India’s stock market has a rising local flavour

SINGAPORE – Swiggy is living up to its reputation for doing things quickly. The Indian food and grocery delivery company backed by Prosus and SoftBank Group will on Wednesday start taking orders for its USD 1.35 billion Mumbai initial public offering. It’s shrugging off the volatility US elections could induce in markets. The timing reflects both the issuer’s urgency and the increasing role of domestic investors in the USD 5 trillion stock market.

There are a couple of reasons to rush. Swiggy’s largest rival, publicly traded Zomato, is planning to raise up to USD 1 billion in a secondary equity offering. The USD 25 billion company is cashing up ahead of an entry by Mukesh Ambani’s giant conglomerate Reliance Industries into “quick-commerce”, the home delivery of grocery items within 10 minutes or so. What’s more, India’s economic growth is slowing and consumption signals are starting to flash red.

For its part, Swiggy has scaled back its ambition. Its targeted market value of USD 10.4 billion at the upper end of the price range is less than the headline figure of its last fundraising round in 2022. And it equates to a multiple of 6.6 times forward sales after annualizing revenue during the three months to the end of June, or nearly half the multiple of Zomato. Nonetheless, Swiggy’s shrinking premium in the grey market – a metric Indian media love to shout about – implies a muted debut when the stock officially debuts around Nov. 13.

Issuers can at least rely on a local cushion. Indians continue to pump their savings into the market at a time when overseas investors are cashing out: foreigners sold a monthly record USD 11 billion of stock in October, taking the Nifty 50 benchmark down 6%, though companies still trade on average at a punchy 24 times forward earnings. The downward drag would have been greater in the past. Foreign ownership of stocks at 17.5% is near a 12-year low, according to data provider Primeinfobase. That makes the timing of Swiggy’s share sale look slightly less bold.

CONTEXT NEWS

Indian food and grocery delivery company Swiggy will on Nov. 6 start accepting orders from retail investors for shares in its initial public offering.

The Prosus and SoftBank-backed company is seeking to raise up to USD 1.35 billion at a valuation of up to USD 10.4 billion at the upper end of the marketed price range, per a term sheet seen by Breakingviews.

(Editing by Una Galani and Aditya Srivastav)

Bracing for higher US yields, dollar, inflation

Investors in Asia wake up on Thursday to a global market landscape redrawn by Donald Trump’s resounding US election victory that has propelled Wall Street to new highs and sparked a huge surge in the dollar and US bond yields.

Any appetite for ‘risk on’ trades in sympathy with the US equity rally will be largely offset, perhaps completely snuffed out, by tighter financial conditions from the rise in Treasury yields and the dollar.

Emerging market currencies fell across the board in Wednesday’s global session – Mexico’s peso slumped as much as 3% before recovering – and Asian exchange rates could come under heavy selling pressure on Thursday too.

Depending on the speed and extent of the selloff, some central banks may feel forced to intervene. The central banks of India and Indonesia, for example, have intervened in the FX market already this year to support their weak currencies.

At one point earlier on Wednesday the US dollar was up nearly 2% on an index basis, which would have been its biggest one-day rise since June 24, 2016 – the day after the Brexit referendum, which sank sterling.

The dollar gave back some gains and Treasuries clawed back some of their heavy losses late on Wednesday, as the huge spike in yields attracted strong demand at an auction of 30-year bonds.

Will investors in Asia on Thursday stick with the so-called ‘Trump trades’ – bets linked to higher federal spending, deficits and inflation, and greater deregulation – or will they exert restraint, and await more attractive levels to re-enter?

Among the biggest moves of Wednesday’s session was bitcoin’s rise of almost 10% to a record high of USD 75,459 as investors bet on the Trump administration implementing policies that will help cement cryptocurrencies’ place in the financial ecosystem.

As if the US election tumult wasn’t enough, the Federal Reserve announced its interest rate decision on Thursday after a two-day meeting. This could provide investors with the cover to reduce risk exposure and trade more defensively on Thursday.

Perhaps fittingly, the first full day of market trading in Asia following Trump’s victory sees the release of Chinese trade and foreign exchange reserves data.

China has been the main target of Trump’s fiery rhetoric about global trade and how the US has suffered from unfair practices practiced by Beijing. He has said imports from China will be subject to tariffs of 60%, perhaps even higher.

Official figures on Thursday are expected to show that export growth accelerated in October to an annual rate of 5.2%, boosted by steep discounts, while imports likely shrank 1.5%, according to a Reuters poll.

Thursday’s calendar also includes the latest Australian trade figures, GDP data from the Philippines, and second-quarter earnings from Japan’s Nissan.

