The Government may infuse around Rs 40,000 crore into PSBs in 2019-20 as it looks to strengthen their balance sheets to enable them to step up lending. An announcement to this effect is expected in the Budget on July 5. A senior government official told that a plan is being firmed up to help banks expand credit offtake further. -Economic Times As the Government gets down to prepare its first Budget, North Block, which houses the Finance Ministry here, will be in ‘quarantine’ from Monday until the presentation of the Budget on July 5. The Ministry will be out of bounds for visitors and media as it gets down to prepare the Budget for 2019-20 fiscal year. -Business Line The RBI modified the guidelines on large exposures for banks with a view to reduce concentration of risk and align them with the global norms. The modified 'Large Exposures Framework' (LEF) provides exclusion of entities connected with the sovereign from definition of group of connected counter-parties. As per the revised norms, the sum of all the exposure values of a bank to a single counter-party must not be higher than 20% of the bank's available eligible capital base at all times. In exceptional cases, board of banks may allow an additional 5% exposure of the bank's available eligible capital base. In case of groups of connected counter-parties, the sum of all the exposure values of a bank to a group of connected counter-parties must not be higher than 25% of the bank's available eligible capital base at all times, the revised LEF said. -Moneycontrol.com The Supreme Court today allowed Serious Fraud Investigation Officer to reopen and recast the accounts of IL&FS, IFIN abd IL&FS Transportation Networks Limited (ITNL) of the past 5 years. The order by the top court came on a plea moved by the Ministry of Corporate Affairs, which had sought to examine the books of the Co between FY 2012-13 and 2017-18. -Business Standard ICICI Bank today launched a center in Bengaluru to provide business solutions exclusively to start-ups and MSME sector, all under one roof. -Business Line The SBI has targeted to grow 10-12 per cent in the current financial year, on the back of green shoots of revival in credit demand and better recoveries of loans. -Economic Times Axis Bank promoted Axis Trustee Services LTD has become the first trustee to start operations at Gujarat International Financial Tec-City (GIFT) City's International Financial Services Centre (IFSC). -Business Standard Fitch Ratings has downgraded the ratings of ICICI Bank and Axis Bank due to ‘challenges’ faced by them and lowering of India’s operating environment. It has downgraded ICICI Bank’s Long-Term Issuer Default Rating (IDR) to ‘BB+’ from ‘BBB-’ and its Viability Rating to ‘bb+’ from ‘bbb-’. The outlook on the IDR is Stable. Fitch has also affirmed ICICI Bank’s Support Rating at 3 and Support Rating Floor at ‘BB+’, it said in a statement late. -Business Line Having initiated a crackdown on a suspected coterie of fraudsters in the IL&FS case, the government's financial fraud probe agency SFIO has recommended necessary action against the guilty auditors and also a detailed internal investigation by the RBI to identify reasons for the delay in detecting the lapses. -Economic Times The RBI has banned audit firm Batliboi & Co. LLP to conduct audit of commercial bank for one year starting April 1, 2019, due to lapses. -The Hindu Bitcoin fell back below the $8,000 level for the first time in more than a week to halt its most recent rally, leading a wider retreat among cryptocurrencies. -Business Line The Delhi High Court has imposed Rs 10 lakh cost on online insurance aggregator, Policybazaar, for concealing facts to obtain an ex-parte injunction in a trademark infringement case filed by it against an insurance Co. -Economic Times USD/INR 69.26 SENSEX 40083.54 (-184.08) NIFTY50 12021.65 (-66.90)
The Supreme Court today directed the RBI to disclose information pertaining to its annual inspection report of banks under the Right to Information (RTI) Act unless they are exempted under law. A bench headed by Justice L Nageswara Rao also directed the federal bank to review its policy to disclose information relating to banks under RTI, saying it is ‘duty bound’ under the law. -Business Line In a move to improve customer confidence in NBFC lending routes, the RBI has announced to extend the ambit of Ombudsman scheme for NBFCs to all eligible non-deposit taking NBFCs as well, effective from today. The scheme which lays down rules for redressal mechanism in cases of customer complaints was earlier applicable only to deposit-taking NBFCs. -Economic Times Resolution plans under IBC have yielded 200% of liquidation value for creditors in addition to rescuing viable firms, IBBI Chairperson M S Sahoo has said. -Economic Times A Mumbai bench of the NCLT has issued notices to the CEOs of Axis Bank and Standard Chartered Bank on a plea by the Ministry of Corporate Affairs after it was found that former IL&FS executive Ramesh Bawa had transferred Rs 1.14 crore from his bank accounts to the accounts of his wife and daughter despite the court ordering the freezing of his accounts. -Economic Times The Finance Ministry has approved 8.65% rate of interest on EPF for 2018-19 as decided by retirement fund body EPFO, benefitting more than 6 crore formal sector workers. -Economic Times YES Bank today reported a surprise loss of Rs 1,506.64 crore for the quaarter ended March 31 on spike in provisions and contingencies. The bank had posted a net of Rs 1,179.44 crore for the corresponding quarter. -Economic Times Crypto currency is a "ponzi scheme" and should be banned to protect the interest of investors, a government official said today. Amid continuing debates about crypto currencies such as Bitcoins, the Investor Education and Protection Fund (IEPF) Authority, which comes under the corporate affairs ministry, is in favour of banning trade in such currencies. -Economic Times Hinting that Jet Airways employees are unlikely to receive their salary dues till the stake sale process is completed, Vinay Dube, the CEO of Jet Airways, today told airline employees that the lenders have so far provided no clarity on releasing emergency funds required to meet salary dues. -Economic Times USD/INR 70.01 SENSEX 39067.33(+336.47) NIFTY50 11754.65(+112.85)
