The US Fed's decision to cut interest rates by 25 basis points to a range of 1.75 per cent to 2 per cent will be the biggest factor giving direction to the markets today. This is the second time this year that the Fed has cut rates, although this time it has offered mixed signals on the next easing.
The U.S. central bank said the rate cut was intended “to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions. Meanwhile, it described the US economic outlook as "favourable". Later, during his news conference, Fed Chair Jerome Powell said the Fed did not see imminent recession, or think the central bank would cut rates to negative territory.
Following the rate cut, the Wall Street closed higher on Wednesday. The Dow Jones rose 0.13 per cent, the S&P 500 gained 0.03 per cent, and the Nasdaq Composite dropped 0.11 per cent. Asian shares edged higher on Thursday. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.03 per cent. Japan’s Nikkei rose 0.46 per cent, while Australian shares rose 0.23 per cent. Trends on SGX Nifty, the Singaporean Exchange for Nifty Futures, were suggesting a flat start to the domestic indices.
Next, the Bank of Japan and Bank of England will announce their interest rate decisions later in the day.
Back home, the Finance Minister's meet with heads of public sector banks today to review credit flow in the economy will be closely watched.
In commodities, oil prices edged lower after Saudi Arabia said it would quickly restore full production. Brent crude oil futures settled at $63.60 per barrel, a 1.47 per cent decline.
Factors such as the movement of rupee against the US dollar, oil price movement, foreign capital flows, and stock-specific action will also influence trading sentiment.
The sudden attack on Saudi Aramco’s facilities saw oil prices flare up and dented sentiment across global financial markets. Marc Faber, Editor and Publisher of The Gloom, Boom & Doom Report tells Puneet Wadhwa there are pockets of value emerging across the globe.
However, at the current juncture, some part of the portfolio should be in cash. Edited excerpts: How are you viewing the debate around the overall economic slowdown in India? The recent economic data has been very disappointing. We are not in an overall recession, but some sectors like automobiles are suffering...
