Business Live: Stocks pare gains; gold tops $2,000 for the first time ever

A view of theBombay Stock Exchange building in Mumbai.

A view of theBombay Stock Exchange building in Mumbai.   | Photo Credit: PTI

Stocks opened the day in the green after making strong gains in yesterday's session but have since pared most of the morning gains.

Gold has hit a record high, breaking above the $2,000 mark for the first time ever.

Join us as we follow the top business news through the day.

1:00 PM

ETF demand behind gold rally

 

 

12:30 PM

India’s service sector activity still severely restricted by COVID-19; contracts for 5th month in July

The service sector shows no signs of turning the corner even as some talk about economic greenshoots.

PTI reports: "India’s services sector activity remained in deep slump in July as coronavirus-induced restrictions stifled demand and forced companies to cease operations and further reduce staff numbers, a monthly survey said on Wednesday.

The IHS Markit India Services Business Activity Index stood at 34.2 in July, slightly higher than 33.7 in June.

Despite the rise, the Indian services sector activity contracted for the fifth successive month in July. A print above 50 means expansion and a score below that denotes contraction, as per the IHS Markit India Services Purchasing Managers’ Index (PMI).

“With such a prolonged and significant downturn, any substantial recovery will take many months, if not years. Latest IHS Markit estimates point to an annual contraction in GDP of over 6 per cent in the year ending March 2021,” said Lewis Cooper, Economist at IHS Markit.

Survey respondents linked falls in both activity and order books to the adverse impact stemming from the COVID-19 pandemic, with frequent mentions of lockdown measures, weak demand conditions and the temporary suspension of company operations.

“The coronavirus pandemic and subsequent introduction of lockdown measures continued to weigh heavily on the Indian service sector in July. Business activity and new orders dropped again, with the rates of decline remaining rapid overall,” Cooper stated.

With overall demand conditions severely muted, service providers made further job cuts in July. The rate of job shedding was the fastest on record, with panellists blaming weak client demand and temporary business closures

“July data, as a whole, provide no real signs that the downturn is slowing down. That’s not surprising with lockdown measures still in force, but undoubtedly these will have to be loosened and companies reopen before the sector can move towards stabilisation,” Cooper said.

Looking ahead, the 12-month outlook for output was negative for a third successive month, with fears of a substantial economic downturn common among survey respondents."

12:00 PM

Virgin Atlantic airline files for U.S. bankruptcy protection

Virgin Atlantic Airways Ltd is seeking protection from creditors in the United States under Chapter 15 of the U.S. Bankruptcy Code, which allows a foreign debtor to shield assets in this country, according to a court filing on Tuesday.

Virgin Atlantic's filing in U.S. bankruptcy court in the southern district of New York said it has negotiated a deal with stakeholders “for a consensual recapitalisation” that will get debt off its balance sheet and “immediately position it for sustainable long-term growth.”

In July, Virgin Atlantic said it has agreed a rescue deal with shareholders and creditors worth 1.2 billion pounds ($1.57 billion) to secure its future beyond the coronavirus crisis.

Read more
 

11:30 AM

Gold breaks above $2,000/oz

 

11:00 AM

Gold extends record rally on softer dollar, stimulus bets

The bull run in gold continues with the yellow metal breaking above the $2,000 mark.

Reuters reports: "Safe-haven gold scaled an all-time peak on Wednesday, extending a record run above the $2,000 mark on a weaker dollar and bets for more stimulus measures to revive a pandemic-ravaged economy.

Spot gold was up 0.2% at $2,022.19 per ounce after hitting a record high of $2,030.72 in early Asian trade. U.S. gold futures rose 0.9% to $2,039.40.

“The drop in the dollar and nominal yields, as speculation remains rife about global growth and any U.S. fiscal package, is what fundamentally drove gold prices higher,” said IG Markets analyst Kyle Rodda.

“The outlook remains very strong for gold. Interestingly, we've seen traders reduce their long exposure to gold throughout this recent rally, suggesting new buyers could still come back into the market to push prices higher,” he said.

Coronavirus cases continue to surge in the United States and dozens of U.S. states have had to pause or roll back their reopening plans. The global tally stood at more than 18.41 million.

The rapid rise in cases has dented hopes of a swift U.S. economic rebound, sending the five-year Treasury yield to a record low, reducing the opportunity cost of holding non-interest bearing gold.

The U.S. dollar fell 0.3% against its rivals, making gold cheaper for holders of other currencies.

White House negotiators vowed to work “around the clock” with congressional Democrats to try to reach a deal on coronavirus relief by the end of this week.

“Despite of potential short-term pullback, the mid-to-long-term prospect of gold and other precious metals remains bullish against the backdrop of low interest rate environment and fiscal + monetary stimulus,” said DailyFx strategist Margaret Yang.