The SEC is suing Elon Musk, accusing the Tesla (NASDAQ:TSLA) CEO of securities fraud and seeking to ban him from serving as an officer of a publicly traded company. The SEC complaint alleges that Musk issued a series of "false and misleading" statements and failed to properly notify regulators of material company events last month when he tweeted about possibly taking Tesla private, saying “funding secured.” In response, Musk said, “Integrity is the most important value in my life and the facts will show I never compromised this in any way.” Tesla’s board says it is “fully confident” in its CEO, and Musk signals that he may not go away quietly. The Wall Street Journal reported that the SEC had crafted a settlement with Musk that it was preparing to file yesterday morning but Musk’s lawyers called off the agreement. Shares tumbled as much as 13% in after-hours trading. Economy Japan’s Nikkei index jumped to a 27-year intraday high overnight, aided by improving corporate profits, a healthier economy and a weaker yen, before closing +1.4% at 24,120. Today's rally puts the Nikkei on track to finish as Q3’s best-performing index, as its 6.7% gain in local currency terms is well ahead of the 2.5% increase for India’s Sensex, although neither benchmark has performed as well in dollar terms. Valuations remain attractive, with the Nikkei priced at just 13x forward earnings, said Tony Glover, Tokyo-based senior investment specialist at BNP Paribas Asset Management. Elsewhere in Asia, China’s Shanghai Composite closed +1%, while Hong Kong’s Hang Seng ended +0.2%. European markets are weighed by political turmoil in Italy, where the new anti-establishment government proposed a 2019 budget with a much wider deficit than the previous administration’s target, setting up a clash with the European Commission. The government late Thursday night offered a budget with a deficit of 2.4% of GDP for the next three years, in a defeat for its economy minister, who had sought a deficit set as low as 1.6% next year, hoping to respect European Union demands that Italy progressively cut the fiscal gap to trim its debt. The full budget will be unveiled in October and will be scrutinized by the European Commission, which could reject it. U.S. lawmakers are expressing deep reservations about any new North American trade deal that does not include Canada as the Trump administration prepares to advance a NAFTA deal with Mexico but not Canada. U.S. Trade Representative Robert Lighthizer met with key lawmakers yesterday to deliver what senators said was a pessimistic assessment of the state of negotiations with Canada. Congressional staff members cautioned that the administration would find little support on Capitol Hill for a deal that excluded Canada entirely and would be unlikely to move to a vote in the House if Democrats win control in November’s elections. Mortgage rates in the U.S. jumped to the highest level in more than seven years during the past week, according to Freddie Mac's (OTCQB:FMCC) latest market survey. The 30-year fixed-rate mortgage rose for the fifth straight week, adding seven basis points to an average of 4.72% for the week ending September 27, up from 4.65% in the prior week, and the 15-year FRM averaged 4.16%, up from 4.11%. Homebuilder stocks posted broad losses, in part on the higher mortgage rates and the likelihood of continued increases with another Fed rate hike apparently set to come before the end of this year. ETFs: ITB, XHB, PKB, HOML. Central banks have emerged as some of the biggest buyers of gold this year, buying a total of 264 metric tons this year to reach the highest level in six years, according to analysts at Macquarie. “The only unambiguously positive sector for gold at the moment is central banks,” Macquarie says, as the price of gold has tumbled 10% so far this year and slid near a six-week low at $1,187.40 per ounce. Poland added to its gold reserves last month, buying more than seven tons of gold, which followed its purchase of two tons in July, according to IMF data; gold buying has long been dominated by Russia, Turkey and Kazakhstan, and Poland's purchase, if confirmed, would be the first by a European Union member this century, according to Macquarie. Stocks Google CEO Sundar Pichai will meet today with Republican lawmakers who want to ask about bias against conservatives, antitrust violations and working with China, among other concerns. House of Representatives Majority Leader Kevin McCarthy will host the private meeting between Pichai and more than two dozen Republican lawmakers. Meanwhile, the Wall Street Journal reported that an audio recording of a Google (GOOG, GOOGL) internal meeting from earlier this year showed numerous employees raising objections to the company’s sponsorship of the Conservative Political Action Conference. The U.S. Air Force selected Boeing (NYSE:BA) to build its next training jet in a contract worth as much as $9.2 billion, beating out competition from a joint bid by Lockheed Martin (NYSE:LMT) and Korea Aerospace as well as another group led by Italy’s Leonardo (OTCPK:FINMF, OTCPK:FINMY). The Air Force currently plans to buy 351 T-X jets and 46 simulators, and options on the contract could allow the purchase of as many as 475 jets and 120 simulators. The new planes will replace the service’s aging fleet of planes, which are nearly 50 years old, and analysts have said it eventually could buy up to 600 planes. Jeff Bezos' Blue Origin space transport company has won a contract to supply engines for the massive Vulcan rocket built by United Launch Alliance, the joint venture between Boeing (BA) and Lockheed Martin (LMT). The potentially multi-billion dollar agreement is a significant milestone for Blue Origin as it strives to become a player in the market for lucrative U.S. military satellite launch contracts. Blue Origin's engines have strategic importance for the U.S. military because they are intended to end the use of Russian-built engines which now provide primary propulsion on United Launch’s Atlas V rockets. The Food and Drug Administration approved Eli Lilly's (NYSE:LLY) Emgality injection for the preventive treatment of migraine in adults, one of three in a new class of drugs recently approved for migraines. LLY said it plans to sell the drug, known chemically as galcanezumab, at a list price of $6,900 per year, or $575 per month, identical to the list price for the other new migraine treatments, Aimovig from Amgen (NASDAQ:AMGN) and Novartis (NYSE:NVS), and Teva’s (NYSE:TEVA) Ajovy. Some 39M Americans suffer from migraine headaches, according to the Migraine Research Foundation. After news that its chairman was indicted on charges of sabotaging union activities, Samsung (OTC:SSNLF) said he would keep his role. "His status remains unchanged," the company said of Lee Sang-hoon, who has led the board since March. It’s another headache for the company, as Samsung heir and Vice Chairman Jay Y. Lee is appealing a conviction for bribery in the scandal that led to the impeachment of South Korea's former president. Thursday's Key Earnings CalAmp (NASDAQ:CAMP) +7.6% AH on Q2 earnings beat. Progress Software (NASDAQ:PRGS) -13.6% AH on mixed Q3 and downward Q4 guidance. iKang Healthcare (NASDAQ:KANG) +0.3% AH on Q1 revenue growth. Today's Markets In Asia, Japan 1.36%. Hong Kong +0.26%. China +1.06%. India -0.30%. In Europe, at midday, London -0.19%. Paris -0.40%. Frankfurt -0.72%. Futures at 6:20, Dow -0.10%. S&P -0.09%. Nasdaq -0.12%. Crude +0.19% to $72.26. Gold -0.03% to $1,187. Bitcoin +2.76% to $6.656. Ten-year Treasury Yield -1.8bps to 3.037%. Today's Economic Calendar 8:30 Personal Income and Outlays 9:45 Chicago PMI 10:00 Consumer Sentiment 1:00 PM Baker-Hughes Rig Count 4:45 PM Fed's Williams: Economic Outlook
