Gold Near Multi-Year Low as Fed's Lockhart Supports September Rate Hike

Manila: Gold steadied not far from a 5-1/2-year low early on Wednesday after comments from a Federal Reserve official backed investor expectations that the U.S. central bank would hike interest rates as early as next month.

Spot gold was little changed at $1,086.35 an ounce by 0037 GMT. Bullion has stayed largely below $1,100 since breaching that key support level in a late July rout that pulled the metal to as low as $1,077, its weakest since February 2010.

U.S. gold for delivery in December slipped 0.4 percent to $1,086.20 an ounce.

Atlanta Federal Reserve President Dennis Lockhart has said it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September, according to the Wall Street Journal.

Gold, an asset that does not earn interest, has taken a hit given rising risks of a U.S. rate hike. The Fed looks intent on lifting rates this year for the first time since 2006 as the U.S. economy strengthens, particularly its labour market.

New orders for U.S. factory goods rebounded strongly in June on robust demand for transportation equipment and other goods, a hopeful sign for the struggling manufacturing sector.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped further on Tuesday to 21.56 million ounces, the lowest since September 2008.

Gold sales at the Perth Mint climbed to a nine-month high in July after a slide in prices of the precious metal to their lowest since 2010 drew buyers.

Asia Stocks Mostly Lower Tracking Fall in US Markets

Tokyo stocks opened lower on Wednesday, despite positive earnings reports and a weaker yen, as US shares slid on another big decline from Apple.

The Nikkei 225 index at the Tokyo Stock Exchange fell 0.15 per cent, or 30.21 points, to 20,490.15 at the start.

US stocks ended lower Tuesday following a mixed batch of earnings reports and a fall by Apple of 3.2 per cent, leaving it down more than 12 per cent since its July 21 earnings release.

The Dow Jones Industrial Average dropped 0.27 per cent.

The broad-based S&P 500 fell 0.22 per cent, while the tech-rich Nasdaq Composite Index slid 0.19 per cent.

In Tokyo Toyota, which said Tuesday its net profit for the three months to June jumped 10 per cent to $5.2 billion, fell 2.53 per cent to 7,915 yen in the first few minutes of trading.

In Tokyo forex trade, the dollar was at 124.32 yen early Wednesday, up from 123.93 yen early Tuesday.

The greenback traded at 124.36 yen in New York late Tuesday.

A weak yen is positive for Japanese exporters as it makes them more competitive abroad and increases profits when repatriated.

The euro was at $1.0885 and 135.29 yen compared with $1.0882 and 135.32 yen in US trade.

Hong Kong stocks opened slightly higher Wednesday, rising 0.17 per cent to defy a lower finish on Wall Street and a slide in Tokyo's opening exchanges.

The city's benchmark Hang Seng Index added 42.3 points to 24,448.42.

Chinese shares were slightly lower on Wednesday morning, as investors took profits after strong gains the previous day sparked by new restrictions on short-selling, dealers said.

The benchmark Shanghai Composite Index edged down 0.29 per cent, or 10.89 points, to 3,745.65.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 0.10 per cent, or 2.17 points, to 2,148.78.

Sensex Jumps Over 150 Points, Nifty Moves Above 8,550

9:25 a.m.: The Sensex jumped over 200 points in the opening deals to hit high of 28,290 and the Nifty advanced above its crucial psychological level of 8,550 tracking buying across the board.

Buying was visible across sectors. Metal stocks were on the buyers' radar. The BSE metal index advanced 1.6 per cent. IT, FMCG, realty, capital goods and power stocks were also witnessing buying interest.

9:12 a.m.: Market analyst Rajat Bose recommends buy on Voltas with stop loss at Rs 314 for target of Rs 330-332

9:08 a.m.: The Sensex jumps 66 points to 28,138 and Nifty advances 32 points to 8,549 levels in the pre-market session.