Here are key developments that could provide more direction to markets on Thursday:

– Further reaction to US presidential election

– China trade (October)

– Philippines GDP (Q3)

(Reporting by Jamie McGeever; Editing by Diane Craft)

Gold rises as markets gird for US election outcome

Gold prices edged up on Tuesday as investors braced for political tensions after opinion polls showed Donald Trump and Kamala Harris are neck and neck in the US presidential election where chances of a contested result are high.

Spot gold gained 0.2% to USD 2,740.96 an ounce by 01:54 p.m. ET (1852 GMT). US gold futures settled 0.1% higher at USD 2,749.70.

Gold is supported by “the uncertainty of the elections. Part of it is what happens if things don’t go so smooth, part of it is the possibility of tariffs, some kind of economic changes,” said Daniel Pavilonis, senior market strategist at RJO Futures.

With a dead heat between Republican former President Trump and Democratic Vice President Harris and control of the US Congress also at stake, investors are particularly nervy about an unclear or contested result, especially if it fuels unrest.

“Should the election result be uncertain for days or even weeks, gold would benefit from the resulting uncertainty,” Commerzbank said in a note.

Trump has repeatedly said any defeat could only stem from widespread fraud, echoing his false claims from 2020. The winner may not be known for days if the margins in key states are as slim as expected.

Gold should ultimately reach USD 2,800 “once the dust settles” after the election, Exinity Group Chief Market Analyst Han Tan said.

Elsewhere, markets widely anticipate a quarter-point cut from the Federal Reserve on Thursday, a further reduction to US interest rates this year after a big cut in September.

Bullion is traditionally seen as a hedge against economic and political uncertainty, and tends to thrive when interest rates are low. This has helped the metal rise nearly 33% so far this year.

Spot silver rose 0.4% to USD 32.59 an ounce, platinum added 1.5% to USD 998.35 and palladium was down 0.2% at USD 1,072.50.

A private sector survey in top metals consumer China showed services activity expanded at its fastest pace in three months in October.

(Reporting by Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Sharon Singleton, Andrea Ricci, Chris Reese and Mohammed Safi Shamsi)

The waiting is over … almost

Investors in Asia are bracing for a day of potential high drama and volatility on Wednesday as the outcome of Tuesday’s US presidential election begins to emerge.

Whether the final result is known in Asian hours remains to be seen – that could take days if the count in certain key swing states is tight – but the yen, gold, dollar, and Treasury futures could be most sensitive to election-related swings in sentiment.

Wednesday’s trading in Asia may ultimately be marked by volatility and uncertainty, but markets may open on a solid footing after a strong reading of US service sector activity sparked a broad-based rally on Wall Street on Tuesday.

The three main US equity indices rose at least 1.00%, while gauges of implied stock market volatility remained subdued. US equity investors, at least, went into election day in a reasonably upbeat mood.

The dollar weakened significantly and US bond yields also rose, which is often a bad combination for Asian and emerging markets. Implied US bond market volatility remains elevated too, with the “MOVE” index at its highest in a year.

Currency market volatility is also high. A broad measure of G10 FX implied “vol” is hugging the 18-month high struck last week, while one-week dollar/Mexican peso implied vol is at the highest since March 2020 and one-week implied vol for China’s offshore yuan is at a record high.

The Mexican peso and Chinese yuan are two currencies that could be hit hardest by extra trade restrictions and import tariffs imposed by Washington, a scenario most likely to play out if Donald Trump wins the election.

Investors will also be sensitive to the announcement of any economic support measures from China’s Standing Committee of the National People’s Congress that is convening this week in Beijing.

Shanghai stocks closed at a four-week high on Tuesday, boosted by upbeat comments from Premier Li Qiang on China’s recovery and improving economic data. Services activity expanded in October at the fastest pace in three months, a private survey on Tuesday showed.

The Asian calendar on Wednesday, meanwhile, includes an interest rate decision from Malaysia, inflation data from Taiwan and Thailand, and services PMI data from Japan and India.

The Bank of Japan releases minutes of its September policy meeting, and Reserve Bank of India Governor Shaktikanta Das speaks, while on the corporate front, the world’s largest automaker Toyota releases second-quarter results.

Toyota is expected to post a quarterly operating profit of almost USD 8 billion, marking its first profit drop in two years and signaling cooler demand after a run of robust earnings helped by a consumer shift away from electric vehicles.

Here are key developments that could provide more direction to markets on Wednesday:

– Reaction to US presidential election result

– Malaysia central bank decision

– Japan services PMI (October)

(Reporting by Jamie McGeever; Editing by Lisa Shumaker)

Yen bulls have the edge

Yen bulls are gathering momentum, no matter the outcome of the US elections.

