Asian shares edged up on Monday as risk assets basked in the glow of the upbeat October payrolls report, though caution was warranted ahead of a reading on US inflation that could spook the rate horses.
The congressional passage of a long-delayed US $1 trillion infrastructure bill cheered investors, though a broader social safety net plan remains elusive.
Data out over the weekend also showed China’s exports beat forecasts in October, though imports lagged.
Early moves were modest with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.1%. Japan’s Nikkei added 0.3%, but was just short of the recent five-week peak. Nasdaq futures were off 0.2%, after 10 straight sessions of gains which left the index looking over extended. S&P 500 futures dipped 0.1%.
In escalation of the Future group-Amazon feud, Future Retail Ltd’s independent directors have urged the Competition Commission to revoke the approval given two years ago for Amazon’s deal with Future Coupons, alleging that the e-commerce major had made false statements for getting the regulatory nod. Future Retail Ltd’s (FRL) independent directors on Sunday wrote to the Competition Commission of India (CCI) Chairman on the matter.
Terming whistle-blower allegations on loan evergreening as “grossly inaccurate and baseless”, Indusind Bank on November 6 admitted to have disbursed 84,000 loans without customer consent in May owing to a “technical glitch”. Lending without the consent was reported by the field staff in two days, and the glitch was also rectified expeditiously, the private sector lender said in a clarification. On Friday, there was a media report about anonymous whistleblowers writing to the bank management and the RBI about BFIL, the microlending-focused subsidiary of the bank, allegedly resorting to evergreening of loans, wherein existing borrowers unable to pay dues were given new loans to present the books as clean.
A vulnerability at a CDSL subsidiary, CDSL Ventures Limited (CVL), has exposed personal and financial data of over 4 crore Indian investors twice in a period of 10 days, according to cyber security consultancy startup CyberX9. The Central Depository Services (India) Limited (CDSL) is a Sebi registered depository and CDSL Ventures Ltd is a KYC registering agency separately registered with the Securities and Exchange Board of India (Sebi).
In primary markets, issue of Paytm’s parent company, One 97 Communication, will open for subscription on Monday. The issue aimed to raise ₹18,300 crore with a price band of ₹2,080-2,150 will close for subscription on 10 November.
Meanwhile, Friday’s US robust payrolls report included upward revisions to the previous couple of months and another strong reading on wages.
Tightness in the labour market combined with dislocation in global supply chains should result in another high reading for US consumer prices due on Wednesday, with any upside surprise likely to rekindle talk of an earlier Federal Reserve hike.
No less than six Fed officials are speaking on Monday, with the most attention likely on Vice Chair Richard Clarida who is talking on Fed and ECB policy.
After some wild swings, Treasuries still managed to end last week with a rally, thanks partly to a huge drop in UK bond yields where short-dated debt enjoyed its best week since 2009 after the Bank of England skipped a chance to hike.
That led the market to push out the likely timing and pace of tightening not just there, but in Europe and the United States too. Fed Funds now have a rate rise fully priced by September 2022, instead of July, a second not until February 2023 instead of December 2022.
Yields on 10-year treasuries dived 10 basis points on the week and were last at 1.46%. The drop took a little steam out of the dollar, which had hit a more than one-year high after the payrolls data. The dollar index was holding at 94.290, from a top of 94.634.
Still, the BoE’s shock decision left sterling down 1.4% over last week and trading at $1.3489 , while the euro touched a 16-month trough before steadying at $1.1563 .
The dollar had more trouble sustaining its bull run on the Japanese yen, leaving it testing support around 113.25 .
The retreat in bond yields was a boon for gold, which offers no fixed return, and lifted it to $1,815 an ounce .
Oil prices firmed after OPEC+ producers rebuffed a US call to accelerate output increases even as demand nears pre-pandemic levels.
Saudi Aramco also raised its official selling price of crude to all buyers across the globe. Brent rose 22 cents to $82.96 a barrel, while U.S. crude gained 34 cents to $81.61 per barrel.
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