Evening call
The next contagion could as well be inflation. It is evident from the shortage in coal and surge in oil prices. Together, the two commodities could push up cost of goods. Shares fell and government bond yields rose globally as oil hit a multi-year high. India’s benchmark indices fell, and the domestic currency depreciated against the U.S. dollar. Prices of LPG, petrol and diesel went up in the country.
In China, the fallout from Evergrande is spilling over into neighbouring Hong Kong as two top property developers filed lawsuits against the Chinese property giant. – John Xavier
For more on our top stories on economy, business and finance, please read our blog below.
5:17 P.M.
Market close | Sensex, Nifty slide on inflation concerns
Equity indices Sensex and Nifty fell at market close as stocks gave up gains and investor sentiment around the globe soured over rising gas prices and inflation.
S&P BSE Sensex was down 0.93% at 59,189.73, while NSE Nifty 50 index ended 0.99% lower at 17,646. Nifty’s Energy index scaled a record earlier in the day, but ended 0.45% lower.
Meanwhile, the rupee declined 54 paise to close at 74.98 against the U.S. dollar. Gold plunged ₹226 to ₹45,618 per 10 grams in line with a decline in international precious metal prices.
5:13 P.M.
Evergrande crisis | Investors to demand protection from riskier bonds
Global investors are likely to demand more protection from riskier bond issuers in China and Asia as a result of Evergrande’s financial woes. They may seek higher returns and command more transparency in such debt instruments.
Top fund managers believe a mix of debt woes and changing regulations in China are shifting the goal post for foreign investors. Moreover, sharp losses in Chinese junk bonds reflects both default risk and uncertainty over bond valuation in the country.
5:10 P.M.
Zee Entertainment moves appellate tribunal
Zee Entertainment has moved an appellate tribunal against a court order that asked it to file replies by Thursday in a case filed by two institutional investors.
The company has been facing a turbulent time since founder Subhash Chandra divested his 50% stake in the company in 2019. Subsequently, the company faced other challenges including Essel Group’s links to a company being probed for ₹3000-crore fraud.
Most recently, Sony Pictures bought Zee Entertainment Enterprises, thus saving the struggling company.
4:23 P.M.
Energy crisis | EU calls for relief funds
The European Union has urged member countries to provide relief funds to customers and small businesses that have been impacted by rising gas and electricity prices. The 27-member bloc has been criticised for its policies to fight climate change, which is fuelling the energy crisis.
The bloc imports about 90% of its natural gas needs, compared to the U.S., which produces its own at cheaper prices. Recently, EU’s energy chief said its countries have enough gas in storage to last through winter, but the surge in prices shows the need to quickly switch to renewable sources and reform the EU gas market.
4:13 P.M.
India’s solar energy output slows
Solar energy output in India slowed in September at a time when coal-powered utilities are in short supply. Growth in solar energy is crucial this year as half of the countries coal-fired power plants have fuel stocks of less than three days. Moreover, Coal India, that accounts for 80% of the country’s coal output, saw production grow at the slowest pace in six months.
3:34 P.M.
Despite RBI’s concerns, investments in crypto surge
Even though India’s central bank expresses concerns over cryptocurrencies owing to their volatility and lack of transparency, private crypto platforms continue to raise millions of dollars. Crypto platform CoinSwitch Kuber said it has raised $260 million, becoming the second crypto exchange to achieve the unicorn status after rival CoinDCX. The platform is valued at $1.9 billion after the funding round. The company raised money from Andreessen Horowitz, Coinbase Ventures, Paradigm, Ribbit Capital, Sequoia Capital India and Tiger Global.
According to Chainalysis, India’s cryptocurrency market has grown to $6.6 billion in May 2021, from $923 million in April 2020.
2:53 P.M.
Asian markets fall on inflation, default woes
Asian and European markets fell due to ongoing worries about rising inflation and tighter monetary policy. Tokyo’s stock index fell for the eighth session, while those of Hong Kong, Seoul, Mumbai and Bangkok were also in red.
The indices enjoyed rallies across equities for more than a year, but recently met with a road block as supply chain problems and a surge on energy prices caused by recovery in demand has led to a sustained spike in inflation.
2:31 P.M.
Oil hits multi-year high
Following OPEC+’s refusal to ramp up production more rapidly, oil hits a multi-year high at $83 a barrel. Brent crude rose as high as $83.47, the highest since October to 2018, while U.S. crude climbed to $79.78, the highest since November 2014.
The price of Brent has surged more than 50% this year adding to the inflationary pressure that could slow recovery from the COVID-19 pandemic.
