Business Live: Asian markets bounce back after US-Iran tensions ease

“Soleimani’s assassination has awakened the deep strain of Iranian patriotism.” Mourners attend a funeral ceremony for the Iranian General and his comrades who were killed in Iraq in a U.S. drone strike, in Tehran, Iran, on January 6. AP

“Soleimani’s assassination has awakened the deep strain of Iranian patriotism.” Mourners attend a funeral ceremony for the Iranian General and his comrades who were killed in Iraq in a U.S. drone strike, in Tehran, Iran, on January 6. AP  

Live updates from the world of economy, markets, and finance

Asian markets have witnessed a bounce this morning after yesterday's losses amidst increasing US-Iran tensions. Gold and oil prices have dropped as tensions have eased since yesterday.

 

2:00 PM

China's Dec forex reserves rise to $3.108 trillion

China's foreign exchange reserves rose $12.3 billion in December to $3.108 trillion, central bank data showed on Tuesday.

Economists polled by Reuters had expected China's reserves, the world's largest, to rise by $7.4 billion to $3.103 trillion, due to fluctuations in global exchange rates and the prices of foreign bonds that China holds.

Strict capital controls have helped China keep outflows under control over the past year despite an escalating trade war with the United States and weakening economic growth at home.

In December, the yuan rose about 1% against the dollar, but it still fell 1.5% over the year.

The value of China's gold reserves rose to $95.406 billion at the end of December from $91.469 billion at the end of November. Reuters

 

1:30 PM

Gold futures gain on spot demand

Gold prices on Tuesday gained Rs 18 to Rs 40,490 per 10 gram in futures trade as investors continued to move towards the safe haven asset following rising tensions between the US and Iran.

The tensions in Middle East region rose after US killed top Iranian commander Qasem Soleimani following an air strike on Baghdad’s international airport on Friday.

On the Multi Commodity Exchange, gold contracts for February traded higher by Rs 18, or 0.04 per cent, at Rs 40,490 per 10 gram with a business turnover of 4,004 lots.

The yellow metal for April delivery traded higher by Rs 12, or 0.03 per cent, at Rs 40,691 per 10 gram in a business turnover of 288 lots.

Fresh positions built up by participants led to the rise in gold prices, analysts said.

Globally, gold prices rose 0.02 per cent to USD 1,569.10 per ounce in New York. PTI

 

12:00 PM

Stocks erase morning gains

Both the Nifty and the Sensex, each up by about 0.6% at the moment, have lost a significant share of the gains they made in the morning.

Business Live: Asian markets bounce back after US-Iran tensions ease
 

 

11:30 AM

Govt plans to cut spending to curb deficit; may hurt growth

India's government is likely to cut spending for the current fiscal year by as much as 2 trillion Indian rupees ($27.82 billion) as it faces one of the biggest tax shortfalls in recent years, three government sources said.

Asia's third largest economy, which is growing at its slowest pace in over six years because of lack of private investment, could be hurt further if the government cuts spending.

But with a revenue shortfall of about 2.5 trillion rupees, the government has little choice to keep its deficit within ”acceptable limits”, the first official, who did not want to be named, told Reuters.

The government has spent about 65% of the total expenditure target of 27.86 trillion rupees till November but reduced the pace of spending in October and November, according to government data. A 2 trillion-rupee reduction would be about a 7% cut in total spending planned for the year.

In October and November, government spending increased by 1.6 trillion rupees, nearly half the 3.1 trillion it spent in September. The fiscal year starts April 1 and ends March 31.

Lack of demand and weak corporate earnings growth in the economy led to lagging tax collections this year. Analysts said growth will be hurt.

“When the private investment has slowed so much, this will definitely drag down growth further,” said Rupa Rege Nitusure, chief economist at L&T Financial. Reuters

 

10:45 AM

High oil prices pose threat to improvement in Indian CAD: Report

Markets view the rally in Brent oil prices, triggered by geopolitical tensions, as a threat to the improvement in India’s FY20 current account deficit and forecasts for a balance of payment surplus, according to a report.

Downbeat sentiments saw USD-INR exchange rate test past 72 to two-month high, while the benchmark equity indices witnessed mayhem on Monday, said a report by Singapore’s banking group DBS.

Weak global sentiments lifted INR sovereign bond yields on profit-taking bids, according to the report.

The jump in 10Y yield was, however, modest vs past risk-off episodes, likely due to expectations that the central bank (RBI) will be inclined to step-up buy-sell OMOs in the coming weeks, to cap long-term yields, said the report.

