Tuesday Morning Briefing: Asian Shares Sluggish As Fed Hike Looms
Asian shares opened mixed tracking weak overnight cues from Wall Street, as investors weighed growth prospects for China amidst rising expectations of a U.S. interest rate hike next week.
The dollar rose for the second session, while the euro weakened due to concerns surrounding the French presidential race. SGX Nifty futures indicate a flat opening for Indian equities after the benchmark index gained 0.74 percent on Monday.
Fed Hike Looms
The global equities rally, which was sparked by President Donald Trump's vow of a 'phenomenal' tax announcement, faded after Federal Reserve Chair Janet Yellen hinted at a more aggressive rate hike path after leaving little doubt that the U.S. central bank will raise interest rates at its March 14-15 policy meeting.
The odds for a rate hike next week are already up to 96 percent, according to futures rates tracked by Bloomberg.
The S&P 500 Index declined 0.3 percent on Monday, while the Dow Jones Industrial Average fell 0.34 percent, dragged by financial stocks.
Attention will now shift to the U.S. employment report for February due Friday.
Also Read: Trump's New Ban Less Restrictive But Likely to Face Suits
China's Growth Woes
Chinese Premier Li Keqiang set a 2017 growth target of “around 6.5 percent, or higher if possible” in a report to the annual National People's Congress gathering in Beijing even as he raised the specter of "graver" internal and external challenges ahead.
Economists surveyed by Bloomberg project 6.5 percent expansion this year.
Oil Holds Near $53
Oil traded near $53 a barrel after Iraq said it was ready to cut production in the second half of the year if Organisation of Petroleum Exporting Countries decides to limit output.
In latest signs of a pickup in spending, oil companies are reviving investment after a two-year rout as production cuts by OPEC and other nations helped support prices, the International Energy Agency said. This helps in easing but not eliminating the risk of a future supply crunch, the Paris-based agency said Monday.
Brent crude for May settlement rose 11 cents to $56.01 per barrel on the London-based ICE Futures Europe exchange while West Texas Intermediate for April delivery declined 3 cents at $53.20 a barrel on the New York Mercantile Exchange.
Copper futures tumbled 1.5 percent while iron ore dropped 1.7 percent after Chinese Premier Li Keqiang warned of larger challenges ahead.
Also Read: Investors Start Doubting Oil Rally After Failure to Top $55
Flat Start?
The SGX Nifty futures traded largely unchanged at 8,972 as of 7:00 a.m. Indian shares snapped a two-day losing streak on Monday, led by index heavyweight Reliance Industries Ltd. and automakers including Tata Motors Ltd. Gains were capped by a drop in information technology stocks due to U.S. visa concerns.
Tech Mahindra Ltd. and Coal India Ltd. will be in focus today. The technology major announced a deal to acquire healthcare software firm CJS Solutions Group LLC, while the board of the government-owned coal producer approved an interim dividend of Rs 18.75 per share.
Also Read: Complete Remonetisation Within 2-3 Months, Says RBI's Viral Acharya
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