"A Sea Of Red": Global Stocks Plunge With Tech Shares In Freefall
While there was some nuance in yesterday's pre-open trading, with Asia at least putting up a valiant defense to what would soon become another US rout, this morning the market theme is far simpler: a global sea of red. Stocks fell across the globe as worries over softening demand for the iPhone prompted a tech stock selloff across the world, while the arrest of car boss Carlos Ghosn pulled Nissan and Renault sharply lower. Even China's recent rally fizzled and the Shanghai composite closed down 2.1% near session lows, signalling that the global slump led by tech shares would deepen Tuesday, adding a new layer of pessimism to markets already anxious over trade. Treasuries advanced and the dollar edged higher. S&P 500 futures traded near session lows, down 0.6% and tracking a fall in European and Asian shares after renewed weakness in the tech sector pushed Nasdaq futures sharply lower for a second day after Monday's 3% plunge and crippled any hopes for dip buying. News around Apple triggered the latest bout of stock market selling, after the Wall Street Journal reported the consumer tech giant is cutting production for its new iPhones. Europe's Stoxx 600 Index dropped a fifth day as its technology sector fell 1.3% to the lowest level since February 2017, taking the decline from mid-June peak to 21% and entering a bear market. Not surprisingly, the tech sector was the worst performer on the European benchmark on Tuesday, following Apple’s decline to near bear-market territory and U.S. tech stocks plunge during recent sell-off. The selloff was compounded by an auto sector drop led by Nissan and Renault after Ghosn, chairman of both carmakers, was arrested in Japan for alleged financial misconduct. The European auto sector was not far behind, dropping 1.6 percent, and the broad European STOXX 600 index was down 0.9 percent to a four-week low. “Most of Europe had a red session yesterday and that has been compounded by the news on Apple and tech stocks overnight, The overall climate is risk off,” said Investec economist Philip Shaw. “Beyond stocks, the Italian bonds spread (over German bonds) is at its widest in about a month now, and Brexit continues to rumble on - uncertainty is very much hurting risk sentiment,” he added. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent, with Samsung Electronics falling 2 percent. In Japan, Sony Corp shed 3.1 percent. Japan’s Nikkei slipped 1.1 percent, with shares of Nissan Motor Co tumbling more than 5% after Ghosn’s arrest and on news he will be fired from the board this week. Meanwhile, as noted yesterday, the CDS index of US investment grade issuers blew out to the widest level since the Trump election, signaling renewed nerves about the asset class. Exactly two months after the S&P hit all time highs, stocks have been caught in a vicious decline and continue to struggle for support as some of the technology companies that helped drive the S&P 500 to a record high earlier this year tumbled amid a slowdown in consumer sales and fears over regulation, many of them entering a bear market. At the same time, a more gloomy macro outlook is emerging, with Goldman chief equity strategist David kostin overnight recommending investors hold more cash even as it reiterated its base case of S&P 3000 in 2019. Ray Dalio disagreed, and said that investors should expect low returns for a long time after enjoying years of low interest rates from central-bank stimulus. “The easy days of long, global bull markets where you can invest in a tracker for five basis points -- I say this as an active fund manager -- and watch the thing go up, I think those days are gone,” Gerry Grimstone, chairman of Barclays Bank PLC and Standard Life Aberdeen PLC, said in an interview on Bloomberg Television. “It’s going to be a move back to value investing, and back to the Warren Buffett-style of investment.” In the latest Brexit news, UK PM May is reportedly drawing up secret plans to drop the Irish border backstop and win support from angry Brexiteers, while reports added PM May has received agreement from the EU to drop the backstop plan if both sides can agree on alternative arrangements to keep the border open. Meanwhile, Brexiteers reportedly still lack the sufficient number of signatures required to trigger a no-confidence vote against UK PM May, the FT reported. In related news, Brexit rebels reportedly admitted attempts to oust PM May has stalled as Eurosceptic MPs turned on each other. The Telegraph also reported that the confidence vote now appears to be on hold until after Parliament votes in December on Mrs May's Brexit deal. Sky News reported that the UK government are to publish new analysis before the MPs’ meaningful vote on the Withdrawal Agreement comparing the “costs and benefits” of Brexit. The impact of three scenarios will be measured; no Brexit, no deal, and leaving with the government's draft deal and a free trade agreement. In rates, Treasuries rose, driving the 10-year yield down to its lowest level since late September, ahead of Thanksgiving Thursday. Italian government bond yields jumped to one-month high on Tuesday and Italian banking stocks dropped to a two-year low, hurt by risk aversion and concerns over the Italian budget. Euro zone money markets no longer fully price in even a 10 bps rate rise from the European Central Bank in 2019, indicating growing investor concern about the economic outlook in the currency bloc. In FX, the Bloomberg Dollar Spot Index whipsawed in early London trading even as it stayed near a more than one-week low on concern cooling global growth will slow the pace of Fed rate hikes, keeping Treasury yields under pressure. At the same time, the pound stabilized as Theresa May appealed to business leaders to help deliver her Brexit deal, and evidence mounted that a plot to oust her as U.K. Prime Minister is faltering. The euro slid as Italian bonds dropped, pushing the yield spread to Germany to the widest in a month; the