Markets may remain sluggish; Wipro, Indiabulls, Jet Airways in focus

Asian stocks skidded on Friday as rising US Treasury yields again rattled equity investors while hoisting the dollar to a three-month high

US stocks had dropped sharply after the Federal Reserve chair disappointed investors by not indicating that the Fed might step up purchases of long-term bonds

Markets are likely to stay sluggish on Friday while trends in SGX Nifty suggest a weak opening of Indian benchmark indices. On Thursday, the BSE Sensex ended at 50,846.08, down 598.57 points or 1.16%. The Nifty closed at 15,080.75, down 164.85 points or 1.08%.

Asian stocks skidded on Friday as rising US Treasury yields again rattled equity investors while hoisting the dollar to a three-month high, which in turn dragged the Japanese yen to an eight-month trough.

Energy markets were not spared the volatility either, with oil prices surging more than 5% overnight to their highest in over a year, after OPEC and its allies agreed to keep production unchanged into April as demand recovery from the coronavirus pandemic was still fragile.

US stocks had dropped sharply on Thursday after Federal Reserve chair Jerome Powell disappointed some investors by not indicating that the Fed might step up purchases of long-term bonds to hold down longer-term interest rates.

Even though Powell made it clear that the Fed was not close to changing its ultra-loose monetary policy stance anytime soon, some analysts still that worried rising Treasury yields could herald higher borrowing costs, thereby limiting the fragile US economic recovery.

Bond investors with a bearish view of Treasuries took heart in Powell’s remarks and sold the notes. The yield on 10-year Treasuries climbed above 1.5% to as high as 1.5727%, but still below a one-year high of 1.614% struck last week.

The yield curve, a measure of economic expectations, steepened on rising yields, with the gap between two- and 10-year yields widening by another 6.3 basis points overnight.

Wipro Ltd on Thursday said it has agreed to buy British consulting firm Capco for $1.45 billion in cash, in the company’s biggest bet since it was founded

Indiabulls Housing Finance has raised $150 million ( ?1,091 crore) by issuing foreign currency convertible bonds, the company said on Thursday.

The new owners of Jet Airways (India) Ltd will have to apply afresh for airport slots that were taken away from it when the airline was grounded in April 2019, aviation authorities told a bankruptcy court on Wednesday. No slots are immediately available, but the application will be considered when it is submitted, lawyers representing the Directorate General of Civil Aviation (DGCA) and the ministry of civil aviation (MoCA) informed the Mumbai bench of the National Company Law Tribunal (NCLT).

Tech firm Capgemini on Thursday said it would cover the cost of covid vaccines for all eligible employees and their dependents in India. It has joined hands with wellness partners to assist team members with any query related to the vaccine, including medical queries that employees or their dependents may have.

Meanwhile, rising Treasury yields bolstered demand for the dollar. The dollar index jumped 0.61% against a basket of major currencies to 91.651, within sight of a three-month high of 91.663.

A stronger dollar hobbled the yen. By early Friday, the yen was soft at 107.95, a level not seen since July 1. The euro was also tripped by a firmer dollar, with the common currency sluggish at $1.19665.

Climbing yields and dollar strength pummeled gold prices, which sank to a nine-month low as investors sold the precious metal to reduce the opportunity cost of holding the non-yielding asset.

Spot gold slid another 0.2% early Friday to stand at $1,694.0600 per ounce, trading below $1,700 for the first time since June 2020.

Oil prices, on the other hand, extended gains on early Friday after zooming higher overnight.

US crude futures climbed 0.85% to $64.38 a barrel, after scaling its January 2020 peak of $64.86 overnight. Analysts said Opec’s decision to not increase output in April as many had expected showed what it is prepared to do to deplete an inventory overhang and keep prices elevated.
 

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