Markets Whipsaw, Dow Jones Hits All Time High
The Dow Jones Industrial Average shot above 40,000 for the first time as the bull market marched higher on bets that inflationary pressures would ease and interest rates would come down
Our Top Reports For Today
- (00:00) Stories Of The Day
- (01:00) Markets whipsaw, Dow Jones hits all time high
- (04:18) Silver is back in the reckoning, hits all time highs, where could it go next?
- (09:56) Steel companies want more tariffs on Chinese imports
- (11:41) Mahindra says it will invest in electric cars, Volkswagen says it is pulling back
- (14:15) Why businesses have to think of and invest in disaster resilience
NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.
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Markets Whipsaw
The stock markets are increasingly seeing same day swings, including yesterday, with the BSE Sensex oscillating 1,220 points during the day.
The swings are obviously reflecting the nervousness at this point arising from the inability of the market to get a precise read on the political temperature.
The markets as we have discussed have priced in a BJP victory but are now manifesting the same nervousness the ruling party has been transmitting in its public utterances.
While the jitteriness has reduced, possibly because internal exit polls have given them some confidence, it is still there.
The ruling party’s senior leadership has also taken to talking up the market directly which is usually not a good idea.
Just two weeks ago there were rumours, subsequently quashed publicly by the FInance Minister, that there could be an increase in taxes on income from stock market transactions.
While any Government would be itching to increase taxes, doing so obviously will cause markets to fall.
Conversely, if there is a likelihood of reduction of taxes - let's say to the earlier position in ____ of no capital gains on stock market gains after a year, then the markets would surely go up.
The BSE Sensex swung 1,220 points during the day, before closing at 73,663, up 677 points while the Nifty50, meanwhile, closed at 22,404, up 203 points. In doing so, they closed at their highest level in seven sessions.
To get a sense of how the markets have moved this month, they fell over 1,800 points month-to-date (till May 9, 2024) and then regained some lost ground, having risen 583 points in four sessions.
On the National Stock Exchange, the NSE Nifty50 pulled up 243 points during the period.
In the global markets, it's all good for now.
The Dow Jones has hit an all time high.
The Dow Jones Industrial Average shot above 40,000 for the first time as the bull market marched higher on bets that inflationary pressures would ease and interest rates would come down.
The Dow was last up 83 points, or 0.2%. At its high of the day, the average touched 40,0051, the culmination of a bull market that began in October 2022, CNBC reported.
The S&P 500 and the Nasdaq Composite also hit all-time highs. The Dow has climbed more than 6% for 2024, while the Nasdaq and S&P 500 are up 11% each.
Adani Under Fire
Meanwhile, Norges Bank, Norway's Central Bank said on Wednesday that it was excluding 3 companies from its government pension fund due to ethical considerations.
The companies are India's Adani Ports and Special Economic Zone (APSEZ), United States-based L3 Harris Technologies, and China's Weichai Power.
Adani Ports, part of billionaire Gautam Adani's conglomerate, was excluded due to the fund’s concerns about its potential contribution to “serious violations of individuals' rights in situations of war or conflict”.
This does of course increase the size of the cloud that is already hanging over the company and group, particularly since the Hindenburg Research revelations in January last year.
But the group appears to have weathered it and investors also seem to have priced in a degree of non-transparency in the company’s ownership and some balance sheet problems.
Silver Hits A Fresh High
Unlike gold, silver prices are being driven by industrial applications or the potential of it, which adds upto almost half of new silver processed.
Silver prices on Thursday hit a fresh all-time high of Rs 87,476 per kg amid sustained buying in the industrial metal. Silver is up around. In this month, silver is already up Rs 6,600 or 8% in May.
Silver is obviously catching up or staying in step with gold though the applications and demand drivers are different, as we have been discussing on The Core Report.
Though there is a thread of geopolitics in both, as I understand, gold for sure because central banks are buying.
Also, there is a metals boom on, for example with Copper which also we have been discussing here.
WIth metals prices rising, speculators are also training their guns on silver.
A report in the EconomiC Times says investors should also consider that silver prices can be highly volatile due to speculation, which can lead to short term price surges. Silver is one of the most volatile precious metals and its volatility can be twice or thrice greater than gold in some days, an analyst quoted there says.
I reached out to Sugandha Sachdeva, founder of SS Wealthstreet, which specialises in commodities research and began by asking her what was going on in silver.
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Chinese Steel Imports
Tariff wars are rarely between just two countries.
The US imposing tariffs on China on steel or for that matter electric cars is bound to create more supply at potentially lower prices.