9:05 a.m.: Nifty is likely to trade in a range between 8,550-8,575 on the higher side while on the downside Nifty has support at 8,450, says market analyst Rajat Bose.

9:00 a.m.: Rupee opens lower at 63.90 per dollar against Tuesday's close of 63.75.

8:15 a.m.: Below are the stocks which will be in focus today:

Bharti Airtel: Bharti Airtel is likely to witness a positive opening in trades today after the company post the market hours reported that its net profit jumped 40 per cent to Rs 1,554 crore compared to Rs 1,109 crore during the same period last financial year.

The results were better than what the analysts had anticipated. Analysts on average expected the company, which operates in 20 countries across Asia and Africa, to post earnings of Rs 1,355 crore, according to Thomson Reuters data.

Shares of Adani group will be in focus today after Australia's Federal court on Wednesday overturned government environmental approval for the Carmichael coal mine under construction in the Australian outback by Indian conglomerate Adani Mining.

Hexaware Technologies: Hexaware Technologies posted better than expected Q1 numbers post the market hours yesterday. The company's revenues exceeded expectations as USD revenues jumped 5.6 per cent. BPO business grew at 14.9 per cent (QoQ) and IMS saw a growth of 17.4 per cent sequentially.

Nestle: Nestle will be in focus today as FSSAI approved lab found Maggi in compliance with safety standards. The lab tested five samples sent by Goa FDA.

Tata Steel: According to Reuters, Tata Steel has spun out its long products unit making items such as plates, sections and wire rods into a standalone business to better pursue strategic options, after the reported withdrawal of Klesch Group from talks to buy the division.

Torrent Power: Torrent Power's first quarter income came in at Rs 3,063.11 crore compared to Rs 2,629 crore. Its net profit jumped over 100 per cent to Rs 173.4 crore from Rs 86.2 crore.

JK Tyres: JK Tyres sales came in at Rs 1,760 crore compared to Rs 1,854 crore. While, its net profit jumped 113 per cent to Rs 118.12 crore from Rs 55.4 crore.

7:55 a.m.: The Sensex and Nifty are likely to witness flat opening in trades today tracking subdued of Nifty futures on the Singapore Stock Exchange. The Nifty on the Singapore Exchange also known as the SGX Nifty was up 0.13 per cent or 11 points at 8,547.

Meanwhile, other Asian markets were trading mostly higher. The Nikkei was up 0.8 per cent, Hang Seng advanced 0.6 per cent while Shanghai Composite declined 0.5 per cent.

Overnight, Wall Street ended lower on Tuesday for a third straight session as investors worried about a rise in interest rates while Apple's shares hit their lowest in over six months.

The iPhone maker's shares fell 3.21 per cent to $114.64, firmly below their 200-day daily moving average, a key technical level closely watched by traders. The stock was the biggest drag on the three major U.S. indexes.

The Dow Jones industrial average fell 0.27 per cent to end at 17,550.69 and the S&P 500 lost 0.22 per cent to 2,093.32. The Nasdaq Composite dropped 0.19 per cent finish at 5,105.55.        

No Difference With Government on Monetary Policy Committee: Raghuram Rajan

The Reserve Bank of India (RBI) held its policy rate at 7.25 percent on Tuesday, pausing as widely expected after a spike in food prices sent consumer inflation to an eight-month high. RBI chief Raghuram Rajan is addressing a press conference.

