Kristal Weekly Feed | 23rd September 2019

All you need to know, in under 1 minute.
Here’s a concise report on what made headlines in the global market last week.

Positives

• Indian market indices post best single day gain as corporate tax rate is cut to 25%
• US Manufacturing output rises in August
• Oil prices post biggest weekly gain in 3 months

Negatives

• Fed cuts benchmark rate by 25bp
• Major indices close negative for the week

Now, for more detail.

Positives

1. Indian market indices post best single day gain as corporate tax rate is cut to 25%

What You Should Know

The government announced on Friday that The effective corporate tax rate for all domestic companies is 25%, lowered from 30%, among Asia’s lowest now. This was welcomed by investors as a boon that may help spur economic growth and company profits as Sensex rose 5.3% on Friday to close above 38,000, the largest single day gain in more than a decade.

What You Should Look Out For

The tax cut will cost the government Rs 1.45 trillion ($20.5 billion) in revenue. It is the latest in a series of measures rolled out in recent weeks aimed at boosting demand and investments after economic growth slowed to a six-year low in the April-June quarter.

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2. US Manufacturing output rises in August

What You Should Know

U.S. manufacturing output increased by 0.6% more than 0.2% increase expected in August, boosted by a surge in machinery and primary metals production, however the outlook for factories remains weak against the backdrop of trade tensions and slowing global economies. Manufacturing production rose 0.6% last month after a 0.4% drop in July.

What You Should Look Out For

Motor vehicles and parts production fell 1% last month after increasing 0.5% in July. Excluding motor vehicles and parts, manufacturing output increased 0.6% in August after falling 0.5% in the prior month. Capacity utilization, a measure of how fully firms are using their resources, increased to 75.7% in August from 75.4% in July.

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3. Oil prices post biggest weekly gain in 3 months

What You Should Know

Brent Crude Oil prices were lower on Friday but closed at $64.7 a barrel, 6% higher for the week, the largest weekly gain in 3 months after Saudi Arabia revealed the extent of damages from the attacks on oil facilities last weekend. US Oil prices closed at $58.09 a barrel.

What You Should Look Out For

Saudi’s have claimed repair and maintenance works can be done on  oilfield services and damages can be repaired, but the damages appear to be far worse than what can be restored within a matter of a few days. They have said that the production can be restored back to normal by month end.

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Negatives

1. Fed cuts benchmark rate by 25bp

What You Should Know

The Federal bank cut its benchmark overnight lending rate to a target range of 1.75% to 2%. Moreover, the Fed also cut the interest it pays on excess reserves by 30 bp, greater than the funds rate cut, in the midst of a breakdown this week in the overnight repurchase lending market.

What You Should Look Out For

Five members thought the FOMC should have kept the rate stable at its previous range of 2% to 2.25%, whereas five approved of the 25 bp cut but keeping rates there throughout the year, and seven favored at least one more cut this year. The committee now sees GDP rising at a 2.2% pace this year, compared with 2.1% in June.

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2. Major indices close negative for the week

What You Should Know

S&P 500 declined 0.5% whereas Dow Jones declined 0.6% on friday for the first weekly decline in a month. This was after a report that a Chinese delegation had canceled plans to visit farms in Montana as a part of its trade negotiations with the U.S.

What You Should Look Out For

Traders were also on the watch for any effects of “quadruple witching day” on Wall Street, that is the simultaneous quarterly expiration of index futures, stock futures, and options on index futures and individual stocks, that means higher volumes.

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