Election risks are significant. Breakevens for overnight options suggest USD/JPY can easily test 150 or 154 once voting outcomes become clearer. Conventional thinking suggests a Kamala Harris victory is negative for USD/JPY and a Donald Trump win is positive.

That said, there is a slight bearish bias in option activity and pricing, with some traders seeing USD/JPY slumping below 150 should the “Trump trade” and yen shorts unravel. Turnover in USD/JPY options with strikes set below current spot is outpacing those with higher strikes about 3 to 1, DTCC data shows. Part of the turnover is likely hedging short yen positions built up since USD/JPY topped 150.

But there are other potentially yen-positive factors at play outside the election outcome. First, the Fed will likely deliver a 25 basis point cut this week. Second, a post-election drop in volatility should buoy US equites, weighing on the dollar. Third, political uncertainty in Japan may ease if a new ruling coalition is formed prior to Monday’s special session of Parliament. Finally, the odds of a December Bank of Japan rate hike are edging up.

Technically, a USD/JPY close below its 200-DMA of 151.60 would open up a test of the key 150 psychological level. A further drop below the 149.09 Oct. 21 low would put the focus on the pair’s thinning Ichimoku cloud.

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

China stocks end at 4-week high as Premier expresses confidence in economic recovery

SHANGHAI – Mainland China stocks closed at a four-week high on Tuesday, after Chinese Premier Li Qiang expressed confidence in the country’s economic recovery, while recent data showed signs of improvement.

Li told the opening ceremony of the annual China International Import Expo that he was confident China will meet this year’s growth target, and that authorities had fiscal and monetary tools at their disposal.

Market sentiment also improved after a private survey showed that China’s services activity expanded at the fastest pace in three months in October.

But the US presidential election remained the key focus of markets globally, with opinion polls showing Vice President Kamala Harris and former President Donald Trump virtually even.

** The Shanghai Composite index closed up 2.32% at 3,386.99 points, while the blue-chip CSI 300 jumped 2.53% to 4,044.57 points. Both indexes finished at the highest level since Oct. 8.

** Hong Kong’s benchmark Hang Seng index gained 2.14% at 21,006.97 points, its strongest closing level since Oct. 14. The Hang Seng China Enterprises index advanced 2.56% to 7,556.62 points.

** As part of his pitch to boost American manufacturing, Trump has promised voters he will impose tariffs of 60% or more on goods from China. Trump’s proposed tariff and tax policies are seen as inflationary, and therefore, likely to keep US interest rates high and undermine currencies of trading partners.

** “Direct US tariffs on imports from China may have less impact than in 2018, but further tightening of the supply chain measures introduced by the Biden administration or indeed sweeping tariffs against intermediary countries have the potential to cause greater damage to China’s economy,” said Jon Harrison, managing director for EM macro strategy at TS Lombard.

** “At the same time, Beijing’s change of direction on stimulus, including a focus on supporting equities and boosting consumption, will help to cushion the market impact.”

** Separately, Chinese lawmakers reviewed a cabinet bill that would raise ceilings on local government debt to replace existing hidden debt as the standing committee of China’s top legislature started their meeting on Monday, state media Xinhua reported.

(Reporting by Shanghai Newsroom; Editing by Sherry Jacob-Phillips and Varun H K)

Eerie pre-US election calm, RBA sets rates

A look at the day ahead in Asian markets.

As investors make last-minute position adjustments ahead of the US presidential election, a flood of top-tier economic indicators and a major policy decision could kick trading activity in Asian markets up a couple of gears on Tuesday.

Inflation numbers from South Korea, the Philippines and Thailand, third-quarter GDP from Indonesia, a services purchasing managers index report from China, and an interest rate decision from Australia all land before polling stations open across the US.

Japanese markets are open after Monday’s Cultural Day holiday, which should boost yen trading volume. The dollar slipped as low as 151.50 yen on Monday as U.S. yields retraced some of last week’s steep rise, and as investors unwound some of their so-called ‘Trump trades’ of recent weeks.

There was an eerie sense of a calm before the storm on Monday – world stocks were flat, Wall Street gave back some of Friday’s gains, Treasury yields dipped, and US bond market volatility likely eased off Friday’s one-year high.

The weekend produced a flurry of polls that both Republicans and Democrats could point to as evidence they are on track to win the White House, the most notable perhaps being the Des Moines Register/Mediacom Iowa Poll which showed Kamala Harris has a surprise 3-point lead over Trump in the typically Republican-leaning state.

