Summary of this article
China's central bank kept its benchmark rates unchanged for eighth straight month
Japan’s 40-year government bond yield crossed the 4 per cent mark, the highest level since inception
Asian equities largely traded in the red in morning trade on January 20
Stock Market Cues: Markets are likely to take cues from multiple geopolitical and macro developments, including China's central bank's decision on benchmark interest rates, the sudden rise in Japan's government bond yields among several other domestic and global cues.
In the previous session on January 19, the 30-share Sensex ended at 83,246.18, down by 324.17 points or 0.39 per cent, while the Nifty 50 closed around the 25,585.50 level, down by 108.85 points or 0.42 per cent.
Stock Market Cues To Watch On Jan 20
Following are the key stock market cues that are likely to influence D-Street sentiment on January 20.
China Keeps Loan Prime Rates Unchanged
The People’s Bank of China kept its benchmark loan prime rates (LPR) unchanged for the eighth straight month, a decision which was largely inline with market expectations, as per a CNBC report. The central bank left the one-year loan prime rate steady at 3 per cent and the five-year LPR, a key mortgage benchmark, at 3.5 per cent.
Japanese 40-Year Bond Yields Rise
Japan’s 40-year government bond yield rose more than 5 basis points to 4 per cent, the highest level since the 40-year maturity was introduced. Since the start of this calendar year, the ultra-long bond yield has risen by more than 11 per cent.
Rising Japanese yields could lead foreign institutional investors to divert their funds to Japan, a development that could amplify volatility across Asian equity markets, the effects of which can be seen in Indian equities.
Greenland Tariffs
After US President Donald Trump threatened to impose tariffs on Denmark and seven other European countries if they refuse to allow the US to “buy” Greenland, European nations are reportedly weighing retaliatory tariffs and broader economic countermeasures against Washington.
Further developments on this front will be critical to track, as any escalation could revive global trade war fears, hit risk sentiment, and trigger volatility across global equities, currencies and commodities.
US Stock Market
US stock markets were closed on Monday, January 19, for Martin Luther King, Jr. Day, which is commemorated on the third Monday in January every year. The US bond market and over-the-counter trading were also closed in observance of the federal holiday.
Asian Stock Markets
Asian equities largely traded in the red in morning trade on January 20. As of the time of writing, Japan's Nikkei 225 was down 1.22 per cent, the Hong Kong-based Hang Seng traded 0.12 per cent lower, China's CSI 300 was down 0.40 per cent, while South Korea's Kospi traded flat with a positive bias.
Crude Oil Price
Crude oil prices were largely flat in early trade on January 20, hovering around levels seen over the past four sessions, as the recent geopolitical risk premium continued to fade from the market.
Brent crude futures traded 0.27 per cent higher at $64.11 per barrel, while the West Texas Intermediate (WTI) crude oil quoted 0.02 per cent lower at $59.42 per barrel.
Meanwhile, the US Dollar Index, which tracks the performance of US dollar against a basket of six major currencies, quoted 0.47 per cent lower at 98.93 in the morning trade on January 20.
