by 825,000 barrels a day in 2020," the energy body states in a press release .
Trump's promise of "major" tax cuts helps boost futures
With US stocks witnessing their worst fall since 2008 on Monday, US President Donald Trump, a cheerleader for higher stock prices, has announced steps to help the economy and companies hit by the coronavirus scare.
IANS reports: "US President Donald Trump in an unscheduled briefing on Monday after the worst stock market crash since 2008 said his administration will ask Congress to pass payroll tax relief and support the economy via tax cuts as the coronavirus crisis in election year draws closer to his political fortunes in November."
The initial reaction of markets to Mr. Trump's stimulus has been encouraging with stock futures up over 2% .
Watch | Yes Bank crisis explained
The Reserve Bank of India has placed Yes Bank under moratorium . Yes Bank customers cannot make regular withdrawals of more than Rs. 50,000 a day till April 3, subject to a maximum of Rs.5 lakh.
Fuel prices cut for sixth day in a row
Piyush Pandey reports on the latest price cut: "State-owned oil marketing companies (OMCs) have reduced the prices of sensitive petroleum products such as petrol and diesel by 30 paise and 25 paise a litre respectively across major cities as as the price of international crude oil fell. The sixth consecutive cut in petrol and diesel prices were done after the OMCs reduced the price of petrol and diesel prices by quarter of a rupee on Monday and are likely to maintain the declining trend this week.
The prices of petrol and diesel are likely to come down further in the coming weeks as India follows the monthly average pricing of benchmark crude oil."
And the impact that the falling price of oil has had on the value of OMCs: "Shares of state-owned oil marketing companies (OMCs) surged on falling crude oil prices. Shares of HPCL gained 6.17% to close at Rs 213.25, BPCL shares closed up 5.20% at Rs 423.80 in a weak Mumbai market on Monday. Indian Oil Corporation (IOCL) shares closed down 1.34% at Rs 99.45."
China virus fears ebbing
Chinese President Xi Jinping's visit to Wuhan, the epicenter of the coronavirus outbreak, has given rise to hopes of a nascent economic recovery. This comes in the midst of the number of fresh coronavirus cases in China dropping significantly.
One sign of rising hopes is the yuan's appreciation against the US dollar.
"The spot yuan opened at 6.9430 per dollar and was changing hands at 6.9383 at midday, 97 pips firmer than the previous late session close. Traders said the virus development has been the key factor influencing the yuan's movements in the past month, with many market participants worrying it could turn into a pandemic," reports Reuters .
Chinese stocks and metals like copper have also seen demand from traders.
US bond yields drop to record lows as investors seek safety
Some big moves happening in the bond market as investors worldwide rush to safety amid increased economic uncertainty.
While US bonds haven't yet stepped into negative territory like their European counterparts, inflation-adjusted real yields may just have.
US government bonds across all maturities dropped below the 1% mark on Monday.
"The benchmark 10-year Treasury yield dropped to a record 0.318% before climbing back to 0.515%, down 19 basis points on the day," according to Reuters .
Did depositors sense trouble at Yes Bank?
Yes, according to data reported by PTI : "Yes Bank, which has been put under a moratorium by the Reserve Bank till April 3, during which customers are not allowed to withdraw more than ₹50,000, had deposits worth ₹2,27,610 crore at the end of March 2019 (or end of 2018-19 fiscal).
However, it fell to ₹2,25,902 crore by the end of the first quarter ended June of the current fiscal year (2019-20) and further to ₹2,09,497 crore by the end of the second quarter ended September of FY20.
The difference in deposits between March 2019 to September 2019, reflects withdrawals to the tune of ₹18,110 crore."
A breakdown of depositor withdrawal data could shed light on awareness about the bank's troubles among retail depositors vis-à-vis larger institutions.
Oil price fall pushes traders to accumulate inventory
The crash in oil prices on Monday has pushed oil traders to accumulate their inventory in the hope that the price of oil will rise in the near future.
If right, the traders could make handsome profits and help stabilize oil prices. If wrong, a flood of supply could further dampen the price of oil in the future.
What's in the news today?
1) After the crash in Asian markets, which saw Indian stocks plunge about 5%, the US markets witnessed a similar sharp fall overnight . The Dow Jones fell the most since 2008, down almost 8%. Asian stocks have remained fairly stable this morning.
2) After the sharp plunge yesterday that helped lower domestic fuel prices , oil prices have bounced back by as much as 7%.
3) The volatility in stocks and oil has made investors seek safety in bonds, driving down bond yields across western markets to historic lows.
4) Owners of AT-1 bonds issued by Yes Bank have approached the Bombay High Court appealing against the Reserve Bank of India's plan to mark down the value of the bonds to zero.
