OVERNIGHT MONEY MATTER HEADLINES - RAJESH SHARMA MONEY MATTERS
INTERNATIONAL MONEY MATTER
The minutes of the April meeting of the Federal Open Market Committee (FOMC) showed that policy makers saw greater risks to their economic outlook than the previous meeting. The minutes showed that most members indicated that additional monetary policy accommodation could be necessary if the economic recovery falters any further. The ECB said yesterday that it will temporarily hold back access to standard Euro system refinancing operations to some Greek banks until these banks have been properly recapitalized by the Greek Central Bank.
Greece is now headed for another round of national elections on June 17, with Panagiotis Pikrammenos, Judge of Greece’ s highest administrative court, being sworn in as head of the caretaker administration yesterday.
Japan’s economy expanded in Q1 at 4.1%y/y compared to market expectation of 3.5%y/y and previous quarter’s estimate of 0.1%y/y. GDP growth was led by reconstruction spending on the wake of earthquake last year offsetting the weak export demand.
The euro fell against the dollar to 1.2681, but recovered to trade at 1.2737, after minutes from the last Fed meeting showed some policy makers said further easing may be needed should the economy lose momentum.
S&P 500 index fell 0.4 percent to 1,324.80, reversing an earlier advance of as much as 0.8 percent, as concern Greece’s debt crisis is worsening offset better-than-estimated reports on U.S. housing starts and industrial production.
Nymex crude futures dropped to $92.81 yesterday but recovered some of the losses to trade at $93.21, after Japan’s economy expanded faster than forecast. Gold futures fell to $1536.60 as concern that Greece will have to leave the euro boosted the dollar, but recovered later to $1547.80. Input and views as given by Rajesh Sharma CMD Money Matters Financial Services Ltd.
NATIONAL MONEY MATTER
The FM yesterday in the upper house of the Parliament said that he would impose new austerity measures to stick to its fiscal consolidation path, however unpopular they may be. He was concerned saying that the government cannot pass the entire oil price rise to the consumers.
In an attempt to strengthening the regional financial and economic cooperation, the RBI Governor yesterday announced that India will offer Swap Arrangement of USD 2 billion both in foreign currency (both USD and Euro) and Indian rupee against the domestic currency or domestic currency denominated government securities of the requesting country. The facility will be available to all SAARC member countries.
Indian equities dropped tracking global markets over Euro zone concerns and weak domestic economic outlook. Sensex lost 1.83% at 16030.09.
GSecs remained range bound in a day market with global risk off cues. The yield for 10Y benchmark security gained 2 bps at 8.52%. The 5Y OIS remained steady at 7.48%.
Indian gold futures hit their lowest level in six weeks, extending losses for the third session on Wednesday. The yellow metal shed 2.5 percent so far this week. There are buying with decent volumes but the market is cautious due to weaker rupee. The most active gold for June delivery on MCX hit 27,855 rupees, its lowest since April 4. said Rajesh Sharma, CMD Money Matters Financial Services Ltd.
Disclaimer: I, Rajesh Sharma, hereby certify that the views expressed reflect my personal views about the subject. The information contained herein is from publicly available data or other sources believed to be reliable, but we do not represent that it is accurate or complete and it should not be relied on as such. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for any investment decision.
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