Summary of this article
Modi and Trump spoke on phone call to discuss progress in bilateral trade negotiations
US dollar is on track for its third straight weekly decline today
Rupee slipped to a fresh record low against US dollar, hitting 90.71
In the previous session, domestic benchmark indices, Sensex and Nifty, rallied, snapping a three-day losing streak after the US Federal Reserve announced a 25-basis-point rate cut.
The Sensex ended at 84,818.13, up by 426.86 points or 0.51 per cent, and the Nifty 50 closed at 25,898.55, up by 140.55 points or 0.55 per cent.
Stock Market Cues Today
The following are the key market cues traders are likely to react upon in trade on December 12:
US Stock Market
Benchmark indices on the Wall Street closed largely higher overnight, with the Dow Jones and S&P 500 logging record closing highs. The tech-heavy Nasdaq closed in red, dragged by Oracle's 10.83 per cent fall, one of its biggest single-day decline, which came after the company's earnings and guidance announcements, which fell short of analysts estimates, according to Reuters.
At close, Dow was up 1.34 per cent, S&P 500 was up 0.21 per cent, and Nasdaq was down 0.25 per cent.
Asian Stock Markets
Asian stocks were trading higher in early trade today, tracking gains on the Wall Street.
Japan's Nikkei 225 was up 0.70 per cent, China's CSI 300 was up 0.22 per cent, South Korea's Kospi was up 0.80 per cent, and the Hong Kong-based Hang Seng surged the highest, about 1.50 per cent.
Modi-Trump Call
Prime Minister Narendra Modi and US President Donald Trump spoke on a phone call on December 11 amid renewed buzz around a potential India-US trade deal. The two leaders reviewed the recent progress in bilateral ties and discussed ways to deepen cooperation across trade, technology, energy, defence, and security, according to an official statement.
Both sides expressed satisfaction with the strengthening partnership. The statement also added that trade was a key point of discussion, with Modi and Trump agreeing on the need to continue pushing efforts to expand business ties between the two countries.
US Trade Deficit Narrows
The US trade deficit narrowed much more than expected in September, hitting its lowest level in over five years. Exports grew at a strong pace while imports rose only slightly, helping pull the gap down.
According to data released on December 10 by the Commerce Department’s Bureau of Economic Analysis and Census Bureau, the deficit fell 10.90 per cent to $52.80 billion, the smallest it has been since June 2020, according to Reuters.
The improvement suggests that trade likely added to US economic growth in the third quarter, as per the report.
US Dollar Set For Third Weekly Fall
The US dollar is on track for its third straight weekly decline today, weighed by increased expectations of Federal Reserve rate cuts next year after last week’s policy meeting delivered a tone that traders interpreted as less hawkish than anticipated.
The dollar index, which measures the greenback against a basket of six major currencies, has fallen roughly 0.96 per cent this week and over 2 per cent in the last three weeks to quote at 98.02, as of the time of writing.
The Fed delivered a 25-basis-point rate cut, which was already on the expected lines. However, it was Chair Jerome Powell’s remarks at the post-meeting press briefing that spurred further selling in the US currency. Markets were expecting an aggressive stance from the Fed going forward. Instead, Powell sounded cautious and downplayed the chances of any further tightening.
US Treasury Yield Falls
The 10-year US Treasury yield slipped on December 11 as investors digested the Fed’s latest rate cut and its implications for the broader US economy. The benchmark yield eased by more than 2 basis points to 4.14 per cent. However, today the benchmark yield gained some lost ground and quoted last at 4.16 per cent, as of the time of writing.
Lower US Treasury yields typically work in favour of emerging markets such as India, as they make these economies more attractive for foreign institutional investors (FIIs).
Rupee Hits New Record Low
The Indian Rupee slipped to a fresh record low against US dollar on December 12, weighed down by uncertainty over a potential trade deal with the US and continued foreign investor outflows.
The Rupee was last quoted at 90.50, down 0.30 per cent, after hitting a record low of 90.71, as of the time of writing.
Crude Oil Price Today
Crude oil prices extended its gains in its recent intraday trading, in attempt to recover some of its previous losses. In the previous session, Brent crude oil futures and West Texas Intermediate (WTI) crude oil futures lost nearly 1.50 per cent.
As of the time of writing, Brent crude oil futures was up by 0.83 per cent at $61.79 per barrel, and WTI crude oil futures was up by 0.89 per cent at $58.11 per barrel.
