On Wednesday, Jerome Powell, in his testimony to the US House of Representatives Financial Services Committee, signalled that Fed would hike rates less than expected due to the impact of Russia’s invasion of Ukraine. However, he did indicate that a 25 bps rate hike in March was on the cards. The CME Fedwatch has assigned a 95% probability to a 25 bps rate hike in March while probability of a 50 bps rate hike in March fell to zero after the testimony. This led to financials in the US bouncing 2.8% pushing Dow higher.
Vedanta Ltd, part of Anil Agarwal’s global metals and minerals conglomerate, has agreed to pay the third dividend during the financial year. This is the third dividend declared during the year as a sharp rally in commodity prices has boosted its earnings. Vedanta will pay a third interim dividend of Rs.13 per equity share to the shareholders. The stock of Vedanta is already at its yearly highs as the surge in global prices of commodities and attractive dividend yield have made the stock an interesting proposition for investors.
After abstaining from the UN Security Council resolution against Russia, India also abstained from the UN General Assembly (UNGA) resolution. The resolution deplored Russia’s aggression in Ukraine. Some of the countries voting for UNGA resolution included Afghanistan, Canada, France, Germany, Ireland, Kuwait, Singapore, Turkey etc. The resolution required a two-third majority and was passed by 141/161. There were a total of 15 abstentions, including. UNSC resolution fell through as Russia exercised its veto power.
RBI is estimated to have sold close to $2 billion worth of dollars in the currency markets to curb swings in the exchange rate. This was one of the biggest central bank interventions taken up by the RBI in the last few years. The rupee has come under tremendous pressure amidst rising crude prices and the uncertain situation created by the ongoing Russia Ukraine war. Most of the state owned banks were selling dollars through spot and GIFT city branches. RBI’s intervention has helped the rupee to stay under Rs.76/dollar.
As per early estimates by the Ministry of Commerce, merchandise exports for Feb-22 were up 22.36% you at $33.81 billion. The exports were driven by engineering goods, petro products and gems & jewellery. However, the pace of exports growth has been slackening in the last few months due to the supply chain constraints imposed by the ongoing war. Merchandise imports for Feb-22 stood at $55.01 billion, which is almost 35% higher on yoy basis. This resulted in a huge trade deficit of $21.19 billion for the month.
On a volatile day, Brent Crude prices crossed $113/bbl, the highest level seen since June 2014. Supply disruptions were visible as Russia was virtually cut off from the global oil markets. There was a virtual scramble among oil buyers to seek alternate sources of oil in a market that is already supply constrained. Brent closed around $111.50/bbl, but the pressure is unmistakable. Russia is the second largest producer of oil in the world after the US and accounts for 8% of global supply. IEA is releasing 60m barrels from SPR.
The Aluminium Association of India (AAI) has sent an SOS to the government over the power shortage. They have asked the PMO to assure at least 25-30 coal rakes per day for the power intensive aluminium sector. The association has asked the PMO to intervene in the matter. This was despite coal stocks higher by 20% in this period. Most of the captive power plants of aluminium companies are left with just about 3-4 days of coal stocks. Producing one tonne of aluminium needs nearly 14,500 units of continuous power.
India’s Manufacturing PMI showed positive momentum growing to 54.9 in Feb-22 from 54 levels in Jan-22. While PMI above 50 indicates expansion, the momentum is evident from the sequential numbers. While manufacturing activity expanded in Feb-22, new orders also grew at an accelerated rate. Feb-22 PMI points to improvement in overall operating conditions for the 8th month in succession. There were positive triggers like higher output, new work intakes, input buying and higher inventory accumulation.