Tuesday Morning Briefing: Asian Shares Fall; Gold Gains
Your Tuesday morning briefing: SGX Nifty flat ahead of key earnings.
Asian shares started off on a negative note on Tuesday, tracking the overnight fall in the U.S., as investors turned risk averse amid political uncertainties globally.
Wall Street ended lower, dragged down by oil stocks, as concerns over President Donald Trump’s protectionist policies weighed on investor sentiment.
Gold advanced for a third day, climbing 0.8 percent to $1,229.57 an ounce, the highest since November, while dollar stood near a 10-week low against the yen on safe haven demand.
Brewing Political Risk
Wall Street analysts are re-evaluating their economic forecasts over the uncertainty surrounding Trump's effect on markets and U.S. economic growth.
"Following the election, the positive shift in sentiment among investors, business, and consumers suggested that the probability of tax cuts and easier regulation was seen to be higher than the probability of meaningful restrictions to trade and immigration," Goldman Sachs Group Inc. economists led by Alec Phillips wrote in note published late last week.
"One month into the year, the balance of risks is somewhat less positive in our view."
Traders are turning cautious on European countries where anti-establishment movements are gaining traction ahead of elections. In France, the National Front’s Le Pen on Sunday fired at globalization and monetary integration, calling for a referendum on European Union membership and a limit on immigration.
Oil Inventory Overhang
Oil prices held losses with U.S. stockpiles forecast to grow for a fifth straight week.
U.S. crude inventories probably rose 2.5 million barrels last week, according to a Bloomberg survey of analysts before an Energy Information Administration report on Wednesday.
U.S. drillers boosted rig count to the most since October 2015, according to data from Baker Hughes Inc.
Brent crude for April settlement fell 1.9 percent in London to $55.72 per barrel while West Texas Intermediate for March delivery rose 17 cents to $53.18 a barrel in Sydney.
Weak Start?
The SGX Nifty Index traded largely unchanged at 8,811 as of 7:05 a.m., indicating a weak start for the Indian markets.
Indian shares closed higher for the fourth straight session on Monday, with the Nifty 50 Index ending up 0.6 percent at 8,796 amid hopes of an interest rate cut by the Reserve Bank of India in its February 8 policy review.
Shares of Tube Investments of India Ltd. and Gujarat State Petronet Ltd. will be in focus today. Tube Investments’ net profit jumped 67 percent while Gujarat State Petronet’s net profit declined 4 percent in the quarter ended December.
Companies such as Tata Steel Ltd., Bharat Heavy Electricals Ltd., IDBI Bank, and Punjab National Bank are scheduled to post their quarterly results later in the day.