Views on Commodities, Currencies and Bonds
ENERGY
• International crude prices fell on Tuesday as lingering concerns about a recession-driven demand downturn offset prospects of tighter global supplies. • Domestic futures also ended weaker on Tuesday’s trade tracking weak global markets. • The Dollar also ended with gains on Tuesday and weighed on prices. • Furthermore, U.S. crude stockpiles have grown weekly for about two months, and were forecast in a Reuters poll to have risen 1.2 million barrels last week. • NYMEX heating oil and gasoline futures rose on Tuesday after a poll forecasted that stocks of both gasoline and heating oil may have witnessed a draw last week. • U.S. NYMEX Gas prices tumbled over 9% on Tuesday weighed down by forecasts for milder weather and lower heating demand next week than previously expected.
BULLION
• International gold ended weaker as the dollar strengthened and bond yields rose, but silver prices gained on Tuesday. • Domestic futures were mixed as well with gold ending weaker and silver gained modestly on Tuesday’s trade. • Markets remained in a small range as investors awaited FOMC meeting minutes.
BASE METALS
• COMEX Copper rebound from Friday’s session to end higher over 3% as China moving away from its zero-Covid policy, could help stabilize commodity prices. • COMEX aluminium prices gained on Tuesday’s trade on worries about output cuts in top producer China, though rising inventories capped gains. • China’s Yunnan province has asked aluminium producers to reduce power consumption by 40-42% from September levels in the face of an ongoing supply crunch.
CURRENCY
• The Indian Rupee ended marginally weaker but traded in a narrow range on Tuesday, tracking similar movements in the dollar index, even as Asian currencies weakened ahead of the release of the FOMC meeting minutes. • The Rupee settled at 82.7900 per dollar, compared with its previous close of 82.7225, and traded in a narrow 10-paisa range. • Meanwhile, according to Refinitiv, trading volumes on the interbank matching system were around $4.3 billion, amongst the lowest this year, as the local unit has remained range bound. • In the overseas markets, the U.S. Dollar Index rose on Tuesday’s session after a survey showed that business activity in the U.S. in February unexpectedly rebounded to an eight-month high, increasing to 50.2 from a final reading of 46.8 in January. • The Euro struggled against the dollar on Tuesday’s session after data showed euro zone manufacturing activity deteriorated this month, although a rebound in the more inflation-sensitive services sector kept losses in check. • The Sterling rebounded from Monday’s lows and moved higher against the dollar on Tuesday after an unexpected bounce in latest PMI numbers, suggesting a smaller risk of recession.
BONDS
• Indian government bond yields ended marginally higher on Tuesday as a fresh sale of debt from states added to the overall supply, while traders await the minutes of the central bank’s latest monetary policy. • The 10-year benchmark 7.26% 2032 bond yield ended at 7.391%, after closing lower at 7.370% on Monday. • Indian states raised 192.37 billion rupees or $2.32 billion through the sale of bonds earlier in the day, but the quantum was lower than planned as some states did not borrow amid rising yields. • U.S. bond yields surged higher on Tuesday as strong economic data led investors to price for higher interest rate.
Report by Reliance Securities
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