Even if that is the case, it still shows a very tight race. As Deutsche Bank’s Jim Reid highlights, RealClearPolitics data shows polling averages put Trump at 48.5% and Harris at 48.4%.

On this measure, the two candidates have been within two percentage points of each other since mid-August.

In terms of the popular vote, this could be the closest election on record, Reid notes.

Before that, however, Tuesday’s Asia & Pacific calendar is brimming with key releases, chief among them the Reserve Bank of Australia’s policy decision.

The RBA is widely expected to leave its cash rate on hold at 4.35%, where it has been since November last year, in the face of solid economic growth and sticky core inflation.

Traders reckon the RBA will be one of the most hawkish G10 central banks, cutting rates by little more than 50 basis points by the end of next year. That compares with cumulative cuts of 100 bps or more from their counterparts in the US, Euro zone, Britain, Canada and New Zealand.

Annual inflation in South Korea is expected to have cooled to 1.4% in October, which would be the lowest since February 2021, while Indonesia’s economy expanded at an annual rate of 5% in the July-October period, according to a Reuters poll.

If China’s manufacturing PMI figures are any guide, the Caixin services PMI on Tuesday could show the sector recorded modest growth in October.

Here are key developments that could provide more direction to markets on Tuesday:

– US presidential election

– Australia central bank decision

– China Caixin services PMI (October)

(Reporting by Jamie McGeever, editing by Bill Berkrot)

Dollar dips as US election outcome remains uncertain, Fed rate cut looms

SYDNEY – The dollar slipped in Asia on Monday as investors braced for a potentially pivotal week for the global economy as the United States chooses a new leader and, probably, cuts interest rates again with major implications for bond yields.

The euro rose 0.4% to USD 1.0876 but faces resistance around USD 1.0905, while the dollar dipped 0.3% on the yen to 152.45 yen. The dollar index eased 0.3% to 103.94.

Democratic candidate Kamala Harris and Republican Donald Trump remain virtually tied in opinion polls and the winner might not be known for days after voting ends.

Analysts believe Trump’s policies on immigration, tax cuts and tariffs would put upward pressure on inflation, bond yields and the dollar, while Harris was seen as the continuity candidate.

Dealers said the early dip in the dollar might be linked to a well-respected poll that showed Harris taking a surprise 3-point lead in Iowa, thanks largely to her popularity with female voters.

“It is widely considered that a Trump win will be positive for the USD, though many feel this outcome has been discounted,” said Chris Weston, an analyst at broker Pepperstone. “A Trump presidency with full control of Congress could be most impactful, as one would expect a solid sell-off in Treasuries resulting in a spike higher in the USD.”

“A Harris win and a split Congress would likely result in ‘Trump trades’ quickly reversed and priced out,” he added. “The USD, gold, bitcoin and U.S. equity would likely head lower.”

Uncertainty over the outcome is one reason markets assume the Federal Reserve will choose to cut rates by a standard 25 basis points on Thursday, rather than repeat its outsized half-point easing.

Futures imply a 99% chance of a quarter-point cut to 4.50%-4.75%, and an 83% probability of a similar-sized move in December.

“We are pencilling in four more consecutive cuts in the first half of 2024 to a terminal rate of 3.25%-3.5%, but see more uncertainty about both the speed next year and the final destination,” said Goldman Sachs economist Jan Hatzius.

“Both our baseline and probability-weighted forecasts are now a bit more dovish than market pricing.”

The Bank of England also meets Thursday and is expected to cut by 25 basis points, while the Riksbank is seen easing by 50 basis points and the Norges Bank is expected to stay on hold.

The Reserve Bank of Australia holds its meeting on Tuesday and again is expected to hold rates steady.

The BoE’s decision has been complicated by a sharp sell-off in gilts following the Labour government’s budget last week, which also dragged the pound lower.

Early Monday, sterling had regained some of its losses to stand at USD 1.2963, some way from last week’s trough at USD 1.2841.

More stimulus is also expected from China’s National People’s Congress, which is meeting from Monday through Friday.

Sources told Reuters last week that Beijing is considering approving next week the issuance of more than 10 trillion yuan (USD 1.40 trillion) in extra debt in the next few years to revive its fragile economy.

(Reporting by Wayne Cole; Editing by Lisa Shumaker)

Nvidia to take Intel’s spot on Dow Jones Industrial Average

Intel will be replaced by Nvidia on the blue-chip Dow Jones Industrial Average index after a 25-year run, underscoring the shift in the chipmaking market and marking another setback for the struggling semiconductor firm.

Nvidia will join the index next week along with paint-maker Sherwin-Williams, which will replace Dow, S&P Dow Jones Indices said on Friday.

