Global bourses slump

Global bourses slump

It has been a bad Monday for global stock markets. Most Asian markets were down. And, Wall Street is on a downhill course. Key Wall Street indices hit their seven-week lows. All the major S&P indexes were down, with energy leading declines as oil prices slid on the possible return of Libyan production.

Shares of major banks sank after a report found more than $2 trillion in flows marked as possible money laundering or criminal transactions. A fresh probe by the International Consortium of Investigative Journalists and Buzzfeed published on Sunday alleged that several global banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money. More than 2,100 suspicious activity reports obtained by Buzzfeed detail the transactions.

The impact of this investigation aside, the rising cases of Coronavirus continue to dominate the market sentiment across the globe. Concerns over fresh lock-down curbs in Europe and the prolonged uncertainty over the new fiscal stimulus package in the U.S. have all combined to trigger a negative fall-out on the market course on Monday.

India story no different

In India, the story is no different. The 30-share BSE benchmark Sensex plunged 811.68 points or 2.09 per cent to 38,034.14. The NSE Nifty tumbled 254.40 points or 2.21 per cent to finish at 11,250.55. Foreign institutional investors were net buyers in the capital market as they purchased shares worth Rs. 205.15 crore on a net basis lastFriday, according to exchange data. The BSE Sensex posted the biggest one-day loss since August 31 and the lowest level since August 14. Investors feared that rising COVID-19 cases worldwide could force many governments to re-impose lockdown measures, hampering the global economic recovery.

Indian markets were in sync with their global peers. European countries such as Denmark, Greece, and Spain imposed restrictions on activity due to rising COVID-19 cases, which threatened to stall recovery.

A resurgence of coronavirus infections in Europe dimmed hopes of a quick global economic recovery. Hong Kong-listed shares of Standard Chartered and HSBC tumbled today, following reports that they allegedly moved large sums of suspicious funds.

Indian Rupee (INR) up against US dollar (USD)

The Indian rupee, in the meanwhile, strengthened by 7 paise to close at 73.38 against the U.S. dollar on Monday, extending its gains for the second day on the back of firm Asian currencies and weak crude oil prices. At the inter-bank forex market, the domestic unit opened at 73.43 and later rose to a high of 73.26 in the day trade. The rupee pared some of its gains to finally settle the day at 73.38 against the greenback, registering a rise of 7 paise over its previous close of 73.45.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.29 per cent to 93.19.

Bond yield in India above 6%

The yield on the benchmark 10-year government of Indian bonds stayed above 6% level at 6.01%, according to over-the-counter inter-bank yield quotes for this government bond maturity.

US Dollar (USD) indeed up

The US dollar index strengthened near 0.7% to trade above 93.5 on Monday, the highest on a closing basis since August 11th amid fears that mounting coronavirus infections in Europe could lead to another economic lockdown and more restrictions. Still, the Fed's cautious outlook, mixed economic data for the US, and lack of progress in a new fiscal stimulus package capped gains. Canadian currency mixed

The Canadian unit has been witnessing mixed trading across currencies. The Canadian dollar was trading lower against the U.S. currency 0.752 at 4.19 p.m. GMT. Against the Japanese Yen, too, the Canadian currency was ruling lower at 78.6566 at 4.23 p.m. At 5.0886, CAD was again lower against the Chinese Yuan at4.27 p.m. The Canadian unit was trading lower against the Indian rupee at 55.3109.

However, CAD was quoting higher against the British pound at 0.5877 at 4.21 p.m. Against the Euro, too, CAD was higher at 0.6402.

Brent down

The Libya factor has pushed the oil prices down on Monday. Brent crude futures dropped over 4% to trade around $41.4 a barrel. Libya, it may be recalled, has announced its return to production after a period of lock-down. Concerns over the fuel demand recovery have also caused the price drop. Spike in global coronavirus cases and prospects of fresh lock-downs haven’t helped the oil price cause. WTI crude fell more than 5% to trade around $38.9 a barrel.

K.T. Jagannathan