Global market: SGX Nifty, First Republic Bank to FOMC — key triggers for today

Global market update: Amid FOMC meeting, US stock market finished higher on Tuesday though Us stock futures traded in tight range. As market is buzz with 25 bps rate hike in FOMC meeting today, US dollar and US bond yield has depreciated in early morning deals. Crude oil price is still under pressure as WTI crude oil is 0.42 per cent lower in morning session. However, First Republic after brutal sell off c Bank share price rebounded strongly on potential government backing to encourage buyers.

Here we list out key triggers that may dictate Indian stock market today:

US stock market

Ahead of FOMC meeting outcome, US stock market witnessed buying interest as market is expecting 25 bps interest rate hike. S&P 500 index gained 1.30 per cent, Dow Jones went up 0.98 per cent while Nasdaq skyrocketed 1.58 per cent on Tuesday session.

Speaking on US stocks’ rally, Marc Despallieres, Chief Strategy and Trading Officer at Vantage said, “Wall Street’s favorite volatility gauge tumbled as a rebound in stocks deepened, with a surge in banks and assurances from authorities easing concern the recent financial tumult would lead to a full-blown crisis. Whatever the case, the coordinated actions to resolve the banking turmoil have restored a semblance of order for now. The market’s so-called fear barometer, or VIX, saw its biggest two-day plunge since May.”

FOMC meeting in focus

As two days FOMC meeting is ending today and the final verdict on US Fed’s rate hike is expected today. However, market will keep a focus on the US Fed’s commentary on bank crisis in US as well.

On FOMC meeting outcome, Ritika Chhabra, Quant Macro Strategist at Prabhudas Lilladher PMS said, “Despite concerns regarding the ongoing banking crisis, the Fed will raise the FFR by 25bps in the upcoming FOMC meeting. The central bank will reiterate its commitment to restore price stability. It will try to allay financial stability concerns by tapping liquidity facilities, without changing its monetary stance.”

“If the US Fed raises interest rates, the cost of capital increases, leading to lower stock valuations. Following the US Fed’s announcement of a likely increase in interest rates, foreign institutional investors (FIIs) have started pulling out of Indian and other emerging equity markets. We are a major importer of crude oil, and continuous selling by FIIs results in rupee depreciation and a higher import bill. This, in turn, has a negative impact on our current account balance,” said Arvinder Singh Nanda, Senior Vice President at Master Capital Services.

First Republic Bank share price

Stocks of the crisis-hit First Republic Bank witnessed brutal sell off in the morning session on Tuesday. But, after the news break of US government’s potential backing to to encourage buyers, First Republic Bank share price rebounded strongly and ended 29.50 per cent higher at $ 15.77 per share on NYSE.

“First Republic Bank surged almost 30% amid optimism over a new plan under discussion to aid the regional lender,” said Marc Despallieres.

SGX Nifty is trading cautious today as investors are awaiting final outcome of the FOMC meeting, which is expected today. SGX Nifty today opened at 17,138 and went on to hit intraday high of 17,198 levels.

Asian share market today

In early morning deals on Wednesday, the Japanese Nikkei is up 1.81 per cent, Shanghai index surged 0.71 per cent, Hang Seng skyrocketed 2.60 per cent whereas South Korean KOSPI surged 1.06 per cent.

Crude oil price

Crude oil prices continued to trade lower on rising weekly inventory speculations and Us stock piles. In early morning Asian trades, WTI crude oil price is quoting around 0.35 per cent lower from its previous close.

US dollar rate

US dollar is trading cautious as market is awaiting FOMC meeting outcome today. Dollar Index went off 0.05 per cent to 102.850 levels.

“The dollar pared earlier losses on Tuesday as traders reckoned banking stress could keep the Federal Reserve and the Bank of England from hiking interest rates much further, or at all, later in the week,” Marc said.

US bond yield

In early session in Asian markets, US bond yield depreciated further. US 10 year bond yield tumbled 0.38 per cent to 3.592 while US 30 year bond yield corrected 0.20 per cent to 3.728.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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