Oil drops nearly 6% on US-China trade war, copper drops to multi month lows & rupee gains after election results

18th May - 24th May

1. The rupee gained strength from weakness in crude oil and election results

May 23, 2019

The Indian rupee continued its recovery for the second day post election results, which were in favour of the ruling BJP and NDA getting a clear majority in the house, and also on account of softer crude oil prices. A major correction in crude oil prices also provided support to the domestic currency. The US-China escalating trade tensions are keeping emerging market currencies under pressure.

Source: Economic Times

2. Oil drops nearly 6% over intensifying US-China trade war

May 24, 2019

Oil drops nearly 6% over the intensifying US-China trade war; fuel demand may drop in the second half of the year. Oil prices dropped along with global equities as the trade war could possibly slow down global economic growth and weaken fuel demand. Crude also lost ground as Middle East tensions are moderating now. Any further action is not seen from both the US and Iran post the last threat.

Source: Money control

3. SEBI allows Mutual Funds in Commodities

May 22, 2019

SEBI issued final guidelines and allowed MF’s to invest in exchange-traded commodity derivatives with an aim to deepen the commodity market. Allowing mutual funds into the commodities segment is a more than welcome step. Indian investors have waited so long for such products which have commodities as underlying.

Source: Money control

4. Crude oil inventories swelled to highest since July 2017

May 22, 2019

U.S. crude inventories swelled by 4.7 million barrels in the latest week against market expectations of a drop of 599,000 barrels, according to a weekly report published by the US Energy Information administration. Crude oil inventories are at 476.8 million barrels, which is the highest level since July 2017.

Source: Reuters

5. India gold imports rose to $3.97 bn in April’19 against $2.58 bn in April’18

May 22, 2019

According to Commerce Ministry data, gold imports rose to $3.97 bn in April’19 against $2.58 bn in April’18. Indian imports nearly 800-900 tonnes of gold annually.  India imported nearly $32.8 billion worth of gold during FY19. The gold import bill is second largest in India after crude oil and has a direct impact on the Current Account Deficit (CAD). A higher CAD will lead to a weaker rupee.

Source: First post

6. US steel industry capacity utilization rate increased at 82% post trade war with China

May 21, 2019

The tariff war is affecting the world economy in a number of areas. The current capacity utilisation of US steel industry at 82% is significantly higher by 10% as compared to the level achieved prior to March 2018.  The US announced a number of stimulus measures of investment in infrastructure. The costly steel imports in US benefited the indigenous steel manufacturers to derive maximum benefits by raising steel prices.

Source: Financial Express

7. Indian household holding increased to 40% of GDP

May 21, 2019

According to the WGC report, Indian households have accumulated near 25,000 tonnes of gold, which is more than 40% of the nominal GDP of FY19. India stands among the largest buyers of gold jewellery and coins during festivals and weddings and there is a tradition of accumulating gold on such occasions for a better future. Indians term gold buying as auspicious and it is a symbol of rich rituals.

Source: Financial Express

8. Copper drops to multi-month lows over mounting trade tensions

May 22, 2019

Copper prices fell to their multi-month lows amid the unresolved Sino-U.S. trade tensions. Both US and China have increased tariffs on goods imported from each other. Now the US is taking strict action on Chinese technology company - Huawei. Chinese President Xi Jinping warned of difficult times ahead.

Source: Reuters