currency had opened the London session higher, supported by corporate buying in EUGBP. The yen rallied to a month-to-date high as Asian stocks followed a U.S. equity slide while the New Zealand dollar got a boost from a jump in milk production; the Aussie was on the back foot even after the RBA said Australia’s unemployment rate could fall further in the near term. India’s rupee rallied a sixth day after the central bank signaled a compromise with the government in their dispute over reserves. Bitcoin extended its drop below $4,500 for the first time since October 2017. WTI crude oil futures hovered around $57 a barrel after oil prices lost steam as fears about slower global demand and a surge in U.S. production outweighed expected supply cuts by the Organization of the Petroleum Exporting Countries. Brent crude slipped 0.9 percent to $66.21 per barrel. In other overnight news, BoJ Governor Kuroda said there is currently no need to ease further, while he added that there was a need for bold monetary policy in 2013 and now we need to persistently continue with policy. Furthermore, Kuroda suggested that the chance of reaching the 2% inflation target during FY2020 is low. Japanese PM Abe says the next initial budget is to have measures to address sales tax. India's Finance Ministry sources expect that the RBI will stand pat on rates at its meeting next month. RBA Governor Lowe states that steady policy is to be maintained for 'a while yet' and it is likely that rates will increase at some point if the economy progresses as expected. Expected data include housing starts and building permits. Best Buy, Campbell Soup, Lowe’s, Medtronic, Target, TJX, and Gap are among companies reporting earnings. Market Snapshot
S&P500 futures down 0.8% to 2,676.00
STOXX Europe 600 down 0.5% to 353.25
MXAP down 1% to 150.89
MXAPJ down 1.2% to 481.70
Nikkei down 1.1% to 21,583.12
Topix down 0.7% to 1,625.67
Hang Seng Index down 2% to 25,840.34
Shanghai Composite down 2.1% to 2,645.85
Sensex down 0.8% to 35,498.94
Australia S&P/ASX 200 down 0.4% to 5,671.79
Kospi down 0.9% to 2,082.58
German 10Y yield fell 1.4 bps to 0.359%
Euro down 0.2% to $1.1433
Italian 10Y yield rose 10.4 bps to 3.223%
Spanish 10Y yield rose 0.3 bps to 1.653%
Brent futures down 0.8% to $66.23/bbl
Gold spot little changed at $1,223.14
U.S. Dollar Index up 0.1% to 96.29
Top Overnight News
Bank of England governor Carney appears before lawmakers on Tuesday. He’ll be joined by fellow interest-rate setters Jon Cunliffe, Andy Haldane and Michael Saunders. Treasury Committee Chair Nicky Morgan has already asked the BOE to assess any agreement
While Salvini is threatening to hijack the EU agenda as the dispute over Italy’s 2019 budget heats up, his closest adviser is trying to steer the populist coalition away from a head-on clash with Brussels, according to senior government and League officials who asked not to be named discussing confidential matters
Credit markets are set for the worst year since the global financial crisis as investors abandon hope of a late-2018 rally
Turmoil engulfed cryptocurrency markets again on Tuesday, with every major coin extending a rout that’s rocking confidence in the nascent asset class. Bitcoin, which started the year at more than $14,000, has fallen below $4,500. Rivals including Ether, Litecoin and XRP joined the slide, though they pared losses that reached as much as 17 percent
Evidence is mounting that the plot to oust U.K. Prime Minister Theresa May is faltering. One rebel leader said in private that more than 50 Tories had claimed they would submit letter but they hadn’t all followed through
Germany and France have warned the EU to do more to prevent the U.K. from being able to claim victory in Brexit talks, according to EU diplomats. Spain’s Foreign Minister said the EU shouldn’t accept a text on a Brexit agreement that Spain isn’t happy with
U.K. Labour Party leader Jeremy Corbyn said he wants to keep a second Brexit referendum open as an option
Australia’s unemployment rate may fall further in the near term based on leading indicators of labor demand, the central bank said in minutes of its November meeting
Bank of Japan Governor Haruhiko Kuroda says he welcomes a diversity of opinion on the effectiveness of negative rates. He also said he believes continuing current policy is best approach for achieving the central bank’s inflation target
Asian stock markets were lower across the board as the risk averse tone rolled over from Wall St, where the tech sector led the sell-off as Apple shares dropped nearly 4% on reports it had reduced production orders and with all FAANG stocks now in bear market territory. As such, the tech sector underperformed in the ASX 200 (-0.4%) and Nikkei 225 (-1.1%) was also pressured with Mitsubishi Motors and Nissan among the worst hit after their Chairman Ghosn was arrested on financial misconduct allegations. Shanghai Comp. (-2.1%) and Hang Seng (-2.0%) were heavily pressured after the PBoC continued to snub liquidity operations and as China’s blue-chip tech names conformed to the global rout in the sector, while JD.com earnings added to the glum as China’s 2nd largest e-commerce firm posted its weakest revenue growth since turning public. Finally, 10yr JGBs were weaker amid profit taking after futures recently hit their highest in around a year and following mixed results at today’s 20yr auction. Top Asian News - BlackRock Doesn’t Expect Significant Growth Slowdown in China - China Stocks Lead Global Losses as Tech Rout Hits Fragile Market - Stock Traders in Asia Keep Finding New Reasons to Hit ’Sell’ - World’s Largest Ikea to Open in Manila as Company Bets on Asia Major European indices are largely in the red, with the SMI outperforming (+0.1%) which is being bolstered by Novartis (+1.0%) following their announcement of a joint digital treatment with Pear Therapeutics for substance abuse disorder. The DAX (-0.7%) is lagging its peers, weighed on by Wirecard (-5.0%) following a disappointing change to guidance forecasting as well as weak sentiment across IT names after the FAANG stocks entered bear market territory on Wall St. In particular, the Stoxx 600 Technology sector (-1.9%), dropped to its lowest level since Feb 2017. Meanwhile, Deutsche Bank (-2.5%) are in the red due to reports that the Co processed payments for Danske Bank in Estonia. Top European News
Draghi’s Man in Rome Shows Populists Alert to Budget Backlash
BASF Targets $2.3 Billion Profit Boost From Corporate Revamp
Danske Fights Back as Hush Money Claims Raise New Questions
The One Thing Supercharging Europe Earnings in 2018 Is Crashing
As Things Stand, Spain Will Vote Against Brexit Deal: Sanchez
