Indian indices may witness a negative start on Thursday. On Wednesday, the market ended a two day-winning run to register a marginal decline. The negative trend is likely to continue today as the Wall Street retreated sharply in the overnight session after mounting fears of an economic downturn hit Wall Street shares and spurred a flight to havens including sovereign bonds. S&P 500 index plunged over 4%, the biggest daily drop in almost two years, and technology-heavy Nasdaq 100 index tumbled more than 5%. Earnings reports from consumer stalwarts stoked worries that high inflation is weighing on margins and consumer spending. The slump extended into Asia on Thursday as equities slid in Japan, Australia, Hong Kong, Shanghai, and South Korea.
Pre-open: Nifty50 slips below 16,000; all the stocks register decline
Pre-open: Sensex falls sharply after Wall Street battering
Day trading guide for Thursday
6 stocks to buy or sell today — 19th May
Members in MPC divided on pace of interest rate hikes
One of the members of the Reserve Bank of India’s monetary policy committee pressed for an immediate repo rate hike of more than 100 basis points, while others favoured less aggressive rate action in future, minutes of the rate-setting panel’s last meeting showed. While all of them voted for an off-cycle policy rate hike in May, some felt that it was necessary to avoid stronger rate action going forward.
UK inflation rockets to 40-year peak, sparking calls for action
Britain’s inflation rate has surged to a 40-year high on soaring energy costs, official data showed Wednesday, sparking calls for an emergency government budget to combat a worsening cost-of-living crisis.
Annual inflation soared to 9.0 percent in April from 7.0 percent in March, the Office for National Statistics said, delivering another heavy blow to Britons whose wages were already failing to keep pace with surging prices.
April’s headline figure marked the highest inflation rate since 1982, the ONS added.
Tycoon Jindal’s port unit plans public listing by March 2024
JSW Infrastructure Ltd., a unit of tycoon Sajjan Jindal’s steel-to-cement conglomerate, is planning an initial public offering by March 2024.
The Mumbai-based company, which operates seaports and terminals, will soon start the process of engaging investment bankers and professional agencies to facilitate the listing, Joint Managing Director Arun Maheshwari said in an interview. The firm will take a “balanced view” on geopolitical risks and inflationary pressures among other factors while deciding on the timing for the listing, he said.
LME copper flat as global growth woes sap risk appetite
London copper prices were flat on Thursday, as mounting worries over a global economic slowdown amid aggressive policy tightening by the U.S. Federal Reserve and ongoing lockdowns in China dented investors’ risk appetite.
* Benchmark three-month copper on the London Metal Exchange (LME) was steady at $9,236.50 a tonne, as of 0213 GMT, after dropping 1.4% in the previous session.
* The most-active June copper contract on the Shanghai Futures Exchange was down 0.5% at 71,380 yuan ($10,556.36) a tonne.
* China has policy room to cope with challenges, as the downward pressure on China’s economy increases, state media quoted Premier Li Keqiang as saying on Wednesday.
Safe-haven dollar eases after Wednesday’s jump, but risk sentiment remains fragile
Safe-haven currencies, including the dollar, eased on Thursday, pausing for breath after big gains the previous session as Wall Street stocks tumbled amid mounting concerns that aggressive tightening by the Federal Reserve and other global central banks could choke growth.
The dollar index, which tracks the greenback against six major peers, edged 0.05% lower to 103.74, after a 0.55% jump overnight that ended a three-day losing streak.
The yen slipped, with the dollar adding 0.21% to 128.495 yen after a 0.86% tumble on Wednesday.
The Swiss franc continued to strengthen, with the dollar losing a further 0.13% to 0.9869 franc, following a 0.6% slide.
The benchmark 10-year U.S. Treasury yield was steady around 2.89% in Tokyo trading after dropping from as high as 3.015% in the prior session.
Consumers shift again, flummoxing big retailers like Target
The pandemic vastly changed the way Americans spend money and now as they return to pre-pandemic behavior, they’re tripping up retailers again.
That dynamic has only been intensified in recent months as inflation jumps sharply, and the latest financial report from Target underscores the challenges.
Target reported Wednesday that its profit tumbled 52% compared with the same period last year in an environment of rising costs for things like fuel, and also a lightening quick return by consumers to more normalized spending. Purchases of big TVs and appliances that Americans loaded up on during the pandemic have faded, leaving Target with a bloated inventory that must be marked down to sell.
Target’s quarterly financial report comes a day after shares of rival Walmart tumbled about 17% for similar reasons after it posted quarterly results. Both companies missed profit expectations by a wide margin. Shares of Walmart fell another 8% Wednesday.
Gold flat as dollar strength counters weaker U.S. bond yields
Gold prices were flat on Thursday, as an elevated dollar weighed on greenback-priced bullion and countered support from lower Treasury yields, with the metal’s outlook already dulled by an aggressive Federal Reserve stance on inflation.
* Spot gold held its ground at $1,816.63 per ounce at 0047 GMT. U.S. gold futures edged 0.1% lower to $1,814.10.
* The U.S. dollar rose on Wednesday, snapping a three-session losing streak, as concerns about the outlook for global economic growth and rapid inflation knocked sentiment a day after Fed Chair Jerome Powell struck a more hawkish tone.
