Andrew L Dcunha
Mumbai, Sep 5: Indian market broke last week’s winning steak today and closed on a negative note. The BSE – Sensex index finally closed at at 16,713 - down 108 points. Nifty ended down 23 points at 5,017. Last week in 3 trading days Sensex went up by 6%. The indices traded weak right from the beginning today. The decline was led by refinery, IT and healthcare sectors. IT companies, which get more than 50 per cent of their revenues from the US and European markets, remained weak following turmoil in global financial markets, while banking stocks declined on fears of more hike in interest rate to tame inflation. Food inflation at 10.05 per cent for the week ended August 20. With the US economy failing to add any new jobs in August, recession worries came to the fore yet again and this led investors to dump Indian stocks that get a good part of their revenues from abroad. All eyes are now on the speech by US President Obama scheduled this Thursday where he is expected to unveil a new fiscal plan.
Asia stocks sank Monday, with heavy losses for financials and exporters among others, after a disappointing U.S. jobs report inflamed concerns about the health of the global economy. Nikkei dropped 1.8% to 8,784. Seoul Composite tanked 4.3% to 1,785. Taiwan, Straits and Chinese markets declined around 2% each. Markets in Europe slipped in line with their Asian counterparts. CAC and DAX were down over 3% each in trades. Markets in Europe will look towards the Central Bank's monthly policy meeting on interest rates on Thursday
US recession fears slowing fuel demand. Oil down
Brent crude fell below $112 a barrel on Monday, as fears of another US recession slowing fuel demand overshadowed supply concerns over a major shutdown of offshore oil production forced by Tropical Storm Lee. US employment growth ground to a halt in August, reviving recession fears and piling pressure on both President Barack Obama and the Federal Reserve to provide more stimulus to aid the frail economy. Front-month Brent fell 88 cents to $111.45 a barrel by 0624 GMT. Brent plunged almost $2 a barrel on Friday on the disappointing jobs data released in the US. US crude was down a dollar to $85.45 a barrel, after settling $2.48 lower at $86.45. Friday’s losses wiped out part of US crude’s 4.1% gain in the week through Thursday
Gold continues record breaking run
Gold prices in the local market rose 2% to a record high tracking firmness in the world market and due to a weak rupee. October contract on the Multi Commodity Exchange hit a record high of Rs 28,355 earlier in the day. International gold prices rose back above USD 1,900 an ounce on Monday as expectations grew that the United States could implement a further round of Monetary easing after Friday's weak payrolls data, while concerns over the euro zone debt crisis resurfaced.
The rupee stayed weak in afternoon trades on Monday as the dollar gained overseas with investors seeking safe-haven assets after bleak jobs data on Friday cemented view the United States might be slipping back into a recession.
Andrew L D Cunha, Managing Director, WinWin Fin Advisory Pvt. Ltd. Mangalore. Email: finadvisoryltd@yahoo.com
