Pre Session-Fresh China rout set to shake Dalal Street
07/01/2016
Indian equity benchmarks are set to be rocked by renewed turmoil in China after the country weakened the yuan’s reference rate by the most since August, raising concerns over a worsening slowdown in the world’s second biggest economy, pushing global markets into a tailspin, and prompting traders to shun risky assets. Trading in China’s stock bourses was suspended for a second time this week after the benchmark index slid 7 per cent, triggering an automatic circuit breaker. The World Bank cut the global growth forecasts for 2016 to 2.9 per cent from 3.3 per cent estimated earlier as a slowdown in China prolongs a commodity slump while Brazil and Russia suffer steep recessions. China’s economic growth forecast was cut to 6.7 per cent in 2016 from 7 per cent estimated earlier, while the economy is set slow further to 6.5 per cent in 2017. However, the World Bank sees India as a bright spot for the global economy, with Asia’s third biggest economy likely to expand at 7.8 per cent in FY 2016-17 after a 7.3 per cent expansion this year. A sharp sell-off in Asia and a bearish finish at Wall Street coupled with weakness in the CNX Nifty Index futures for January delivery which fell 0.79 per cent or 60.5 points at 7,673.5 at 10:27 am Singapore time, signals that the Sensex may witness a gap down opening on Thursday. Marking a third straight session in the red, the 30-share Sensex on Wednesday tumbled by 174.01 points or by 0.68 per cent to end at 25,406.33 as a bout of global worries including a worsening China slowdown, an oil freefall, heightened Middle East tensions and North Korea bomb test sent shivers down the spine of Dalal Street, sapping risk taking appetite. Weakness in the rupee which hit a three-week low vs. the US dollar and caution ahead of the start of the Q3 FY 2015-16 corporate earnings season also weighed on domestic bourses.
Asian stocks plummeted as China’s move to weaken its yuan reference rate to an unexpectedly low level raised more anxiety over the country’s economic slowdown. China’s Shanghai Composite fell over 7 per cent before trading was halted, Hang Seng shed over 2 per cent while Japan’s Nikkei 225 tanked 1.8 per cent as a stronger yen curbed the lure for exporter stocks. Doom and Gloom struck Wall Street on Wednesday as worries over a China slowdown, coupled with heightened geopolitical fears amidst Middle East tensions and North Korea’s successful testing of a hydrogen bomb hit sentiment. Investors cast aside mostly upbeat US economic data which showed that private payrolls in the US rose by the most in a year, up by 257,000 in December, services maintained solid growth, with the PMI coming in at 55.3 last month, well above the neutral 50-mark, after 55.9 in November. Minutes from the Fed’s December meet, released on Wednesday showed that policymakers saw the decision to raise interest rates in December as a “close call”. The Dow Jones Industrial Average plunged 1.47 per cent; the Nasdaq Composite dropped 1.14 per cent while S&P 500 fell 1.31 per cent.
07/01/2016
Indian equity benchmarks are set to be rocked by renewed turmoil in China after the country weakened the yuan’s reference rate by the most since August, raising concerns over a worsening slowdown in the world’s second biggest economy, pushing global markets into a tailspin, and prompting traders to shun risky assets. Trading in China’s stock bourses was suspended for a second time this week after the benchmark index slid 7 per cent, triggering an automatic circuit breaker. The World Bank cut the global growth forecasts for 2016 to 2.9 per cent from 3.3 per cent estimated earlier as a slowdown in China prolongs a commodity slump while Brazil and Russia suffer steep recessions. China’s economic growth forecast was cut to 6.7 per cent in 2016 from 7 per cent estimated earlier, while the economy is set slow further to 6.5 per cent in 2017. However, the World Bank sees India as a bright spot for the global economy, with Asia’s third biggest economy likely to expand at 7.8 per cent in FY 2016-17 after a 7.3 per cent expansion this year. A sharp sell-off in Asia and a bearish finish at Wall Street coupled with weakness in the CNX Nifty Index futures for January delivery which fell 0.79 per cent or 60.5 points at 7,673.5 at 10:27 am Singapore time, signals that the Sensex may witness a gap down opening on Thursday. Marking a third straight session in the red, the 30-share Sensex on Wednesday tumbled by 174.01 points or by 0.68 per cent to end at 25,406.33 as a bout of global worries including a worsening China slowdown, an oil freefall, heightened Middle East tensions and North Korea bomb test sent shivers down the spine of Dalal Street, sapping risk taking appetite. Weakness in the rupee which hit a three-week low vs. the US dollar and caution ahead of the start of the Q3 FY 2015-16 corporate earnings season also weighed on domestic bourses.
Asian stocks plummeted as China’s move to weaken its yuan reference rate to an unexpectedly low level raised more anxiety over the country’s economic slowdown. China’s Shanghai Composite fell over 7 per cent before trading was halted, Hang Seng shed over 2 per cent while Japan’s Nikkei 225 tanked 1.8 per cent as a stronger yen curbed the lure for exporter stocks. Doom and Gloom struck Wall Street on Wednesday as worries over a China slowdown, coupled with heightened geopolitical fears amidst Middle East tensions and North Korea’s successful testing of a hydrogen bomb hit sentiment. Investors cast aside mostly upbeat US economic data which showed that private payrolls in the US rose by the most in a year, up by 257,000 in December, services maintained solid growth, with the PMI coming in at 55.3 last month, well above the neutral 50-mark, after 55.9 in November. Minutes from the Fed’s December meet, released on Wednesday showed that policymakers saw the decision to raise interest rates in December as a “close call”. The Dow Jones Industrial Average plunged 1.47 per cent; the Nasdaq Composite dropped 1.14 per cent while S&P 500 fell 1.31 per cent.
