Markets

Spooked by US-China trade talks collapse, markets bleed

Our Bureau Mumbai | Updated on May 06, 2019 Published on May 06, 2019

Global meltdown an overreaction: experts

Stock markets across the world crashed on Monday on the back of news that US-China trade talks had collapsed.

India’s benchmark indices — the Sensex and the Nifty — declined by nearly one per cent after reports that US President Donald Trump admitted that trade talks with China were not only not going “optimistically”, but have effectively collapsed and tariffs on Chinese imports would be hiked. The Sensex fell 362 points to close at 38,600 and the Nifty was down 114 points at 11,598. Yet, experts who spoke to BusinessLine said they are sceptical about the fall in markets merely based on a statement from the US President who could change his stance the very next day.

 

 

China’s benchmark Shanghai Composite crashed 5.58 per cent and the SZZE Component, the key index in Shenzhen, was down 7.56 per cent. There was a sea of red globally as there was overnight selling in risk assets and currencies. Money was flowing into safe havens like the US dollar and treasuries. The MSCI World Index, which comprises all top indices, fell nearly half a per cent.

“Such news-based selling has often been seen lacking follow-through. In India, with election results around the corner, the markets could swing both ways in the coming weeks,” said Rohit Srivastava, fund manager, Sharekhan-BNP Paribas. “A larger market correction could still be months away. Currently, it seems like an overreaction to the news.”

The results of the ongoing Lok Sabha polls will be declared on May 23.

In the US, the Dow Jones futures were down more than 1.5 per cent. The index fell more than one per cent soon after opening. The S&P 500, another benchmark, was down 1.25 per cent. Silver futures in the US were down nearly a per cent while gold too fell by 0.25 per cent. The leverage in silver is often high, making it highly volatile.

Major gainers & losers

In India, Zee Entertainment, Titan Company, YES Bank, Tata Motors and JSW Steel were among the major losers. BPCL, TCS, ITC, Bajaj Finserv and Bharti Airtel were the major gainers. Except the IT index, all other sectoral indices closed with losses led by metal, infra, bank, auto, pharma and FMCG.

Published on May 06, 2019
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