• Fall in oil prices very beneficial for India
• RBI awaiting transmission of previous rate cuts
• Monitoring monsoon and inflation
• One set of bank licenses by this month's end
• RBI panel going through applicants
• No difference between RBI and the government over monetary policy committee
• RBI in a dialogue with the government on monetary policy committee
• RBI and government have reached a broad understanding on what the monetary policy committee should look like
• RBI wants monetary policy committee to be institutionalised; Ultimate responsibility on monetary policy is on governor
• RBI talking to government to hike foreign portfolio investment cap in debt market
• Sustained hardening of inflation excluding food and fuel "most worrisome"
• Credit availability seems to be adequate for most sectors
• Healthy respect between government and the central bank
• Veto power with RBI governor in proposed monetary policy panel will mean no change from current rate setting practice
• Institutionalising the process of setting interest rates is vital
• We are enthusiastic supporters of the idea of a committee for interest rates
• Government has given RBI a clear inflation objective
• Responsibility and decision of setting rates so far is that of RBI governor
• Studies show panel's decisions are better than those of an individual
• Spreading the responsibility can reduce external and internal pressure on an individual
• Any changes in RBI Act will require Parliamentary approval
• RBI ultimately decides what the course of action will be, but it seeks out what the government thinks

RBI Keeps Policy Rates on Hold at 7.25%

The Reserve Bank of India (RBI) held its policy rate at 7.25 per cent on Tuesday, pausing as widely expected after a spike in food prices sent consumer inflation to an eight-month high.

All but four of 51 analysts polled by Reuters had predicted the RBI would keep the repo rate on hold.

The central bank has reduced the policy rate by a total 75 basis points since January, when it embarked on an easing cycle.

Raghuram Rajan to Shortly Announce Rate Decision Amid Row Over RBI Powers

Reserve Bank of India Governor Raghuram Rajan is expected to keep interest rates unchanged at the monetary policy review scheduled for 11 a.m. today, according to a majority of economists polled by Reuters.

The monetary policy announcement comes at a time when there is a raging debate about a draft parliamentary bill that seeks to reduce the central bank's independence to set interest rates. The draft legislation, published last month for public comments, called for the creation of a rate-setting panel, removed a reference to the central bank governor's veto power, and permitted the government to appoint more than half of its members.

Dr Rajan has cut the key repo rate thrice this year, but the benefits for the broader economy have been limited because of commercial banks' reluctance to lower their lending rates.

Chances of a rate cut today are low because retail inflation - the key parameter tracked by the RBI - edged up to an eight-month high in June. The other key factor likely to weigh against a rate cut is the uncertainty about monsoon rains, which irrigate nearly 60 per cent of the country's farmlands.

Economists also expect Dr Rajan to wait until the Federal Reserve's September meeting, when interest rates in the US are likely to go up for the first time in a decade. Any increase in interest rates in the US is expected to suck money out of emerging markets like India.

However, a few economists, including those from Moody's, expect Dr Rajan to surprise with a fourth rate cut this year.

"The Reserve Bank of India could deliver fireworks in its monetary policy meeting on Tuesday by cutting the repo rate by 25 basis points to 7 per cent," Moody's said in a report.

Repo rate is the rate at which the RBI lends short-term money to commercial banks.

Economists who expect a rate cut today have built their case on the continued slide in crude oil prices. Brent crude prices fell below $50/barrel for the first time in six months on Monday. The continue drop in crude oil prices augurs well for the Indian economy, which imports nearly 80 per cent of its oil needs.

The recent uptick in monsoon rains and the lack of demand in the Indian economy are some other arguments Dr Rajan is likely to consider while firming up his decision on rate cuts, economists say.

"We are expecting 0.25 per cent reduction and 0.5 per cent by the end of the year. If reduction has to be done, why not do it early? This will benefit industry and boost growth," said Naina Lal Kidwai, country head of HSBC India.

The BSE Sensex and the Nifty have gained momentum in the run up to the RBI's monetary policy, so a status quo may result in a temporary setback, analysts say.

Meanwhile, economists are likely to pour over Dr Rajan's commentary on the Indian economy for clues as to whether there is a chance of another interest rate cut this year.

Hero MotoCorp Posts 33% Rise in Q1 Profit

Hero MotoCorp Ltd, the world's largest seller of two-wheelers, posted a 33 per cent rise in its fiscal first quarter net profit, beating analyst expectations.

The company, which sells about one in every two motorbikes in India - mainly in the countryside, said profit in the June quarter rose to Rs 750 crore ($117.3 million), up from Rs 563 crore a year earlier.

