The big economic news today is the Centre’s decision to ban as many as 59 Chinese mobile apps amid geopolitical tensions. The decision has led to fears of a trade war between India and China.
The benchmark stock indices though remain unflinched as they open the day with modest gains.
Join us as we follow the top business news through the day.
Gold poised for best quarter in 4 years as virus fears persist
A recap of the various factors driving gold’s out-performance this year.
Reuters reports: “Gold held close to a near eight-year peak on Tuesday, en route to its best quarter in more than four years, as worries over rising cases of the novel coronavirus and its economic fallout boosted safe-haven demand.
Spot gold was steady at $1,772.14 per ounce by 0703 GMT, just $6.92 shy of a near eight-year high of $1,779.06 hit last week. U.S. gold futures rose 0.3% to $1,787.30. Bullion, with quarterly gains of more than 12%, is on track for its best quarter since end-March 2016, and is also headed for a third straight monthly gain.
“Gold’s main supports right now are negative real interest rates across the U.S. yield curve, and risk event hedging. In that, you can lump U.S. COVID-19 situation, and U.S.-China relations,” said Jeffrey Halley, senior market analyst at OANDA.
A spike in COVID-19 cases in recent days has pushed some U.S. states to reverse re-openings and close businesses such as bars again to curtail its spread.
U.S. Federal Reserve Chair Jerome Powell said the outlook for the world’s biggest economy is “extraordinarily uncertain” and will depend both on containing the disease and on the government’s efforts to support the recovery. Central banks worldwide have adopted aggressive stimulus measures and kept interest rates low, helping the non-yielding asset surge more than 16% this year.
Capping gold’s advance were better-than-expected economic readings out of the U.S. and China, which lifted investors’ appetite for riskier assets.
“The fact gold prices remain fairly constructive around risk-on is a bullish sign in its own right,” said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.
Elsewhere, palladium gained 0.5% to $1,912.32 per ounce, platinum rose 0.8% to $811.78 and silver edged 0.1% higher to $17.87.”
US eager to work with India on 6GHz band for wireless, says Ajit Pai
The US is eager to work with India to harness the benefits of the powerful 6 GHz band for Wi-Fi and towards global harmonisation of this spectrum, Ajit Pai, the top American communications regulatory official has said.
Addressing to the US-India Business Council webinar on creating alignment in the 5G Ecosystem, Mr. Pai, Chairman of the Federal Communications Commission, said, “during my visit to India in February, I had a good discussion with Indian officials about our 6 GHz efforts, so I know that India is interested in exploring the possibilities of unlicensed use in this band.
“I’m eager to work with my Indian counterparts and other leaders around the world to harness the benefits of the 6 GHz band for Wi-Fi and then work together toward global harmonisation of this spectrum, the senior Indian-American official said.
Indian bond yields fall to over-1 week low after special OMO announcement
Yields have dropped in anticipation of further central bank buying.
PTI reports: “India’s benchmark 10-year bond yield dropped to its lowest level in over a week on Tuesday after the Reserve Bank of India announced a special open market operation to simultaneously buy and sell debt on July 2.
The yield dropped to a low of 5.86%, its lowest level since June 22 and down 4 basis points versus its close on Monday.
The RBI said on Monday it will buy up to 100 billion rupees ($1.32 billion) worth of papers in the 9-13 year tenor from the market on July 2, while also selling 6- and 12-month treasury bills of the same value.
“The market is happy that the RBI is at least watching and stepping in when it feels necessary. In the absence of an open market calendar, this is still some comfort,” the head of fixed income trading at a private bank said.
Traders expect the benchmark bond yield to remain in a tight 5.83% to 5.93% range in the near term in the absence of any fresh cues.
Seven Indian states are due to sell at least 90 billion rupees worth of debt later in the day with a greenshoe option to retain an additional 30 billion rupees.
Yields at the auction are expected to fall following the OMO announcement, traders said.
Foreign investors bought a net 14.2 bilion rupees worth of bonds on June 29, the highest single session buying since April 20, reflecting some return in appetite for domestic debt but traders said this could change in the absence RBI support.
“A more decisive roadmap of OMOs will be necessary to materially lower rates,” said Radhika Rao, an economist with DBS Bank.