Spot gold may complete its current correction above a support at $2,000 and retest a resistance at $2,028 per ounce, said Reuters technical analyst Wang Tao.

Elsewhere, silver eased 0.2% to $25.95 per ounce, platinum rose 0.1% to $938.16 and palladium slipped 0.8% to $2,122.74."

10:40 AM

Rupee surges 17 paise to 74.87 against U.S. dollar in early trade

The rupee gained 17 paise to 74.87 against the U.S. dollar in opening trade on Wednesday tracking positive domestic equities and weak American currency.

At the interbank forex market, the domestic unit opened at 74.93 against the U.S. dollar, gained further ground and touched 74.87 against the U.S. dollar, registering a gain of 17 paise over its previous close.

It had settled at 75.04 against the U.S. dollar on Tuesday.

Forex traders said positive trend in the equity markets, weak American currency and sustained foreign fund inflows supported the rupee.

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10:20 AM

July exports near last year’s level: Piyush Goyal

Showing signs of significant improvement, the country’s exports in July reached almost the level of the corresponding month last year, Commerce and Industry Minister Piyush Goyal said on Tuesday.

He said several indicators were reflecting that economic activities were reviving in the country.

“Our exports have almost reached last year’s July level, with nearly 90% of our export of July 2019 having come back. And, in fact if we were to remove the oil-related exports, where we are largely a small value adder... we are 95% plus on the revival of our exports,” he said.

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10:00 AM

Sensex rallies over 300 points in early trade; Nifty tops 11,150

A good start this morning for stocks.

PTI reports: "Domestic equity benchmark Sensex rallied over 300 points in opening session on Wednesday led by gains in Reliance Industries, ICICI Bank, Axis Bank and Kotak Bank amid positive cues from global markets and sustained foreign fund inflow.

The BSE Sensex was trading 314.47 points or 0.83 per cent higher at 38,002.38; while the NSE Nifty was up 88.70 points or 0.80 per cent at 11,183.95.

Axis Bank was the top gainer in the Sensex pack, rising over 3 per cent, followed by IndusInd Bank, UltraTech Cement, Tata Steel, Bajaj Finance, SBI, Bajaj Finserv, ICICI Bank, Axis Bank and Reliance Industries.

On the other hand, PowerGrid and Nestle India were among the laggards.

In the previous session, the 30-share Sensex soared 748.31 points or 2.03 per cent to close at 37,687.91, while the NSE Nifty rallied 203.65 points or 1.87 per cent to 11,095.25.

Exchange data showed that foreign institutional investors purchased equities worth Rs 703.74 crore on a net basis on Tuesday.

According to traders, besides stock-specific action, positive cues from global markets and sustained foreign fund inflow buoyed domestic benchmarks.

Bourses in Shanghai, Hong Kong and Seoul were trading with gains in mid-day deals, while Tokyo was in red.

Stock exchanges on Wall Street ended on a positive note in overnight session.

Global oil benchmark Brent crude was trading 0.11 per cent lower at USD 44.38 per barrel."

 

9:30 AM

OYO restoring salary cuts for employees in India, South Asia

Some initial signs of the business world getting closer to normalcy.

PTI reports: "Hospitality firm OYO on Tuesday told its employees that it is restoring the full salaries of staffers in India and South Asia, a company spokesperson said.

Pay cuts for employees with fixed compensation of up to Rs 8 lakh have been reversed from August 1, while the rest will see restoration in a phased manner from October 2020, the spokesperson added.

The hospitality firm had on April 22 had asked some of its staff in India to go on leave with limited benefits from May 4 for four months. It also asked all employees in the country to accept a cut in their fixed salaries by 25 per cent effective for April-July 2020 payroll, due to the impact of COVID-19.

The spokesperson said 12.5 per cent of the total 25 per cent salary cut will be restored from October and the remaining 12.5 per cent from December 2020.

This was announced by OYO India and South Asia CEO Rohit Kapoor in a townhall meeting with the employees, the spokesperson said.

“We are grateful to all our OYOpreneurs for giving OYO a fighting chance to survive these tough times. The organisation respects your unwavering support for it in good as well as tough times,” the spokesperson quoted Kapoor as saying in the townhall meeting.

Kapoor also urged everyone to continue working together to bring the business back to pre-COVID levels.

When the pay cuts were announced in May, the company had said the action was planned in such a way that post the proposed pay cut, the fixed compensation for any employee is not less than Rs 5 lakh per annum. This ensured a large percentage of employees at lower pay scales saw no impact, OYO had said."

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Printable version | Sep 24, 2020 11:47:52 AM | https://www.thehindu.com/business/businesslive-5-aug-2020/article32273548.ece

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