In FX, the DXY index remains technically prone to further downside pressure having closed below another Fib support level yesterday and testing the next bearish chart area around 96.050-10 ahead of 96.000 even. However, a more concerted bout of risk-off trade/positioning saved the DXY and broad Dollar from steeper declines as the tech-induced sell-off in stocks intensified, and jitters over Brexit alongside the Italian budget returned to the fore. NZD/AUD - The Kiwi is bucking the overall trend and outperforming in contrast to this time on Monday, with Nzd/Usd rebounding firmly to 0.6850+ levels and Aud/Nzd retreating through 1.0650 to just south of 1.0600 following overnight data showing a hefty 6.5% y/y rise in NZ milk collections for October. Conversely, the Aud/Usd has slipped back under 0.7300 again, and close to 0.7250 in wake of RBA minutes underscoring no rush to hike rates and subsequent affirmation of wait-and-see guidance from Governor Lowe. In fact, he asserts that the jobless rate could decline to 4.5% vs 5% at present without inducing wage inflation, while also underlining concerns about the supply of credit. JPY/CHF - Both benefiting from their more intrinsic allure during periods of pronounced risk aversion and investor angst, as Usd/Jpy probes a bit deeper below 112.50 and a key Fib at 112.46 that could be pivotal on a closing basis with potential to expose daily chart support circa 112.16 ahead of 112.00. Meanwhile, the Franc has inched closer to 0.9900 and over 1.1350 vs the Eur that remains burdened with the aforementioned Italian fiscal concerns. GBP/EUR - Almost a case of déjà vu for Sterling and the single currency as early attempts to the upside vs the Greenback saw Cable and EuUsd revisit recent peaks around 1.2880 and 1.1470 respectively, but a combination of chart resistance and bearish fundamentals forced both back down to circa 1.2825 and 1.1425. In terms of precise technical/psychological levels, 1.2897 and 1.1445 represent Fib retracements, ahead of 1.2900 and 1.1500, while the Pound has remained relatively unchanged and unresponsive to largely on the fence pending Brexit rhetoric from the BoE in testimony to the TSC on November’s QIR. In commodities, gold has stayed within a USD 5/oz range and traded relatively flat throughout the session moving with the steady dollar ahead of US Thanksgiving. Similarly, copper traded lacklustre breaking a 5-day rally because of a subdued risk sentiment stemming from ongoing US-China trade tensions; with Shanghai rebar adversely affected from these factors. Brent (-0.1%) and WTI (+0.2%) are following a relatively quiet overnight session, while recent upticks in the complex resulted in WTI reclaiming the USD 57/bbl and Brent edging closer to USD 67/bbl. This follows comments from IEA Chief Birol that Iranian oil exports declined by almost 1mln BPD from summer peaks. Looking ahead, traders will be keeping the weekly API crude inventory data which is expected to print a build of 8.79mln barrels. On today's light data calendar, in the US, there should be some interest in the October housing starts and building permits data, especially following Fed Chair Powell’s recent comments acknowledging a slowdown in the housing market and yesterday’s homebuilder data. Away from that, the BoE’s Carney is due to appear before the Parliament’s Treasury Committee to discuss the Inflation Report, while the ECB’s Nouy and Bundesbank’s Weidmann are both scheduled to speak at separate events. US Event Calendar
8:30am: Housing Starts, est. 1.23m, prior 1.2m; MoM, est. 1.79%, prior -5.3%
8:30am: Building Permits, est. 1.26m, prior 1.24m; MoM, est. -0.79%, prior -0.6%
DB's Jim Reid concludes the overnight wrap With the sell-off of the last 24 hours we have now traded through the last of our YE 2018 top level credit spread forecasts as US HY widened 6bps to +424bps (YE 2018 forecast was 420). We still think US HY is the most expensive part of the EUR & US credit universe but as discussed above, last night we’ve become more optimistic on all credit in the near-term after what has been the worst week of the year. Credit massively under-performed equities last week but equities caught up on the downside yesterday. The sell-off was underpinned by the FANG names selling off, an accounting scandal emerging at Nissan, oil swinging around and the US housing market spooked by weak data. Just on the market moves first, the NASDAQ and NYFANG indexes slumped -3.03% and -4.28% yesterday, registering their fourth and third worst days of the year, respectively. Facebook and Apple fell -5.72% and -3.96% respectively, as the sector remains pressured amid a slew of negative PR and the spectre of stricter government regulation. Over the weekend, Apple CEO Tim Cook said in an interview that “the free market is not working” and that new regulation is “inevitable”. This negatively impacted highly-valued social media companies. Twitter and Snapchat traded down -5.02% and -6.78% respectively. The tech sector was further pressured after the WSJ reported that Apple had cut production orders in recent weeks for the new model iPhones, with chipmakers broadly trading lower and Philadelphia semiconductor index shedding -3.86%. The S&P 500 and DOW also slumped -1.66% and -1.56% respectively while in Europe the STOXX 600 turned an early gain of +0.71% into a loss of -0.73%. In credit, cash markets were 2bps and 11bps wider for Euro IG and HY and 2bps and 6bps in the US. CDX IG and HY were, however, 3bps and 11bps wider, respectively. Elsewhere, WTI oil first tested breaking through $55/bbl yesterday, after Russia stopped short of committing to supply cuts, before recovering to close +0.52% at $56.76. Bond markets were relatively quiet, with Treasuries and Bunds ending -0.4bps and +0.6bps, respectively, albeit masking bigger intraday moves. BTP yields rose +10.6bps to 3.597%, within 10 basis points of their recent closing peak, as rhetoric between Italian officials and their European peers continued to intensify. Finance Ministers from Austria and the Netherlands separately spoke publicly about their concerns, and expressed their hope that the European Commission will loyally enforce the fiscal rules. Italian Finance Minister Tria tried to calm conditions by framing the disagreement as relatively minor, though he also accused the Commission of being biased against expansionary policies, which he argued are needed to avert a macro slowdown. Back to credit, as we highlighted yesterday, the recent weakness in the asset class has become a talking point for broader markets and while our view is now that value is starting to emerge, there are an increasing number of idiosyncratic stories plaguing the market. There were a couple more