“We expect domestic agents to be at the drivers’ seat to absorb this year’s supply, led by banks and the RBI, while foreign investors stay by the sidelines”.”
Chinese app ban: TikTok says in process of complying with govt order
The statement comes in the backdrop of the Centre’s decision to ban a number of Chinese apps as a way to retaliate against China’s military aggression.
PTI reports: “TikTok on Tuesday said it is in the process of complying with the government’s order on blocking of the app, and asserted that it has not shared information of Indian users with any foreign government, including that of China.
The short video-sharing company said it has been invited to meet with concerned government stakeholders for an opportunity to respond and submit clarifications.
India on Monday banned 59 apps with Chinese links, including hugely popular TikTok and UC Browser, saying they were prejudicial to sovereignty, integrity and security of the country.
Meanwhile, TikTok app has been taken down from Google Play store and Apple App store. According to sources, TikTok has taken down the app from these app stores on its own.
“The Government of India has issued an interim order for the blocking of 59 apps, including TikTok, and we are in the process of complying with it. We have been invited to meet with concerned government stakeholders for an opportunity to respond and submit clarifications,” Nikhil Gandhi, Head of TikTok, India said.
TikTok added that it continues to comply with all data privacy and security requirements under the Indian law and has not shared any information of its users in India with any foreign government, including the Chinese government.
“Further, if we are requested to in the future we would not do so. We place the highest importance on user privacy and integrity,” he said.”
TikTok and other Chinese apps are banned in India on security concerns. It narrows a growth market for Chinese tech and may embolden other governments to close doors. But Beijing can retaliate in pharmaceutical supply chains and more, argues @ugalani: https://t.co/LJLRl71qCY. pic.twitter.com/RjSSyrWCg3
— ReutersBreakingviews (@Breakingviews) June 30, 2020
‘Govt. must allow airlines commercial freedom’
The government must cease to control commercial decisions of India’s airlines to ensure their survival following the financial setbacks caused by the air travel restrictions necessitated by the COVID-19 pandemic, aviation consultancy CAPA India warned on Monday.
“Allowing complete commercial freedom is a must for the revival of airlines in India. No other major aviation market in the world imposes such barriers on their own carriers,” the firm said.
The removal of curbs would enable airlines to tap into sources of ancillary revenue such as extending zero-baggage fares — which would allow passengers with no baggage to benefit from lower fares, while those with baggage would pay an extra fee thus providing airlines a new source of income.
Global liquidity trumps the virus
global risk aversion and liquidity swamped any specific issues of the coronavirus: look at how Brazil’s stock market tanked relative to the rest of the world when it still accounted for a negligible proportion of global Covid cases, and then recovered at the wrong time/Authers pic.twitter.com/8QQD5lYyJ3
— Alexandre Penna R. (@apennatam) June 29, 2020
Rupee rises 13 paise to 75.45 against US dollar in early trade
The positive sentiment in equities has helped the rupee gain against the dollar.
PTI reports: “The rupee appreciated 13 paise to 75.45 against the US dollar in early trade on Tuesday tracking weakness in the greenback and gains in the domestic equity market.
Forex traders said positive domestic equities and weak US currency supported the local unit, while foreign fund outflows and concerns over rising COVID-19 cases weighed on investor sentiment.
The rupee opened at 75.48 against the US dollar, then gained further ground and touched 75.45 against the US dollar, up 13 paise over its previous close.
It had settled at 75.58 against the greenback on Monday.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.07 per cent to 97.46.
The 30-share BSE benchmark Sensex was trading 152.30 points higher at 35,113.82 and broader NSE Nifty rose 51 points to 10,363.40.
Foreign institutional investors were net sellers in the capital market as they sold shares worth Rs 1,937.06 crore on Monday, according to provisional exchange data.
Brent crude futures, the global oil benchmark, fell 0.62 per cent to USD 41.45 per barrel.
Meanwhile, the number of cases around the world linked to the disease has crossed 1.02 crore and the death toll has topped 5.04 lakh.
In India, the death toll due to COVID-19 rose to 16,893 and the number of infections spiked to 5,66,840, according to the health ministry.”