Once the dominant force in chipmaking, Intel has in recent years ceded its manufacturing edge to rival TSMC and missed out on the generative artificial intelligence boom after missteps including passing on an investment in ChatGPT-owner OpenAI.

Intel’s shares have declined 54% this year, making the company the worst performer on the index and leaving it with the lowest stock price on the price-weighted Dow.

Shares of Intel fell 1.6% in extended trading on Friday, while those of Nvidia were up 2.2%.

This development comes a day after Intel expressed optimism about the future of its PC and server businesses, projecting current-quarter revenue above estimates but warning that it had “a lot of work to do.”

“Losing the status of Dow Jones inclusion would be another reputational blow for Intel, as it grapples with a painful transformation and loss of confidence,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

“It would also mean that Intel is not included in exchange-traded funds (ETFs) which track the index, which could impact the share price further.”

Launched in 1968, the Silicon Valley pioneer sold memory chips before switching to processors that helped launch the personal computer industry.

In the 1990s, “Intel Inside” stickers turned commodity electronic components into premium products, and eventually became ubiquitous on laptops.

Intel’s revenue was $54 billion in 2023, down nearly one-third from 2021, when Pat Gelsinger took over as CEO. Analysts expect Intel to report its first annual net loss this year since 1986.

The company is worth less than $100 billion for the first time in 30 years.

That pales in comparison to Nvidia, which is sitting at a USD 3.32 trillion valuation, making it the world’s second-most valuable company.

Nvidia’s AI lead

Nvidia has emerged as a cornerstone of the global semiconductor industry, thanks to the essential role its chips play in powering generative AI technologies which has driven a seven-fold surge in its shares over the past two years.

The company’s shares have risen more than two-fold this year alone.

Once popular only among gamers who hunted for PCs with Nvidia’s graphics processors, it is now seen as a barometer for the AI market.

The company’s 10-for-one stock split that took effect in June also helped pave the way for its addition to the index, making its soaring shares more accessible to retail traders.

Intel, on the other hand, has struggled to gain share in the AI chip market dominated by Nvidia, with the front-runner’s chips hard to get and even harder to replace in AI datacenters, owing to the processors’ technological edge and the high costs of replacing them.

(Reporting by Akash Sriram, Arsheeya Bajwa, Deborah Sophia and Sourasis Bose in Bengaluru; Editing by Maju Samuel)

Gold at record high as global political uncertainty boosts safe-haven demand

Gold prices rose to a record high on Wednesday as uncertainty over the US presidential election boosted safe-haven demand, with traders also awaiting economic data for cues on the Federal Reserve’s policy path.

Spot gold rose 0.5% to $2,788.87 per ounce by 9:55 a.m. ET (1355 GMT), after reaching an all-time high of USD 2,789.73 earlier in the session.

U.S. gold futures settled 0.7% higher at USD 2,800.8.

“We have elections coming up, the political climate here is just very uncertain, the Fed is cutting interest rates, prospects of Russia, Ukraine,” said Daniel Pavilonis, senior market strategist at RJO Futures.

“There’s just so much out there to push gold higher, and all the negative news out there is what gold is really looking for. The next step higher is probably USD 2,850,” Pavilonis said.

The US Presidential election season is reaching its climax on Nov. 5, with tight polling between Republican former President Donald Trump and Democratic Vice President Kamala Harris.

Gold, traditionally a hedge during geopolitical instability, has surged 35% this year, on course for its best annual performance since 1979. Low interest rates have further supported the rally.

Gold may reach USD 3,000 by 2025 amid emerging market concerns, gold ETF inflows, and post-election market adjustments, said Dominik Sperzel, head of trading at Heraeus Metals Germany. GOL/ETF

Meanwhile, data showed US private payrolls growth surged by a higher-than-expected 233,000 jobs in October, despite fears of temporary disruptions from hurricanes and strikes. The US gross domestic product increased at a 2.8% annualized rate.

Fed policymakers are expected to cut rates by a quarter-point next week. Markets are also focused on US Personal Consumption Expenditures and payrolls data, due Thursday and Friday.

Palladium dropped 5.8% to USD 1,151.75 per ounce, after reaching a 10-month high on Tuesday.

According to a trader, there are bets that there are going to be no sanctions on Russian palladium if Trump wins next week. This is creating space for the market to pay more attention to signals that the situation is easing for Sibanye Stillwater

Spot silver lost 1.7% to USD 33.87 per ounce, while platinum slid 2.8% to USD 1,014.10.

(Reporting by Anjana Anil and Anushree Mukherjee in Bengaluru; Editing by Tasim Zahid and Shreya Biswas)

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