examples yesterday with the aforementioned story about Nissan removing its chairman after being arrested for violations of financial law. This caused Renault’s CDS to widen +25.0bps (equity down -8.43%), while Vallourec bonds dropped 15pts after falling 11pts on Friday as concerns mount about the company’s rising leverage in the wake of recent results. Like we’ve see in equity markets, it does feel like credits are now getting punished with sharp moves in the wake of negative headlines Certainly something to watch, but as we said above, credit is now much more attractively priced than it has been for some time. From steel tubing to Downing Street, where we’ve actually had a rare temporary lull for Brexit headlines over the last 24 hours, although behind the scenes it does look we’re getting closer to the threshold for a confidence vote in PM May with the Times yesterday reporting that “senior Brexiteers” had told reporters that they had “firm pledges” from over 50 MPs to submit letters. As a reminder, 48 are needed to trigger the process. Looking further out, yesterday DB’s Oliver Harvey published a report arguing that there is still a path towards an orderly Brexit based on the existing Withdrawal Agreement should May survive a confidence vote. This path is provided by the political declaration on the future economic relationship. The latter has yet to be negotiated, and as the EU27 and UK recognise in the joint statement, the existing temporary customs arrangement (TCA) already provides a basis for a future economic relationship. Oli argues that the UK should push for the political declaration on the future relationship to explicitly commit the UK to a form of Brexit that might be described as “Norway plus.” The temporary customs arrangement would become permanent, but under the governance framework of UK membership of the EEA and EFT. The UK should tie the political declaration on the future relationship to the good faith clause in the existing Withdrawal Agreement, meaning that if negotiations were not pursued on these lines after the transition period had begun, the UK could withhold payments from the EU27. This would help to allay concerns from across the political divide that the UK would be “trapped” in a sub optimal customs union with the EU27. Meanwhile, to complicate matters, Bloomberg has reported that the EU is mulling over issuing a series of separate statements on Brexit on Sunday, in addition to the Withdrawal Agreement and the Political Declaration. This comes after pressure from some EU countries not to appease any additional UK demands. Elsewhere, the SUN has reported that the PM May has drawn up a secret plan to scrap the Irish backstop arrangement in an attempt to win over angry Tory Brexiteers after a meeting with them yesterday. However, if a mutually agreeable solution couldn’t be found over the last couple of years, it seems tough to imagine one was finally found yesterday afternoon. We’ll see. Further adding to the complexity of where Brexit heads, last night the DUP abstained on the UK finance bill, which implements the budget. This stops short of their prior threat to actively vote against the legislation, but is still a surprise and signals that further political turbulence between PM May and the DUP is likely. The bill only just scraped through. Sterling finished +0.14% yesterday and this morning is trading flattish (+0.02%) in early trade. Sentiment more broadly in Asia is following Wall Street’s lead with almost all markets trading in a sea of red. The Nikkei (-1.25%, with Nissan Motors down as much as -5.41% and Mitsubishi Motors -6.71%), Hang Seng (-1.84%), Shanghai Comp (-1.63%) and Kospi (-0.96%) are all down along with most other markets. Elsewhere, futures on S&P 500 (-0.29%) are extending losses as we type. Back to yesterday, where as we mentioned at the top, weak US homebuilder sentiment survey data played its part in the moves for markets. The November NAHB housing market index tumbled to 60 from 68 in October after expectations had been for just a 1pt drop. That’s the lowest reading since August 2016 and biggest one-month drop since February 2014. The details weren’t much better and falls into line with the expectation of a softer outlook for housing. As you’ll see in the day ahead we’ve got more housing data in the US today so worth keeping an eye on even if the October data for starts could be distorted by Hurricane Michael. As far as the day ahead is concerned, we’re fairly light on data today with Q3 employment stats in France, October PPI in Germany and November CBI total orders data in the UK the only releases of note. In the US, there should be some interest in the October housing starts and building permits data, especially following Fed Chair Powell’s recent comments acknowledging a slowdown in the housing market and yesterday’s homebuilder data. Away from that, the BoE’s Carney is due to appear before the Parliament’s Treasury Committee to discuss the Inflation Report, while the ECB’s Nouy and Bundesbank’s Weidmann are both scheduled to speak at separate events.
Futures Falls On Chip Carnage As World Await Brexit Verdict
Stocks in Europe faded early gains and S&P futures fell after a mixed session in Asia as chip stocks were taken to the woodshed on poor guidance from Nvidia and Applied Materials sparked fears that the chip bull run is over, while investors wondered whether China and America can de-escalate their trade war after mixed signals by US officials just days before the G-20 summit. The euro failed to rebound while the sterling halted its biggest drop in 2 years after some of the most dramatic 24 hours yet in the Brexit process and another turbulent week for world markets. With reports of a UK leadership coup still rife and fear that the country could crash out of the EU without an agreement, cable struggled to rise above $1.28. Meanwhile traders around the world were waiting for an outcome from the ongoing Brexit saga: “If and when a vote on the withdrawal agreement occurs is uncertain. Whether the withdrawal bill is passed by both houses of Parliament is uncertain,” Joseph Capurso, a senior currency strategist at CBA, said in a note. “Whether the Prime Minister resigns or is challenged for the leadership is uncertain. And, whether there is a second referendum and/or an election is uncertain.” Fears over political turmoil in the UK and Italy dragged Europe's Stoxx 600 back into the red, set for its first weekly drop in three, trimming Friday’s gain as AstraZeneca's drop weighed on the gauge after a cancer-drug setback while telecom names were outperforming. Utilities started the session lower in the wake of yesterday’s ECJ decision which deemed the