Wells Fargo cuts S&P view twice in three weeks in recession call
Three weeks after Wells Fargo Investment Institute cut its view on the S&P 500, it did this again, saying a mild recession is now its base-case view.
The investment advisory firm slashed its year-end target by 300 points Wednesday, on top of the 200-point cut it made late April. The advisory arm of Wells Fargo & Co. now sees the gauge trading in the 4,200-4,400 range by Christmas. That represents a drop of as much as 7.7% for the full year, but a gain of up to 12% from current levels.
“We have noted a growing recession risk since early this year,” Wells Fargo Investment Institute’s strategists wrote in a note to clients. “As we weigh the latest monthly and weekly data, the economy has crossed a probability level that makes a mild and short-lived recession our base case.”
Hong Kong stocks down by more than 3%
Hong Kong stocks were down by more than three percent Thursday, after Wall Street suffered one of its worst batterings in two years.
The Hang Seng index was down 3.03 percent, or 625.84 points, at 20,018.44.
Market consolidates after a strong relief rally: Sameet Chavan, Angel One
Yesterday’s massive rally was followed by yet another gap up opening with modest gains. We clearly shrugged off the global cues as the SGX Nifty was indicating a sluggish start in the morning. In the initial trades, Nifty extended its gains towards 16400, but failed to sustain at higher levels. Around the midsession, Key indices pared down all gains and slipped marginally in the red. Fortunately, a smart recovery immediately after the midseason pulled Nifty back to 16350, which again got sold into to conclude the choppy session on a flat note.
Since the overall global picture has not changed yet, our market was unable to keep up the same momentum as we witnessed during yesterday’s short covering move. Traders chose to take some money off the table after reaching the key resistance zone of 16400 – 16500. Now although we have seen some sluggish moves today, we expect buying to emerge at lower levels till the time Nifty holds its sacrosanct support zone of 16100 – 16000. Traders can certainly take a punt as close as possible to 16150 – 16100 on the expiry session. On the flipside, it’s advisable to lighten up longs around the higher range of 16400 – 16500. The real strength will come back in our market only after surpassing the sturdy wall of 16500 – 16600, till then it would be a prudent strategy to adopt ‘One step at a time’ strategy.
Today, there wasn’t much sectoral participation seen in the market; but the FMCG space stood out and some of the heavyweights like, HINDUNILVR are poised for some decent moves. Also, one can focus on banking and metal counters which are likely to perform well if there is no aberration globally.
Oil falls 2.5% as U.S. refiners ramp up output, equities retreat
Oil prices fell 2.5% on Wednesday, reversing early gains as traders grew less worried about a supply crunch after government data showed U.S. refiners ramped up output, and as crude futures followed Wall Street lower.
Brent crude futures for July settled down $2.82, or 2.5%, at $109.11 a barrel. U.S. West Texas Intermediate (WTI) crude for June fell $2.81, or 2.5%, to $109.59 a barrel.
Both benchmarks gave up early gains of $2-$3 a barrel following a change in risk sentiment as equity markets fell, said UBS analyst Giovanni Staunovo.
Asian shares tumble as global growth fears mount
Asian stocks tracked a steep Wall Street selloff on Thursday, as investors fretted over rising global inflation, China’s zero-COVID policy and the Ukraine war, while the safe-haven dollar held most of its strong overnight gains.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 2% in early Asian trading hours, the first daily decline in a week. Japan’s Nikkei tumbled 2.4%.
Pulling it lower was a 1.5% loss for Australia’s resource-heavy index, a 2.6% drop in Hong Kong stocks and a 1% retreat for blue chips in mainland China .
Overnight on Wall Street, earnings reports from retail giants soured sentiment, with Target Corp warning of a bigger margin hit due to rising fuel and freight costs as it reported its quarterly profit had halved. One day earlier, Walmart Inc warned of similar margin squeezes.
Target’s shares plunged 24.88%, the biggest one-day percentage drop since the “Black Monday” stock market crash on Oct. 19, 1987. On Wednesday, the Nasdaq fall almost 5% while the S&P 500 lost 4%.
Stocks extend rout as bonds jump on growth fears
A slump in stocks extended into Asia Thursday and US equity futures retreated after mounting fears of an economic downturn hit Wall Street shares and spurred a flight to havens including sovereign bonds.
Equities slid in Japan, Australia and South Korea in the wake of a 4% plunge in the S&P 500 index, the biggest daily drop in almost two years, and a more than 5% tumble in the technology-heavy Nasdaq 100 index.
Earnings reports from consumer stalwarts stoked worries that high inflation is weighing on margins and consumer spending. Target Corp. plunged the most since Black Monday in 1987, a day after Walmart Inc. also spiraled lower.
Federal Reserve officials reaffirmed that sharply tighter monetary policy lies ahead to cool economic activity and get price pressures under control. Chicago Fed President Charles Evans said raising interest rates somewhat above the neutral level and stopping there should help bring inflation down.
Treasuries climbed amid fraying risk appetite. The dollar pared an advance. Bonds in Australia and New Zealand jumped in the slipstream of the US session.
China’s Covid lockdowns amid a persistent omicron outbreak are also buffeting markets. Oil sank below $109 a barrel on concerns about demand.
The challenge from inflation for bellwether retailers weakens the argument that corporate earnings can help stem this year’s rout in stocks. Instead, global equities are sliding toward a bear market as recession fears mount.
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