Hong Kong: Markets across Asia are struggling to post gains today after yesterday’s surge, with concerns over a global food crisis compounding the risk of an economic slowdown.
As at 7.30 am IST, Nifty futures are down nearly two-tenths of 1 percent, after fairly volatile early morning trades. Elsewhere across the region too, indices are mostly in the red, and again it’s all very choppy out there.
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Overnight, Wall Street posted modest gains, for the third straight day, despite some weak economic data, after news out of Europe – where the German parliament voted to bail out Spanish banks – provided some cheer. Good corporate results too uplifted sentiment.
Barclays analysts expect markets to move sideways for the most part in the near term, since conflcting forces are at work across asset markets. Growth prospects are broadly weaker, but policy intervention continues to surprise by being pro-active.
Back home, concerns about the monsoon’s weak progress have been compounded by fears of a global food crisis, with the worst US drought in 50 years pushing up corn and other agricultural commodity prices to levels higher than in 2007-08, when they triggered food riots in many countries around the world.
The chatter about the government’s intention to announce FDI in retail next month is growing louder, and the expectations of a widespread Cabinet reshuffle, and the likely return of P Chidambaram to the Finance Ministry, are seen as possible pluses. But in the near term, the UPA government faces a mini-crisis with the NCP ministers, including political heavyweight Sharad Pawar, threatening to resign.
For this morning, the Indian market faces some headwinds. We’ll likely see a weaker start to the trading day.