Global stocks rise, extending Q2 rebound as investors looked past neg Coronavirus headlines, choosing to focus on better than exp econ data: US pending home sales surged 44.3%, exceeding all forecasts. China PMI beats as well. Bonds lower w/US 10y 0.63%. Gold $1772, Bitcoin $9.1k pic.twitter.com/gZnCzzPCY5
— Holger Zschaepitz (@Schuldensuehner) June 30, 2020
Start-up gives hope to stroke survivors amid lockdown
During the lockdown, when brain stroke survivors could not visit a physiotherapy clinic or summon physiotherapists for continuing with treatment, SynPhNe (Synergistic Physio Neuro), a Digital Neurological Therapeutics start-up specialising in wearable technology solutions and therapy devices, changed its business model to help with their rehabilitation.
Patients with brain injury and those suffering from Parkinson’s disease require continual therapy, both for improving their condition and preventing regression. But due to the lockdown, many could not access the crucial service.
“Since the time of the COVID-19 outbreak, we transformed into an online therapy model. At this time, we noticed great deterioration in the condition of stroke patients because they needed regular sessions, but were apprehensive of exterior human contact,” Abhijeet Pandit, director & CEO, SynPhNe India Pvt. Ltd. told The Hindu.
India bans 59 apps including TikTok, UC Browser
As political tensions rise between India and China, the economy could be in for some collateral damage.
PTI reports: “India on Monday banned 59 apps with Chinese links, including hugely popular TikTok and UC Browser, saying they were prejudicial to sovereignty, integrity and security of the country.
The ban, which comes in the backdrop of current stand-off along the Line of Actual control in Ladakh with Chinese troops, is also applicable for WeChat and Bigo Live.
The list of apps that have been banned also include Helo, Likee, CamScanner, Vigo Video, Mi Video Call — Xiaomi, Clash of Kings as well as e-commerce platforms Club Factory and Shein.
This marks the largest sweep against the Chinese technology companies.
The Information Technology Ministry in a statement said it has received many complaints from various sources, including several reports about misuse of some mobile apps available on Android and iOS platforms for “stealing and surreptitiously transmitting users’ data in an unauthorised manner to servers which have locations outside India“.
“The compilation of these data, its mining and profiling by elements hostile to national security and defence of India, which ultimately impinges upon the sovereignty and integrity of India, is a matter of very deep and immediate concern which requires emergency measures,” the statement said.”
Indian shares rise on recovery hopes, Nifty set for best quarter in 11 years
The benchmark indices have begun the day with modest gains.
PTI reports: “Indian shares rose on Tuesday, with the benchmark index set for its best quarter since 2009, as upbeat U.S. and China data renewed economic recovery hopes, while investors awaited Prime Minister Narendra Modi’s speech later in the day.
The NSE Nifty 50 index rose 0.74% to 10,389.05 by 0351 GMT, while the benchmark S&P BSE Sensex was up 0.6% at 35,172.71.
The Nifty is set to close the quarter around 20% stronger, its best performance since June quarter of 2009, after a liquidity-driven rally from a four year low hit in March.
Tata Steel was the top boost on Nifty, gaining as much as 4.3% in early trade.
China’s manufacturing sector grew more than expected in June, lifting Asian shares, while strong U.S. housing data boosted Wall Street.
PM Modi will address the nation at 1600 hours local time (1030 GMT) on Tuesday, a day after the government announced a new set of guidelines to further ease restrictions on the lockdown.”
-Hong Kong stocks were little affected after China passed the new security law for the city, Hang Seng Index rose 0.8% as traders awaited details of the legislation
-South Korea, Japan, Australia stocks ⬆
-Oil ⬇ to $39.39 https://t.co/ITshoHkIzR pic.twitter.com/FoPzd9rGxW
— Bloomberg Asia (@BloombergAsia) June 30, 2020
Auto exports tumble 73% on lockdown, delayed orders
Even as automobile sector exports tumbled 73% in May 2020 to $230.3 million, the industry on Monday warned that inordinate delays in clearance for consignments from China may lead to a halt in the manufacture of vehicles in the country.
Import consignments from China are being subjected to ‘100% manual inspection, resulting in clearance delays’ amid continuing border tensions between India and its northern neighbour.
“Inordinate delays in clearance due to congestions at ports could eventually impact manufacturing of vehicles in India,” Rajan Wadhera, president, Society of Indian Automobile Manufacturers, said. “The industry is piecing itself together as growth is limping back; any further disruption at this juncture is best avoided.”