Indian stock markets are likely to be volatile on Friday amid a rally in global peers and a cut in domestic credit ratings outlook. Global equity markets soared to near record highs on Friday after China said it has agreed with the United States to cancel tariffs on each others’ goods in phases, a key demand of Beijing for sealing a deal to end a trade war that has hit economic growth and roiled markets world over.
MSCI’s gauge of stocks across the globe rose slightly to stand at 543.70, just a hair off the record high of 550.63 reached in January 2018. The index compiler’s gauge of Asia-Pacific shares outside Japan edged up 0.2% in early trade, while Tokyo’s Nikkei jumped 0.75% to a 13-month high.
China and the US have agreed to roll back tariffs on each others’ goods as part of the first phase of a trade deal, officials from both sides said on Thursday, in further signs of progress even as both continue to haggle over several contentious issues.
While US stocks pared gains on the report of opposition to the deal in Washington, the Dow and S&P 500 closed at all-time highs overnight. The Nasdaq missed a record close by less than two-tenths of a point. The S&P 500 ended 0.27% higher at 3,085.18. The pan-European STOXX 600 index also breached its January 2018 peak to come within a striking distance of its record high set in April 2015.
Back home, India’s credit ratings outlook was cut to negative from stable by Moody’s Investors Service on concern that government won’t be able to help stunted economic growth. Moody’s cited the growing debt burden and the government’s struggle to narrow the budget deficit. The rating company affirmed the nation’s foreign issuer rating at Baa2, the second-lowest investment grade score.
Amid growing concerns on the economy, the Financial Stability and Development Council (FSDC) chaired by finance minister Nirmala Sitharaman on Thursday reviewed global and domestic macroeconomic situation, and issues of financial stability and vulnerability, including those concerning non-bank lenders and credit rating agencies.
The dispute over the cancellation of registration of six Tata Trusts is set to be a protracted legal battle, as the trusts and tax officials differ over the end date of the registration, and whether it was a cancellation or a surrender. While the charitable trusts said they surrendered their registration in February 2015, the tax department, which cancelled the registration in October 2019, said there was no legal provision for surrendering the registration.
As investors wind back their buying in safe assets, the 10-year US Treasuries yield rose 11.8 basis points to 1.930%, marking the biggest daily increase since 9 November, 2016, which followed the surprise election victory of Donald Trump. The yield jumped to as high as 1.973%, a three-month peak, on Thursday and last stood at 1.924%.
The 10-year Japanese government bond yield rose to minus 0.050%, a 5-1/2-month high, as expectations of a Bank of Japan rate cuts dissipated in the past week or so.
In the currency market, the yuan stood firm while safe-haven currencies lost their edge. The offshore yuan traded at 6.9976 yuan per dollar, having hit a three-month high of 6.9530 per dollar in US trade on Thursday. The dollar climbed to 109.31 yen, reaching a five-month high of 109.49 the previous day.
The euro slipped to $1.1050, having marked a low of $1.10355 in US trade, its weakest since 16 October. This helped push up the dollar index to three-week highs of 98.236. The index last stood at 98.134.
Gold prices were at $1,467.9 per ounce, having hit a five-week low of $1.460.7 on Thursday.
US West Texas Intermediate (WTI) crude lost 0.1% to $57.09 per barrel in Asian trdae but has gained 1.4% so far this week.
Reuters contributed to the story