Analysts on average expected the company to post a profit of Rs 683 crore for the quarter.

Net sales of the company, however, fell marginally to Rs 6,856 crore from roughly Rs 7,000 crore in the same period last year, said a company statement issued to the stock exchanges. 

Asian Shares Edge Down, Oil Stabilises After Rout

Asian shares edged lower on Tuesday after downbeat economic data pressured Wall Street ahead of key US jobs data later this week that could provide a key clue to the timing of the US Federal Reserve's interest rate increase.

Crude oil prices stabilized after plunging overnight, with US crude adding about 0.6 per cent to $45.42 a barrel. Brent gained 0.4 per cent to $49.73 after skidding 5 per cent to six-month lows.

MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2 per cent in early trading, while Japan's Nikkei stock index slipped 0.5 per cent, after breaking a three-day winning streak in the previous session.

US equities markets logged solid losses on Monday, after manufacturing data from China and US figures released on Monday both disappointed.

The Institute for Supply Management's index of national factory activity slipped to 52.7 in July, falling short of expectations that it would match last month's reading of 53.5.

The weak reading, combined with the rout in oil prices that raised fears of disinflation, led investors to pare bets that the US Federal Reserve's long-awaited interest rate hike will come as early as September.

Friday's jobs data is expected to show the US economy created 225,000 new jobs in July, according to economists polled by Reuters. The unemployment rate is expected to hold steady at 5.3 per cent.

"In our view anything above 230k will be seen as significantly raising the odds of September lift-off and anything below 200k will be seen as significantly reducing these odds," Steven Englander, global head of G10 FX strategy at CitiFX in New York, wrote in a note to clients.

The dollar edged down against its Japanese counterpart to 123.94 yen, while the euro was slightly higher at $1.0953.

The weakness in oil prices, meanwhile, pulled the rug out from under commodity currencies.

The Canadian dollar was buying C$1.3159 per US dollar, after it notched 11-year years lows overnight with Canadian markets shut for a public holiday.

The Australian dollar last traded at $0.7271, down about 0.2 per cent on the day and moving back towards last week's six-year low of $0.7234 as investors awaited the outcome of the Reserve Bank of Australia's policy meeting at 0430 GMT.

Market participants widely expect the RBA to leave the cash rate unchanged at a record low 2.0 per cent, but it could try to talk down the currency.

Bharti Airtel up ahead of results

The stock is also in focus on acquiring financial solutions firm YTS Solutions.

Bharti Airtel has advanced over a percent to touch a high of Rs. 426 in early morning trades on the back of positive news flow.

According to reports, Bharti Airtel has acquired financial solutions firm YTS Solutions for an undisclosed amount and appointment of the latter's co-founder Manish Khera as CEO of its mobile wallet service Airtel M Commerce Services.

The telecom major is also scheduled to announce its earnings today.

The stock is now up 0.8 percent at Rs. 422, and around 25,000 shares have changed hands at the counter so far.

Meanwhile, the Sensex has slipped 74 points to 28,113.

RBI likely to hold rates; Rajan comments watched

The RBI has reduced its benchmark repo rate by 75 bps since January.

The Reserve Bank of India (RBI) is most likely to keep interest rates unchanged at its monetary policy review on Tuesday and markets will carefully interpret comments from Governor Raghuram Rajan to get clues on future course of action.

However, one financial daily quotes Moody’s Analytics as saying that the RBI could spring a surprise with a 25 basis point (bps) rate cut on Tuesday.

The RBI has reduced its benchmark repo rate by 75 bps since January. The last cut lowered the repo rate to 7.25% on June 2.

The RBI's next monetary policy review is set for Sept. 29, which would come after the Fed's September policy meeting. Going ahead, the Rajan & Co. will look for further direction on monetary policy from the overall monsoon season rainfall and its impact on domestic food prices, besides the Fed’s view on US interest rates.