India's steel industry, already on the backfoot thanks to cheaper imports, is worried about a surge in shipments from China after the US imposed tariffs on Chinese steel, industry persons told Reuters.
On Tuesday, U.S. President Joe Biden unveiled steep tariff increases on several Chinese imports including steel and aluminium.
The Indian Steel Association’s Secretary General told Reuters that India was already under grave threat of import because all major steel consuming countries are shutting their doors on these steel producing countries.
ISA members include India's major steel companies like JSW Steel Ltd and Tata Steel Ltd.
Chinese export surges are being driven by weak demand at home. China is, like in other products, the world’s largest producer.
While India has been steadily raising tariffs in the last decade or so, producers are constantly asking for more tariff barriers and thus protection.
Unusually, the Government is resisting calls for more import curbs, thanks to strong local steel demand, says Reuters, linked of course to the massive infrastructure investment in recent years.
The numbers are small though, India imported around 2.7 million tonnes of steel from China last year, of a total consumption of 136 million tonnes last financial year to March 2024. India's steel consumption rose 13.4% last year over the previous one.
More Electric Car News
Mahindra & Mahindra Ltd (M&M) Mahindra & Mahindra said on Thursday it will invest Rs 12,000 crore in its electric vehicle (EV) unit, Mahindra Electric Automobile.
The announcement came on the back of strong results with standalone net profit rising 32% in March quarter to Rs 2,038 crore.
Standalone revenue from operations rose 11 percent to Rs 25,109 crore in Q4FY24.
Elsewhere in the world, demand for electric is still weak and affecting .most car company's outlook for electric. Earlier this week, we reported on how Ford Motor which is losing a $100,000 per electric car it makes, I repeat, per car.
And now news is that Volkswagen AG’s all-in on electric vehicles plan is no more. Volkswagen is also present in India though not in electric.
The Germany car major which apparently earlier pitched its ID family of electric cars as central to its future, said last week it will need more plug-in hybrids as EV sales decelerate, Bloomberg is reporting
The manufacturer has also shelved efforts to seek outside investors for its battery unit and scrapped plans for a €2 billion ($2.2 billion) EV factory in Germany.
Amazingly, VW’s internal combustion engine cars are doing very well.
So much so that it is on track to overshoot its emissions allowance next year, leading Chief Executive Officer Oliver Blume to ask European regulators for leniency.
Three years ago, VW was on a different trip.
It lobbied so aggressively for EVs in the EU that it started fights with its peers in the region, says Bloomberg.
Not only are manufacturers scaling back but countries like Germany and Sweden have ceased or pared back subsidies for electric cars that still tend to be more expensive than combustion counterparts, which has hurt the broader sector.
Gaps in public charging networks also continue to turn off potential
Mercedes-Benz Group AG has stopped development of underpinnings for new electric luxury sedans to save money and plans to sell cars running on gasoline longer than expected. BMW AG, which has had more success selling EVs than its German rivals, still warned this week that the EU’s plan to effectively ban new combustion-engine vehicle sales by 2035 will hurt the industry. European regulators are set to review the policy in 2026.
The slowdown has dealt a serious blow even to Tesla, which has lost $235 billion in market capitalization this year, more than triple VW’s current valuation.
Disaster Resilience, Why Businesses And Governments Have To Invest More In It
In February, the RBI issued draft guidelines on ‘Disclosure framework on climate-related financial risks, 2024’.
The rules when they kick in will apply to commercial banks, financial institutions and large financial companies from the 2025-2026 tax year onwards, with large cooperative banks following a year later.
The disclosures will need to be published as part of banks’ financial results and made available online.
The draft includes requirements for how banks should detail their use of scenario analysis, as well as their setting of internal targets and progress towards meeting any legal targets.
The larger point obviously is that climate change is now a recognised and finite factor in business decision making.
A parallel stream to efforts have led to the creation of the Coalition for Disaster Resilient Infrastructure (CDRI) is a partnership of national governments, UN agencies and programmes, multilateral development banks and financing mechanisms, private sector and knowledge institutions.
Before I go further, let me use an example. The flooding of Dubai airport was a climate disaster for which there was no preparation or anticipation.
In future, funding for such projects would ensure that climate and disaster risks are built in.
Equally, Governments are working on doing the same for public infrastructure, which is to build in disaster resilience.
A key factor here is awareness and of course adoption.
I reached out to Amit Prothi, the Director General of CDRI and began by asking him to take us through what transpired in a recent gathering of countries and entities in this initiative as what he felt was the role of businesses and financial institutions in gearing up for this new normal.
