Fed cut the rates by 25 basis points but Wall Street was far from impressed. Nifty and Sensex bounced higher but Wall Street ended flat on Fed rate cut. The Federal Reserve cut the US Fed rates by another 25 bps resulting in an overall cut of 50 bps in the last 2 months, along expected lines. However, Wall Street was not too enthusiastic for two reasons. Firstly, US markets were disappointed about the lack of consensus among committee members. Also the dovish signals were not there with the Fed being ambivalent in its stance and vote for a rate cut slightly mixed at 7:3.
FPIs may not be buying secondary market equities, but foreign funds have been picking up their biggest share of stake in Indian road assets, At a time when the government and the capital markets have worried about FPIs selling a record $5 billion in equities in the Jul-Sep quarter, foreign investors have been quietly mopping up road assets to the tune of Rs.25,000 crore. Pension funds and sovereign funds from Canada, Abu Dhabi and Australia have picked up key road assets from IRB, GMR, Dilip Buildcon and L&T among others. Long term investors are beginning to see value in Indian infrastructure.
Commodity mutual funds fail to elicit interest from asset management companies a full four months after they were officially approved by SEBI. Commodity mutual funds are not really taking off in India as insiders believe that things were getting stuck on accountability for physical delivery. SEBI had approved commodity mutual funds in May following long consultations with the mutual funds but no AMC has come forward to launch a commodity fund. Things may change with Deutsche applying for a commodity custodian license, since commodity custody was the stumbling block.
Despite the hue and cry over BRERXIT, the EU may be more worried about Germany than about BREXIT. Even as Boris Johnson juggles between a deal and “no deal” exit, the real worry for major EU members is the slowdown in Germany. In the recent past, Germany had reported weak trade data as well as weak industrial output. France has already pointed to this slowdown as the biggest threat to the EU since Germany is the largest and most powerful economy in the European region and is today the world’s largest net exporter to the rest of the world, adding their economic prowess.
Brent crude slid marginally to $63.76/bbl after the sharp fall in oil prices on Tuesday, the prices slid further on Wednesday after Saudi Arabia committed to restoring full supply by the end of September. However, oil is still way above the sub-60 levels that it had touched in the earlier week. The production of crude in Saudi Aramco had received a major shock after Saudi announced 50% cut in output following the drone attacks. Meanwhile, Trump hinted at many options with Iran, short of full fledged war. Trump hinted at many more action points with Iran short of a full-fledged war. In fact, the US has already expanded the gamut of its sanctions on Iran after Saudi presented evidence to the US about Iran’s involvement. Saudi and the US have alleged that the drone attacks were sponsored by Iran.
Microsoft approved its $40 billion stock repurchase program. In one of the biggest stock buyback programs in global history, Microsoft announced a $40 billion offer to shareholders. Microsoft has been among the top performing software companies in the US with market cap well beyond $1 trillion and has been among the top wealth creators. This shareholder payout via buyback will be in addition to a higher quarterly dividend declared. During the last one year, Microsoft has outperformed other FAANG stocks like Facebook, Amazon, Netflix and Google, led by the young Sathya Nadella.