UK’s scheme for ensuring power supplies during the winter months as a violation of state aid rules. Other individual movers include Vivendi (+4.2%) sit at the top of the Stoxx 600 after posting impressive Q3 sales metrics and announcing a potential sale of part of their Universal Music Group division. Elsewhere, AstraZeneca (-2.3%) and Shire (-1.3%) have been seen lower throughout the session after both posting disappointing drug updates. Not helping sentiment, ECB head Mario Draghi said the bank still plans to dial back its stimulus at the end of the year, but acknowledged the economy had hit a soft patch and inflation may rise more slowly than expected. “If firms start to become more uncertain about the growth and inflation outlook, the squeeze on margins could prove more persistent,” Draghi told a conference. Earlier in the day, Asian shares ended the session in the red (MSCI Asia -0.2% to 151.52), led lower by declines in Japan, even as China and Hong Kong rose after initial reports the United States might pause further China tariffs were denied by Commerce Secretary Wilbur Ross who damped hopes of any imminent trade deal with China. The Nikkei fell 0.6% pressured by a drop in the USDJPY after China Mofcom began an investigation into alleged dumping of machine tools by Japanese firms. The Hang Seng (+0.3%) and Shanghai Comp. (+0.4%) swung between gains and losses after continued liquidity inaction by the PBoC which skipped Reverse Repos for a 16th consecutive occasion. S&P futures were hit on fresh slowdown concerns, this time out of the semiconductochip space, after Nvidia gave a dire sales forecast, projecting a 20% drop in revenue while a disappointing outlook from Applied Materials indicated the chip industry is holding off on expansion plans in the face of a murky outlook for electronics demand. The chipmaking sector saw another bout of selling in Asia, wiping at least $11.2 billion in market value amid signals that demand for servers, personal computers and mobile is falling. Also falling after hours were shares of AMD and Intel, dragging Nasdaq futures lower. "It started with Apple, then Nvidia ... Since performances of these companies set the tone for the global tech and chip industries, related Japanese stocks will likely be sluggish for a while,” said Takatoshi Itoshima, a strategist at Pictet Asset Management. The Bloomberg Dollar Spot Index was little changed after Fed Chairman Powell flagged his concern over potential headwinds for the U.S. economy, while the pound staged a modest rebound on reports that some pro-Brexit ministers decided to stay in their governmental posts. The pound gained as U.K. Prime Minister Theresa May defied demands to quit and amid reports her environment secretary wouldn’t resign, following the resignation of several ministers Thursday. The yen rallied as trade stress simmered, with investors trying to gauge whether China and the U.S. can de-escalate their dispute. Also under water was the cryptocurrency Bitcoin, which hit a one-year trough overnight. It had tumbled 10 percent early in the week when support at $6,000 gave way. It was last changing hands at $5,500 on the Bitstamp platform. Treasuries were steady while 10-year yields on German bonds were set for their biggest weekly fall in three weeks, in a sign that the Brexit uncertainty and worries about Italy’s finances, continued to support demand. Italian bonds edged higher even as European Commission Vice President Valdis Dombrovskis said in an interview with Il Sole 24 Ore that the country’s government was openly defying EU budget rules. Emerging-market currencies consolidated recent gains while oil prices extended their rebound. Oil prices rose, helped by a decline in U.S. fuel stockpiles and the possibility of a cut in OPEC output. Brent (+1.3%) and WTI (+1.1%) are both in the green and continuing their rebound seen yesterday with WTI hovering around USD 57.00bbl. Energy newsflow remains light, post-yesterday's DoE report, however, Iraq’s North Oil Co. have announced that they have resumed Kiruk oil exports heading towards the Turkish port of Ceyhan. Looking ahead, the main highlight on the calendar will be the Baker Hughes rig count. Elsewhere, natural gas futures are relatively steady after their 19% decline yesterday which came in the wake of a 20% increase the day before. In geopolitical news, US Republican and Democrat Senators filed a bipartisan bill seeking to suspend arms sales to Saudi Arabia in response to war in Yemen and killing of journalist. North Korean Leader Kim inspected test of new high-tech tactical weapons, according to Yonhap citing North Korean state media Today's data include October industrial production and capacity utilization. Viacom is among companies reporting earnings Market Snapshot
S&P500 futures down 0.3% to 2,725.25
STOXX Europe 600 down 0.01% to 358.38
MXAP down 0.2% to 151.52
MXAPJ up 0.2% to 486.84
Nikkei down 0.6% to 21,680.34
Topix down 0.6% to 1,629.30
Hang Seng Index up 0.3% to 26,183.53
Shanghai Composite up 0.4% to 2,679.11
Sensex up 0.5% to 35,446.11
Australia S&P/ASX 200 down 0.1% to 5,730.55
Kospi up 0.2% to 2,092.40
Brent futures up 1.2% to $67.41/bbl
Gold spot up 0.3% to $1,216.36
U.S. Dollar Index little changed at 96.93
German 10Y yield rose 0.8 bps to 0.368%
Euro up 0.2% to $1.1346
Italian 10Y yield rose 0.3 bps to 3.12%
Spanish 10Y yield fell 1.4 bps to 1.617%
Top Overnight News
Fed Chairman Jerome Powell has laid out a scenario for a pause in the central bank’s interest-rate hiking campaign sometime next year by highlighting potential headwinds to the U.S. economy.
British Prime Minister Theresa May is defying demands to quit as she battles to keep control of her fractious government long enough to deliver a Brexit deal that’s drawn ire from across the political spectrum.
Pro-Brexit ministers Michael Gove, Liam Fox, Chris Grayling, Penny Mordaunt and Andrea Leadsom have decided together not to quit the government, Times reporter Tim Shipman said on Twitter.
ECB’s Draghi sees no reason for expansion to come to abrupt end, he said at an event in Frankfurt, Germany.
PG&ECorp. rallied as much as 49 percent in extended trading Thursday after the head of the California Public Utilities Commission said he can’t imagine allowing the state’s largest utility to go into bankruptcy as it faces billions of dollars in potential liability from deadly wildfires
Deutsche Bank AG and Bank of America Corp. have been contacted by U.S. criminal investigators for information about transactions they handled for a small bank branch in Estonia that’s at the center of one of the biggest money-laundering investigations in history, according to two people familiar with the matter.