Welcome back to the live, Sowmya! The energy crunch seems to dominate Asian markets today. Its impact is seen on domestic LPG and fuel prices. As you will gather from our updates, Evergrande contagion is continuing to affect property developers. I'm signing out now, and handing over the blog to you to keep our readers updated. - Ishan
Thanks, Ishan! I'll pick it up from here! - Sowmya
12:56 P.M
Evergrande crisis | Hong Kong property developers file lawsuit
China’s Evergrande Group’s woes continue as two top Hong Kong property developers sue the Chinese company over unpaid commissions. The suit brings more pressure on the property developer that is already burdened with over $300 billion in debt.
Centaline and Midland Holdings, two of Hong Kong’s largest property developers, have sued Evergrande. Centaline is claiming to recover HK$3.1 million ($398,196) in overdue commissions, and Midland Holdings is claiming unpaid commission of HK$43.45 million for two projects.
12:19 P.M.
LPG price goes up
Rising crude oil prices are impacting India’s domestic household gas price. The cost of an LPG cylinder was increased by ₹15 to ₹899.50 (in Delhi and Mumbai). This hike is the fourth increase in just two months. The price has gone up by ₹205 since the start of the year. Prices of petrol and diesel were also hiked, by 30 paise and 35 paise respectively, per litre. In Delhi, the price of Petrol is now ₹102.94 per litre while diesel is priced at ₹91.42 a litre.
11:37 A.M.
Rupee slump against U.S. dollar continues; Oil rises
The Indian rupee is continuing its slide against the U.S. dollar. The domestic unit opened weak at 74.65 against the greenback. The strength of the U.S. dollar in global markets is weighing on the Indian currency. Also, following the OPEC+ meeting on Monday, crude oil prices are on a rise, which is impacting the rupee negatively.
Driven by energy supply concerns and the OPEC+ meeting’s decision on Monday, oil prices continued to rise today, with U.S. oil prices climbing for a fifth day to reach its highest level since 2014. WTI surged 0.24% to $79.11 a barrel. Brent crude gained 0.3% to $82.80 per barrel, after reaching a three-year high in the previous session.
10:35 A.M.
Samsung’s quarterly profit
Samsung’s profit in the September ending quarter is likely to be its highest since 2018, on rising memory chip prices and smartphone sales, analysts’ say.
The South Korea-based company’s operating profit could surge 30% to 16.1 trillion won ($14 billion) in the third quarter, according to a Refinitiv SmartEstimate from 16 analysts.
The world’s biggest smartphone maker is also expected to post record revenue in the quarter.
10:10 A.M.
Aviation industry’s conundrum
The aviation industry’s recovery could get delayed due to confusion over differing travel restrictions set by different countries.
“People want to fly. We’ve seen strong evidence of that,” Willie Walsh, Director General of IATA, said. “They can’t fly because we have restrictions that are impeding international travel.”
9:30 A.M.
Asian shares fall; India indices open higher
Today, major Asian stock indices opened in green but dipped in early trade, after a rebound on Wall Street. Japan’s Nikkei opened at 28,033.91, up 211.79 points. Nikkei was down around 1% in early trade.
South Korea’s Kospi opened at 2,986.06, up 23.89 points. Hong Kong’s Hang Seng, opened at 24,259.20, up 155.05 points.
Chinese mainland markets will be closed till Thursday for the holidays.
Indian indices opened higher today amid mixed global cues. The BSE Sensex opened at 59,942.00, up 197.12 points, after gaining over 400 points in the previous session. Similarly, NSE Nifty opened at 17,861.50, up 39.2 points.
Morning agenda:
Moody’s upgrades outlook on India to stable from negative. The agency notes that the country’s downside risk is receding. Our blog will be tracking the energy situation in India as the country faces a coal crunch that could drag on for the rest of the year. We’ll also track the Evergrande contagion, among other top developments. The Chinese property giant is said to be exploring the possibility of a stake sale. It has over $300 billion in debt.
The aviation sector is also on our radar as pandemic restrictions ease and people start to travel. Last evening, Emirates signed a $750 million five-year, sales-backed loan with Dubai’s biggest lender. Earlier in the day, we heard the Director General of global airlines body IATA say the sector could cut its losses dramatically to $52 this year from $138 billion in 2020. The sector could return to profitability next year. – John Xavier
---- Edited by John Xavier
(With inputs from Reuters, PTI and other news agencies.)
Top business news of the day: Oil hits multi-year high; Energy crisis worsens; India's solar energy output slows, and more - The Hindu
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