Wall Street closed lower on Tuesday on mixed economic news and markets in Asia were trading mostly down on concerns of a weak economic outlook
The local market is likely to see a gap-down opening on weak global cues as Wall Street closed with marginal losses overnight on mixed economic news and lingering concerns about Europe. Tracking the losses on the US indices, most markets in Asia were in the red in early trade on Wednesday. The SGX Nifty was 43.50 points lower at 5,350.50 compared to its previous close of 5,394 on Tuesday.
The market which saw listless trade in the absence of any triggers, ended flat with a positive bias on Tuesday, reflecting the small gains accrued by Asian markets. Earlier, the Sensex and Nifty opened at 18,016 and 5,385, respectively, and hit an intra-day high at 18,110 and 5,423 in the early afternoon. Oil & gas, auto, banking, realty and consumer durable stocks supported early gains. Also, Asian markets, which were weak in early trade, were higher in subsequent trade, supporting investor sentiments here. While the key indices were positive, the gains were marginal in the absence of any major trigger.
There was selling pressure from institutional investors after news about inflationary pressures that could impact economic growth. The market hit its intra-day low, lower than that of Monday, at 17,934 and 5,367. But value buying came in immediately afterwards and the market closed positive. The Sensex closed at 18,012, up 19 points, and the Nifty closed at 5,395, a gain of eight points.
Markets in the US closed lower on Tuesday on mixed economic news and lingering sovereign debt issues plaguing Europe. The Federal Reserve Bank of Richmond’s manufacturing index slid to negative six in May, compared with a reading of 10 in April. On the other hand, new home sales rose 7.3% in April to a seasonally adjusted annual rate of 323,000, from a 8.3% gain in March. Economists had expected new home sales to remain unchanged.
On the commodities front, oil prices gained after Goldman Sachs said demand for crude would rise. US light, sweet crude rose nearly 2% to $99.59 a barrel, while in London, Brent crude rose 2.2% to $112.53. Gold gained 0.52% to close at $1,523.20 an ounce, while silver gained 3.5% to close at $36.12 an ounce.
The Dow declined 25.05 points (0.20%) to 12,356.21, its lowest close since 19th April. The S&P 500 shed 1.09 points (0.08%) to 1,316.28, The index has fallen 3.5% since climbing to a three-year high on 29th April amid a commodity slump and concern about Europe’s debt crisis. The Nasdaq fell by 12.74 points (0.46%) to 2,746.16.
Markets in Asia were mostly weak in early trade this morning on depressing economic news from Japan and negative sentiments from the US. Japanese exports tumbled in April, dragged down by a slump in carmakers’ output after the earthquake in March. Exports fell 12.5% from a year earlier, in line with a median forecast for a 12.4% annual decline and followed a 2.3% drop in March.
Among corporates, Japanese electronics major Sony fell 1.3% after the company said on Tuesday that its websites in four countries had been hacked, while in Seoul Hyundai Motor and Kia Motors both rose over 1% after news late on Tuesday police had dispersed a strike at a parts supplier.
The Hang Seng fell 0.48%, the Jakarta Composite declined 0.16%, the Nikkei 225 retraced 0.36%, the Straits Times was down 0.22%, the Seoul Composite tanked 1.04% and the Taiwan Weighted was down 0.56%. On the other hand, the Shanghai Composite added 0.07% and the KLSE Composite gained 0.26%.
Back home, industry body PHD Chamber urged the government not to withdraw tax refund DEPB scheme, which is ending in June, as it will make exports uncompetitive and would affect the growth momentum. Exporters get refund of duties on import content of their export products. It costs the exchequer about Rs8,000 crore per annum.