Market participants view the rally in Brent oil prices as “a threat to the improvement in India’s FY20 current account deficit and forecasts for a balance of payment surplus,” it stated.

The Reserve Bank of India (RBI) has conducted three tranches of buy-sell open market operations (OMOs) in the last fortnight.

Sub-target revenue growth increases the scope of additional borrowings this quarter. This might necessitate 1-2 more tranches of OMOs ahead of February’s Budget, the report said. PTI

 

10:30 AM

Rupee jumps 22 paise to 71.71 as crude oil prices ease

The Indian rupee appreciated by 22 paise to 71.71 against the US dollar in early deals as some easing in global crude oil prices boosted forex market sentiments.

The domestic unit started the session on a positive note and held its ground in early transactions at the Interbank Foreign Exchange.

On Monday, the rupee had settled at 71.93 against the US currency.

Global oil benchmark Brent crude cooled 1.23 per cent to USD 68.06 per barrel after the Pentagon on Monday distanced itself from US President Donald Trump’s threats to bomb Iranian cultural sites despite international prohibitions on such attacks. PTI

 

10:00 AM

Oil drops more than 1% as investors recalibrate risk in Mideast

Oil prices fell more than 1% on Tuesday as investors reconsidered the likelihood of Middle East supply disruptions in the wake of the United States killing a top Iranian military commander.

Brent crude fell as much as 1.5% to $67.86 a barrel and was at $68.09, down 82 cents, at 0324 GMT. U.S. West Texas Intermediate (WTI) crude futures was at $62.53, down 74 cents, after earlier dropping 1.5% to an intra-day low of $62.30.

Prices surged during the previous two sessions, with Brent reaching its highest since September while WTI rose to the most since April. The gains followed fears of escalating conflict and potential Middle East supply disruptions after the Jan. 3 drone strike in Baghdad that killed Iran's Qassem Soleimani. But, some analysts have tempered expectations for a widespread conflict. Reuters

 

9:30 AM

Nifty, Sensex make strong start to the day

The Nifty is up almost 140 points, a 1.12% gain, while the Sensex is up almost 500 points.

Business Live: Asian markets bounce back after US-Iran tensions ease
 

9:00 AM

Credit flow to Infra sector remains muted at Rs 21.2 lakh cr in Apr-Sep: Report

Credit to infrastructure sector from banks and non-bank financing companies remained muted at Rs 21.2 lakh crore in April-September period of the current fiscal, says a report.

The infrastructure credit had witnessed a 19 per cent growth in FY19 to Rs 21.1 lakh crore.

The tepidness in the first half of FY20 has been led by de-growth in banking sector credit to infrastructure segment, though infrastructure finance non-bank companies (IFCs) continued to grow at a modest pace of 17 per cent year-on-year, and and 12 per cent sequentially, Icra said in the report.

“Majority of the infrastructure credit growth in FY19 was also back ended. Hence, a pickup in H2 FY20 cannot be ruled out, though the pressure on fiscal position may limit the government’s push towards expenditure on infrastructure and hence constrain a major reversal in trend,” the rating agency’s vice president and head (financial sector ratings), Manushree Saggar.

Overall, the growth in the total infrastructure credit in FY20 is likely to remain lower than last year, he said. PTI

Also read: Nerves of steel

8:30 AM

Asia stocks bounce, oil slips as Iran anxiety ebbs

Asian shares rebounded on Tuesday as a day passed without any new escalation in the Middle East and Wall Street erased early losses to end in the black as tech stocks climbed.

Oil surrendered hefty gains as some speculated Iran would be unlikely to strike against the United States in a way that would disrupt supplies, and its own crude exports.

Brent crude futures fell 54 cents to $68.37 a barrel, having been as high as $70.74 on Monday, while U.S. crude dropped 44 cents to $62.83.

Gold also retreated to $1,557.54 an ounce, after scaling a near seven-year peak of $1,579.72 overnight.

Equities went the other way as MSCI's broadest index of Asia-Pacific shares outside Japan added 0.6%, recouping almost all of Monday's losses.

Japan's Nikkei rallied 1.3% and Shanghai blue chips advanced 0.5%. E-Mini futures for the S&P 500 firmed 0.1%, while EUROSTOXX 50 futures rose 0.4%.

Shares had fallen sharply on Monday as Iran and the United States traded threats after an U.S. air strike killed a top Iranian commander.

The mood calmed a little as the session passed with no new aggression. Reuters

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Printable version | Feb 19, 2020 1:13:48 AM | https://www.thehindu.com/business/businesslive-7-jan-2020/article30500381.ece

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