In a flat country a hillock thinks itself a mountain.
We've had a hillock of gains in recent days and things could flatten a bit. US stocks closed absolutely flat, while Europe was a mixed bag. Among the key Asian markets, the Hang Seng is up 1% while the Nikkei is marginally higher. The rest of the regional benchmarks have posted modest gains.
The market could extend the two-day rally, at least at the start today. Thereafter, we expect the key indices to remain a bit subdued. What may also keep the overall mood cheerful are expectations of fresh stimulus measures in the interim budget.
Meanwhile, all eyes are on Washington. Global markets are awaiting the passage of Obama administration’s stimulus package. Also being eagerly awaited is the unveiling of a revamped bank rescue plan. Both the key events will take place later today in the US. So, the Asian markets will be able to react to the same only on Wednesday.
As a report states, the money being spent on the economic bailouts now totals more than the combined value of the entire Iraq war, the lifetime budget of NASA, the 1980s Savings & Loan crisis, and all the dollars spent on the Korean War.
The moot point is whether global markets can sustain the bounce once the expected events are out of the way. The jury’s still out on this. The best thing would be to play for a short-term spurt and make a quick exit. It’s easier said than done, but nothing wrong in giving it a shot.
US financial shares extended Friday's rally into Monday, but the broader American market struggled as the announcement of the revamped bank bailout plan was delayed and Congress continued to squabble about the stimulus package.
The Dow Jones Industrial Average lost 9 points or 0.1%, to end at 8,270.87. The Standard & Poor's 500 index was virtually unchanged at 869.89. The Nasdaq Composite index was barely changed as well, at 1,591.56.
Once the new version of the bank bailout plan is announced and once the Congress agrees on a stimulus plan, US stocks should get a boost. These two programs are good indications that the new administration is willing to go an extra mile to address the mess, which should be reassuring to investors.
The Senate has reached a tentative agreement on a new version of the economic stimulus bill. After more than a week of heated debate, lawmakers have reportedly managed to cut the proposed $900 billion plan down to $827 billion. A vote is expected on Tuesday.
However, Senate approval of the plan is just another step in the process. The House of Representatives already approved an $819 billion version of the plan in a party-line vote nearly two weeks ago. If the Senate bill passes, leaders will need to negotiate a final bill with the House.
Treasury Secretary Tim Geithner was expected to speak on Monday about how the government plans to use the remaining $350 billion of the Treasury's Troubled Asset Relief Program (TARP). However, the speech was postponed until Tuesday so as to keep the focus on the stimulus plan.
Geithner might announce the creation of a so-called "bad bank" that would let the government remove bad assets from banks' balance sheets. This is likely to get banks to start lending again.
Another possibility is that the Treasury could suspend or change the "mark-to-market" accounting rule, meaning that the government could buy the assets at a price that is below market rate, but not at fire sale prices.
Such a change would address criticisms that the Bush administration overpaid for the bad assets it bought with the first half of the TARP.
On the corporate front, UK-based Barclays bank posted a better-than-expected 2008 profit as a one-time gain from its purchase of the North American operations of Lehman Brothers helped temper massive writedowns. Its shares jumped 11%.
Shares of NYSE Euronext fell after the operator of the New York Stock Exchange and the Euronext stock exchanges posted a big quarterly loss.
Japanese auto major Nissan warned that it will post a loss for its current fiscal year and that it will cut 20,000 jobs.
General Motors (GM) is reportedly in discussions to take back part of Delphi, the auto-parts supplier it spun off a decade ago. The move is part of the company's plans to line up additional bailout funds from the government, which has already given the company more than $13 billion.
Other reports said GM could be planning to cut up to 5,000 salaried workers.
Treasury prices slipped, raising the yield on the benchmark 10-year note to 2.99% from 2.98% on Friday. Treasury prices and yields move in opposite directions.
Lending rates were mostly unchanged. The 3-month Libor rate slipped slightly to 1.23% from 1.24% on Friday. The overnight Libor rate held steady at 0.31%. Libor is a bank lending rate.
US light crude oil for March delivery fell 61 cents to settle at $39.56 a barrel on the New York Mercantile Exchange. Gasoline prices rose three-tenths of a cent to a national average of $1.924 a gallon.
The dollar fell against the euro and yen. COMEX gold for April delivery fell $21.50 to settle at $892.80 an ounce.
European shares rose in a choppy session amid relief in the banking sector after Barclays reported a 1% profit fall and as investors continued to wait for details on a package of measures to shore up the U.S. economy and banking sector.
The pan-European Dow Jones Stoxx 600 index managed to rise for the fifth straight session as the banking and insurance sectors advanced. It gained 0.4% to 199.35.
Markets extended gains to second straight trading session on Monday. Hopes of further fresh measures to stimulate the economy ahead of vote-on-account lifted the markets higher. All round buying in scrips across the bourses finally lifted the NSE Nifty to close above the 2,900 mark.
The Sensex surged 298 points to close at 9,583 and the Nifty advanced 76 points to close at 2,919.
Among the 30-components of Sensex, 29 ended in the positive terrain and only 1 stock i.e. Hindustan Unilever ended in the red. The major gainers in the Sensex were JP Associates, Tata Steel, Reliance Infrastructure, ONGC, L&T and Sterlite Industries.
Shares of Tata Steel have surged by over 7% to Rs200 after the company announced that its hot metal, crude steel and saleable steel production in January 2009 was higher YoY.
The scrip has touched an intra-day high of Rs200.8 and a low of Rs187 and has recorded volumes of over 61,00,000 shares on NSE.
Shares of Ahluwalia Contracts slipped by 4.5% to Rs30.5. The company had announced that it bagged various Projects worth Rs3,201.3mn. The scrip touched an intra-day high of Rs33 and a low of Rs30 and recorded volumes of over 1,00,000 shares on BSE.
Shares of Cipla edged higher by 0.6% to Rs192. Nearly five lakh shares of the company changed hands on the NSE at an average price of Rs190. The scrip touched an intra-day high of Rs193 and a low of Rs188 and recorded volumes of over 90,000 shares on BSE.
Shares of United Spirits surged by over 14% to Rs701 after reports stated that it was planning to add 10 new bottling units in next 12 months. The scrip touched an intra-day high of Rs712 and a low of Rs602 and recorded volumes of over 3,00,000 shares on BSE.
Shares of Nagarjuna Construction surged by over 8% to Rs50.6 after the company announced that it has secured four new orders aggregating Rs7.12bn. The first order valued at Rs3.6bn is secured from the Singareni Collieries Company Ltd., Khammanm, Andhra Pradesh for Blast Hole Drilling, Controlled Blasting and other works to be completed over a period of 72 months.
The scrip touched an intra-day high of Rs51.3 and a low of Rs45 and recorded volumes of over 7,00,000 shares on BSE.
BHEL announced that it won four major contracts worth Rs70bn for the supply and installation of main plant equipment for thermal power projects. The projects, with a cumulative capacity of 3,250 MW, are located in Madhya Pradesh, Uttar Pradesh, Tamil Nadu and Maharashtra.
The stock was up by 2% to Rs1392 after hitting an intra-day high of Rs1400 and a low of Rs1362 and recorded volumes of over 2,00,000 shares on BSE.
All eyes would be on the Washington as the US Senate is set to vote on Obama regimes new stimulus plan. A revamped bank rescue package is also slated for the same day.