Asia-Pac stocks traded indecisively as the region lacked fresh catalysts and as uncertainty regarding Brexit and US-China trade played on investor’s minds. ASX 200 (-0.1%) and Nikkei 225 (-0.6%) were choppy with outperformance of tech and mining names in Australia overshadowed by a lacklustre broader market, while the Japanese benchmark was subdued by mild flows into the JPY and after China Mofcom began an investigation into alleged dumping of machine tools by Japanese firms. Elsewhere, Hang Seng (+0.3%) and Shanghai Comp. (+0.4%) swung between gains and losses after continued liquidity inaction by the PBoC which skipped OMOs for a 16th consecutive occasion, while participants were also tentative amid ongoing trade uncertainty after conflicting reports regarding the next round of China tariffs being placed on hold which USTR Lighthizer later denied. Finally, 10yr JGBs were mildly higher with prices underpinned amid an indecisive tone seen in stocks and with the BoJ also present in the market for JPY 680bln of JGBs in the belly to super-long end. Top Asian News - China’s Kindergarten Crackdown Is the Latest Disaster for Stocks - Modi Is Said to Enlist Tata for Jet Airways Rescue Ahead of Vote - Philippines Shuts 3 Miners, Suspends 9 Others After Review - Indian Central Bank Board to Discuss Surplus Funds Transfer European equities trade relatively flat (Eurostoxx 50 +0.2%) in the wake of mixed trade headlines overnight for the US and China. Performance across European indices is relatively equal whilst focus once again falls on the FTSE 100 (U/C) which remains at the whim of Brexit-inspired fluctuations in the GBP. Once again, potential upside for the index is being capped by losses in domestically focused banking names (RBS -3.0%, Lloyds -2.1%) as Brexit uncertainty continues to dampen investor sentiment. In terms of sector specifics, most sectors are trading higher with mild outperformance seen in telecom names. Utilities started the session lower in the wake of yesterday’s ECJ decision which deemed the UK’s scheme for ensuring power supplies during the winter months as a violation of state aid rules. Other individual movers include Vivendi (+4.2%) sit at the top of the Stoxx 600 after posting impressive Q3 sales metrics and announcing a potential sale of part of their Universal Music Group division. Elsewhere, AstraZeneca (-2.3%) and Shire (-1.3%) have been seen lower throughout the session after both posting disappointing drug updates. Top European News
Finnish Software Company Basware Is Said to Explore Sale
Vauxhall Owner Said to Weigh Closing a Factory Post-Brexit
Amid Brexit Gloom, Deutsche Bank Sees Frankfurt as Next London
Nyrstar Surges on Hopes Over Trafigura Refinancing Talks
GBP- The Pound is not the biggest net mover for a change, but still one of the most volatile and vulnerable as Cable pivots 1.2800 and EuGbp trades between 0.8850-80. The fall-out from Wednesday’s Cabinet meeting continues as UK PM May strives to sell the Brexit draft, but facing a rising rebellion within the Conservative Party that appears to have reached the critical mass required to trigger a no confidence vote. However, some positive news with a key Minister deciding not to follow others out of the Government, as Gove opts to stay rather than go. In terms of technical impulses, Cable is holding above yesterday’s 1.2725 low, ahead of chart support around 1.2710-00 that protects mtd and ytd troughs at 1.2696 and 1.2662 respectively, while near term resistance is seen around 1.2836 before 1.2850, but 1 bn option expiries at 1.2800 could well exert more influence into the NY cut. For EuGbp, several MAs form support blow 0.8850 and the 100 DMA at 0.8910 may hamper further gains if0.8900 is breached.
JPY- Maintaining a firm underlying safe-haven bid as broad risk sentiment remains fragile and China is reportedly investigating machine dumping by Japan – Usd/Jpy near the bottom of a 113.20-65 range.
EUCAD/CHF- All narrowly mixed vs the Greenback, with the single currency keeping afloat of 1.1300 and eyeing a Fib at 1.1358, while the Loonie is holding recent recovery gains through 1.3200 as oil prices continue their rebound and the Franc meanders between 1.0075-50 vs 1.1000+ earlier this week when the broad Dollar and DXY were in the ascendency (index well above 97.000 vs just below the figure presently).
EM- The Lira is off best levels, but still relatively bid after reports that the US could Turkish cleric Gulen in an attempt to assuage President Erdogan to adopt a less aggressive stance against Saudi Arabia over the Khashoggi killing. Usd/Try now near the middle of a 5.3240-3940 band.
In commodities, gold (+0.2%) is trading relatively flat after hitting new weekly highs of USD 1218.39/oz earlier in the session; following uneventful overnight trade. Elsewhere, Shanghai Zinc prices have risen due to London Metal Exchange stockpiles falling to decade-low levels. Brent (+1.3%) and WTI (+1.1%) are both in the green and continuing their rebound seen yesterday with WTI hovering around USD 57.00bbl. Energy newsflow remains light, post-yesterday's DoE report, however, Iraq’s North Oil Co. have announced that they have resumed Kiruk oil exports heading towards the Turkish port of Ceyhan. Looking ahead, the main highlight on the calendar will be the Baker Hughes rig count. Elsewhere, natural gas futures are relatively steady after their 19% decline yesterday which came in the wake of a 20% increase the day before. US Event Calendar
9:15am: Industrial Production MoM, est. 0.2%, prior 0.3%; Manufacturing (SIC) Production, est. 0.2%, prior 0.2%
11am: Kansas City Fed Manf. Activity, est. 11, prior 8
4pm: Total Net TIC Flows, prior $108.2b, Net Long-term TIC Flows, prior $131.8b
The Sensex was launched on January 1, 1986, with the base value of 100 set on April 1, 1979. The credit for coining the term, Sensex, goes to Deepak Mohoni, a stock market analyst and IIT, Kanpur graduate and IIM, Calcutta alumnus. As of September 20, 2017, the index was hovering above the 30,000 mark. It is the oldest index in the country ... Indian share markets traded on a volatile note today and ended marginally lower.. Benchmark indices ended lower for the fifth consecutive session today with Nifty ending below the 11,150-mark. At the closing bell, the BSE Sensex stood lower by 65 points. Meanwhile, the NSE Nifty ended down by 19 points. Bharti Infratel was the top loser in NSE. Bitcoin tops $10,000 for first time since February pre-halving 08 May, 2020, 08.56 AM IST. Bitcoin rose as much as 2.2 per cent to to $10,015 on Friday in early Asia trading, taking it into five figures for the first time since Feb. 24. BSE Sensex 30 Streaming Chart Get instant access to a free live streaming chart of the BSE Sensex 30. The chart is intuitive yet powerful, offering users multiple chart types including ... BSE Sensex 30 Candlestick Patterns Dozens of bullish and bearish live candlestick chart patterns for the BSE Sensex 30 index and use them to predict future market behavior.
Price of a stock VS Value of a stock - indian stocks basics - huge profit indi
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