Issue no : 1
The first issue is out!
I hope you enjoy reading this and learn as much as I did.
Happy reading!
Let us dive right in our first set of news!
Global Market Developments:
The International Monetary Fund forecast a shallower contraction for the global economy this year while cautioning that the recovery is expected to strengthen only gradually and that reopening has stalled as the pandemic continues to spread. It forecasts Global GDP to contract by 4.4% YoY from a previous estimate of 5.2% contraction in 2020. Upward revisions were made to US, Euro-zone and Chinese growth projections. Downward revisions were made to EM economies, particularly for the ASEAN region and the Indian economy.
China’s central bank added more funds than expected to its banking system to support the economic recovery from the pandemic and assist companies to pay taxes due next week. The People’s Bank of China offered CNY 500 billion via its one-year medium-term lending facility, according to a statement on Thursday, 15 October. Some CNY 200 billion of the funding comes due Friday, 16 October. It further offered CNY 50 bn of 7-day reverse repurchase agreements.
South Korea’s central bank left its key interest rate unchanged amid signs that a resurgence of the coronavirus at home is waning and exports and inflation are picking up. The Bank of Korea maintained its seven-day repurchase rate at 0.5%.
Singapore’s central bank signaled it would keep monetary policy unchanged for longer to complement a massive fiscal stimulus supporting the economy’s recovery. The Monetary Authority of Singapore, which uses the exchange rate as its main tool rather than a benchmark interest rate, kept its policy settings unchanged on Wednesday, 14 October but the Singaporean economy might provide further fiscal support to the tune of SGD 100 billion (USD 74 billion) next year to strengthen an economy that is expected to face significant uncertainty next year, according to the Transport Minister Ong Ye Kung.
U.S. Treasury Secretary Steve Mnuchin said he and House of Representatives Speaker Nancy Pelosi were “far apart” on another coronavirus economic relief package, and that a deal would be hard to reach before the Nov. 3 elections, but he would keep trying.
Domestic market developments:
India’s federal government on Tuesday, 13 October allowed 20 states to raise market loans amounting INR 688.25 billion rupees to meet revenue shortfall in the current financial year ending in March 2021, a government statement said.
The International Monetary Fund (IMF) forecast India’s gross domestic product (GDP) to contract 10.3% in FY21, in a downward revision of its June forecast of a 4.5% drop, reflecting the worse-than-anticipated contraction in economic activity in the fiscal first quarter due to the nationwide lockdown, as well as the rapidly-spreading pandemic. However, a sharp rebound of 8.8% YoY was forecasted for FY22.
Government bond prices ended in red on 16 October as market sentiment was dented over government’s announcement of additional INR 1.1. tn borrowing to fund the shortfall in GST compensation for states. However, market participants are also of the view that RBI may come up with buying short term papers in order to prevent hardening of the yield curve. The 10-year benchmark 5.77%, 2030 bond ended at 5.93% yield, compared with 5.90% on Thursday, 15 October.
Commodity market developments:
“ The units of Coal India Ltd should be allowed to independently set fuel prices in a bid to increase competition and reduce the price of coal in the country.”, India’s Coal Minister Pralhad Joshi said.
Gold is trading 0.61% lower as fading hopes of a new fiscal stimulus package before the November 3 presidential election supported a rebound in the dollar index and weighed on gold prices. The economic uncertainty amid the resurgence of the coronavirus across Europe and consolidation in the US treasury bonds have supported gold prices at lower levels. Gold is trading at USD 1895.15/oz.
Oil is trading 3.0% lower as new restrictions to stem a surge in coronavirus infection have increased uncertainty over the outlook for economic growth and a recovery in fuel demand. Some European countries are reviving curfews and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Friday, 16 October.
Forex Markets :
The DXY is currently trading lower at 93.63 level after edging higher in the early European session following a spike in Covid-19 cases on both sides of the Atlantic, triggering fears of fresh lockdowns and worries over the detrimental impact on the economic recovery. US fiscal stimulus and retail sales are also of interest to the traders that is limiting sharp upside in the DXY.
The EUR/USD pair is trading higher in today's session at 1.1724 level by 0.15% as dollar edged higher due to rising coronavirus cases and growing restrictions in the European region.
The city of London is set to enter a tighter lockdown from midnight, while Paris, and a number of other major French cities, is set to suffer a curfew for the next four weeks. The GBP/USD pair is currently trading higher at 1.2958 level (+0.33%) after suffering heavy selling overnight following the European Union's demand that Britain offer more concessions to secure a trade deal or brace for a disorderly end to the post-Brexit transition period in three months. The pair is rising on hopes that PM Johnson allows for more Brexit talks but rising coronavirus cases and Manchester's rejection of new measures may limit sterling's rise.
The USD/JPY pair is trading lower in today's session at 105.30 level by 0.14%. A modest USD pullback, weaker US bond yields exerted downward pressure on the pair.
Stock Markets:
US stock markets ended lower in the previous trading. The Dow Jones (0.39%) and S&P 500 (0.01%) ended in the green.
Asian stock markets are trading broadly stronger this morning. Australia ASX-200 (0.85%), KOSPI (0.24%), Hang Sang (0.64%), and Nikkei (1.11%) are trading in the green while Shanghai Composite index (-0.71%) is trading in red.
ASX-200 : Market Index of Australian Securities Exchange
KOSPI ( Korea composite stock price index) : Market Index of Korean Stock Exchange
Hang Sang : Market Index of Hong Kong Exchange
Nikkei : Market Index of Tokyo Stock Exchange (Japan)
Shanghai Composite index : Market Index of Shanghai Stock Exchange (China)
Well that’s it for the first issue. I hope I this was worth your time. I wish you read the next issue as well.
Thank you for reading!
Nice work Devanshi 👏