Markets may react to Trump's trade war-mongering
After a long holiday weekend, Indian equity benchmarks are likely to react on Monday to the import duties imposed by the US on steel and aluminium. The big overhang will be the possibility of a full-fledged retaliatory trade and currency war. The SGX Nifty is indicating that the Nifty could open around 10,345 at the opening bell.
The ruling NDA put up a stellar show in the North-East assembly elections. The BJP won hands down in Tripura and is set to form coalition government in Nagaland and has managed to install BJP-supported government in Meghalaya. From the capital markets perspective, this will be viewed as a reaffirmation of Modi's government's sweeping reforms process that began in 2014. Now, BJP would be looking forward to putting up a decent show in Karnataka and Rajasthan, and If that happens, BJP's hopes of returning to power in 2019 would be bright. That would be a boost for the stock markets.
Most Asian markets began the week on a downbeat note. Japanese Nikkei index has extended losses from Friday’s session, with metal stocks extending slide on fears of US led global trade war. Additionally, the strengthening yen is putting pressure on Japanese equities. Hong Kong’s Hang Seng has lost 357 points, while China’s Shanghai Composite has shed 2 points. China has targeted economic growth at 6.5% for this year, according to a work report delivered by Premier Li Keqiang at the National People’s Congress meeting in Beijing.
Indian equity indices had cautious opening on Thursday considering the turmoil in the global markets. However, indices made an attempt to move higher, but the recovery attempt was unsuccessful and indices ended the session near the day’s low. Nifty closed the day at 10,458, down by about 35 points and BSE Sensex closed at 34,047, lower by 137 points. The broader indices ended lower as Mid-cap and Small-cap indices slipped 0.78% and 0.20%, respectively. All sectoral indices ended lower, with Nifty PSU index emerging as top loser, down 1.87%, followed by Nifty Media.
The US equity markets came under pressure early in the session as market participants expressed concern after President Donald Trump announced upcoming tariffs on steel and aluminium raising fears of potential trade war. But as the day progressed, markets pared most of their losses with the Nasdaq and the S&P 500 climbing into positive territory. The Dow, however, ended the session in the red for a fourth straight session. The Nasdaq rose 77 points to 7,258 and the S&P 500 added 14 points to 2,691, while the Dow ended with modest loss of 71 points to 24,538.
The European stocks ended the week lower amid lacklustre economic news and fears about brewing trade war following President Donald Trump’s announcement of tariff on steel and aluminium. Germany’s DAX plunged 2.27%, CAC 40 of France dropped 2.39% and UK's FTSE 100 finished lower by 1.47%.