What changed for market overnight: Gift Nifty to global market cues for Sensex today
3 min read 09 Aug 2023, 07:25 AM ISTCredit rating agency Moody’s cuts ratings of several US regional banks and placed some big lenders on review for potential downgrade. It warned US banks will find it harder to make money as interest rates remain high, funding costs climb and a recession looms.
PremiumAsian markets traded mixed on Wednesday following an overnight selloff on Wall Street sparked by concerns over the health of the US banking system.
Credit rating agency Moody’s cut ratings of several US regional banks and placed some big lenders on review for potential downgrade. It warned US banks will find it harder to make money as interest rates remain high, funding costs climb and a recession looms.
In Europe, the Italian government imposed a one-off 40% tax on banks on profits reaped from higher interest rates. Citigroup analysts calculated the tax could wipe nearly a fifth off Italian banks' 2023 net income, Reuters reported.
Meanwhile, in Asia, investors watch for China’s inflation figures for July, which reported a 0.3% fall in consumer prices from a year ago. The producer prices in July also fell 4.4% YoY, the National Bureau of Statistics data showed.
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Asian Markets
Japan’s Nikkei 225 fell 0.24%, while the Topix declined 0.3%. South Korea’s Kospi rallied 0.88%, while the Kosdaq gained 1%.
In Australia, S&P/ASX 200 was trading flat.
Hong Kong’s Hang Seng index futures were trading around 100 points higher at 19,084.
Meanwhile, Gift Nifty was trading at 19,602 as compared to Nifty futures’ previous close of 19,609, indicating a tepid start for the Indian benchmark indices.
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China slides into deflation
China’s economy is witnessing signs of deflation pressure as consumer and producer prices both declined in July from a year ago
The consumer price index dropped 0.3% last month from a year earlier, the National Bureau of Statistics said Wednesday, marking its first decline since February 2021.
Producer prices fell for a 10th consecutive month, contracting 4.4% in July from a year earlier, slightly worse than expected. It’s the first time since November 2020 that both consumer and producer prices registered contractions, Bloomberg reported.
US market
US stocks ended lower on Tuesday amid worries about the health of the banking system after Moody’s cut the credit ratings for 10 small and mid-sized lenders.
The Dow Jones Industrial Average dropped 158.64, or 0.4%, at 35,314.49, while the S&P 500 fell 19.06, or 0.4%, at 4,499.38. The Nasdaq composite ended 110.07, or 0.8%, lower at 13,884.32.
The banks index shed 1.1%, while the KBW Regional Banking index dipped 1.4%. The S&P 500 Banks index has slipped 2.5% in 2023 so far as against a 17.2% rally by the S&P 500.
Among stocks, Goldman Sachs and Bank of America fell around 1.9% each, while Bank of New York Mellon declined 1.3% and Truist dipped 0.6%.
Beyond Meat plunged 14.3%, while Eli Lilly surged 14.9% and Dish Network jumped 9.6%.
Europe
European stocks ended lower after the Italian government approved a 40% windfall tax on lenders. The pan-European STOXX 600 index lost 0.2%.
Italy's FTSE MIB plunged 2.1% to hit four-week lows. Britain’s FTSE 100 fell 0.4% to 7,527.42, while Germany’s DAX dropped 1.1% at 15,774.93. France’s CAC 40 declined 0.7% at 7,269.47.
Italian banks such as Intesa Sanpaolo, Banco BPM and UniCredit dipped between 5% and 9.1%.
Danish drugmaker Novo Nordisk rose 17.3% to a record high, after it said a large study had shown its obesity treatment Wegovy also had a clear cardiovascular benefit.
Crude oil price today
Crude oil prices fell as concerns over slow demand from top crude importer China grew after bearish trade data.
Brent crude futures fell 0.2% to $86.00 a barrel, while US West Texas Intermediate (WTI) crude was at $82.73 a barrel, down 0.2%.
Gold rate today
Gold prices rose as bond yields and dollar weakened a day ahead of the release of US consumer price data.
Spot gold rose 0.1% to $1,926.29 per ounce, while US gold futures were flat at $1,960.30.
(With inputs from Agencies)
