Stocks & rupees are falling as investors are concerned about US inflation

Stocks & rupees are falling as investors are concerned about US inflation

Web Desk
June 12, 2022

Stocks & rupees are falling as investors are concerned about US inflation

The NSE Nifty dropped 1.68 percent to 16,201.80 points.
The rupee fell 0.1 percent to 77.84 per dollar at the close.
US market indexes fell again on Friday as consumer inflation rose 8.6 percent in May, the highest pace since 1981, owing to a jump in fuel and food prices.
Investors are afraid that central banks’ stricter monetary policies and persistently high oil prices could derail the recovery. “

Mumbai: Indian shares fell and the rupee fell to a record low on Friday, mirroring Wall Street’s overnight panic ahead of the US inflation reading. Persistently high oil costs and renewed concerns in China over a comeback in Covid cases also worsened the mood, as foreign investors continued to sell.

The NSE Nifty dropped 1.68 percent to 16,201.80 points. The BSE Sensex dropped 1.84 percent to 54,303.44. The reductions were driven by lenders, information technology businesses, and Reliance Industries.

The rupee fell 0.1 percent to 77.84 per dollar at the close. It had concluded at 77.83 to the dollar on May 16, setting a new intraday low of 77.93. The benchmark bond rate was somewhat higher at 2.25%. The S&P 500 and Nasdaq tumbled more than 2% on Thursday, as investors worried that if consumer inflation data indicated stickiness, the US Federal Reserve would have to increase interest rates further next week.

US market indexes fell again on Friday as consumer inflation rose 8.6 percent in May, the highest pace since 1981, owing to a jump in fuel and food prices. At the time of publication, the Dow was down 2.4 percent, the S&P 500 was down 2.7 percent, and the Nasdaq was down 3.4 percent. The pan-European STOXX 600 index fell 2.7 percent on Friday.

The European Central Bank (ECB) laid out a plan on Thursday to conclude its stimulus program and begin raising interest rates as inflation expectations rose, leading yields on regional government bonds to rise.

Investors are afraid that central banks’ stricter monetary policies and persistently high oil prices could derail the recovery. “The volatility and uncertainty that we saw in May are continuing this month too because oil prices are not coming down,” said Sunil Singhania, founder, of Abakkus Asset Management. “Inflation and rate tightening will keep the near-term outlook challenging.” Brent crude futures climbed 0.7 percent to $123.98 per barrel, with brokerages like Goldman Sachs projecting prices will reach $140 by July-September. Analysts believe that rising oil prices will keep the currency under pressure because India imports more than 80% of its petroleum requirements.