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India's SBI loses more than $11 billion over two sessions due to margin squeeze and disappointing earnings
State Bank of India lost more than $11 billion in market value during two sessions due to?narrowing profit margins and disappointing fourth-quarter results that brokers?warned might signal a 'tougher profitability cycle. On Monday, shares of India's largest lender by customer base fell 4.5% to 973.60 Rupees. This was an extension of Friday's nearly 7% fall following the results. The stock dropped more than 10% over two sessions and $11.3 billion was lost. NSE data on Monday showed that the 1,000 strike of SBI was the most heavily?called, indicating that investors are expecting any near-term recovery?in stock price to be capped around that level. The two sessions saw 95 million shares traded, which is almost five times the average 30-day volume of 18.7 millions. Analysts say the lender's fourth quarter?earnings missed reinforced concerns that Indian bank are entering a "tougher profitability cycle", with rising funding costs beginning to erode loan margins. SBI reported on Friday a smaller net interest margin for the quarter of 2.8%, compared to 2.98% during the previous three-month time period. They also missed the profit estimates by analysts. JP Morgan said on Monday that "NIM compression has become more apparent as funding costs reprice quicker", adding that earnings could slow down in the next quarters. "Core earnings are underwhelming and incremental margins are tightening," Bernstein stated, warning that upside catalysts could be limited if margins do not stabilize. Brokerages said that SBI's asset quality was a positive factor, as bad loans and credit costs remained benign. However, they warned it might not be enough to offset margin compression pressures on net interest income. Analysts maintained a positive long-term outlook, citing the strong balance sheet of the bank, its?scale, and market leadership. SBI's gains for the year to date were wiped out by the two-session selling, which left the stock down 0.8%, but it still performed better than the benchmark Nifty50's 8.8% decline.
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As US-Iran negotiations hit a stalemate, stocks fall and the dollar rises
Investors were 'fretted' that the talks between Iran and the U.S. had reached a deadlock, leaving the Strait of Hormuz almost?closed. This sent oil prices back up. Donald Trump, the president of the United States, rejected Iran's response on Sunday to a U.S. proposal for peace talks that would end the war. He said Tehran's requests were "totally inacceptable". Brent crude futures, around 45% more expensive than they were before Israel and the U.S. began their strikes against Iran on February 28th, jumped up to 4.6% over night and closed at $103.75 per barrel, an increase of 2.4% for the day. The MSCI All-World Index was relatively flat. In Europe, the STOXX 600 fell 0.2%, and U.S. Stock Futures were trading 0.1% lower. In the last two week, the correlation between oil and stock markets has turned positive, meaning that they are more likely than ever to move together, rather than in opposite directions as had been the case for the majority of the war. Investors will look beyond energy prices, for the time being, due to the strong enthusiasm for all things tech, and macro data, including last week's U.S. Payrolls Report, which shows that global economic growth is still holding up. "Markets are good at learning how to adapt and live with situations that we once thought impossible. We are at this point with crude oil right now. If it rises another 50%, that's another test we will have to?navigate", IG Chief Market Strategist Chris Beauchamp stated. If you look at the data on earnings, they are really good. We would be firing on all cylinders if it weren't for the Iran issue. "But people are happy to believe there must be some sort of deal with Iran no matter how ugly it is," he said. Iranian media reported that an Iranian plan sent to Washington stressed the need to end the war on all sides and lift sanctions against Tehran. It also called for reparations and recognition of Iran's control of Strait of Hormuz. Bruce Kasman is the global head of JPMorgan's economics. He said that "the conflict in the Middle East has now entered its eleventh week." Energy prices are up but still at levels that are 'headwinds, not expansion-ending obstacles. Our commodities team is seeing operational stress levels start sometime in June. Iran has effectively closed the Strait, cutting off a corridor which normally handles about a fifth the world's oil shipments. The dollar gained 0.3%, to 157.12 Japanese yen. Meanwhile, the euro dropped 0.12% to $1.177. The British pound lost 0.32%, trading at $1.36 as British Prime Minister Keir?Starmer tried to quell the rebellion in his ruling Labour Party following last week's local election results. Overnight, optimism about AI drove Chinese stocks to new highs. Meanwhile, South Korea's chipmaker heavy KOSPI index rose by 4.3%. Data revealed that?China’s producer prices rose to a near four-year high. Meanwhile, consumer inflation also increased due to the rising global energy costs. Trump will visit China on Wednesday and meet Chinese President Xi Jinping, for their first face to face talks in over six months. Gold fell 1% on commodity markets as the dollar firmed and inflation fears were at the forefront. (Editing by Stephen Coates and Gareth Jones)
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The oil crisis and Modi's comments on gold have sparked fears about tariffs. Jewellery stocks are down.
The Indian Prime Minister Narendra Modi’s call to “avoid purchasing gold for one year” in order to help protect foreign currency reserves fueled fears of higher import duties on the metal. Shares of Indian jewellery retailers fell as a result. Oil prices have soared due to the Iran war, putting pressure on India's rupee and balance of payment. India is the third largest oil consumer and importer in the world, importing more than 90% its crude oil needs and half its natural gas demands. Modi made his remarks on gold on Sunday along with other measures that he advocated, such as fuel conservation, working more from home, and limiting travel and imports. Gold jewellery is a very popular gift in India. It is also a necessity for brides at weddings. India is the second largest gold consumer in the world, but imports are used to satisfy nearly all of its demand. On Monday, shares of jewellery manufacturers?such as Titan Gold, Senco Gold, and Kalyan Jewellers - fell between 6% to 9%. Surendra Mehta is the national secretary of the India Bullion and Jewellers Association. He said that there are fears the government may increase import duties on gold to deter imports for an entire year. "Duties may be increased even more than in previous years." New Delhi raised tariffs on imports of gold in 2012 and 2013 to stabilize a rapidly depreciating rupee. Jewellers are now concerned that the duty reductions made to 15 to 6% in 2024, to combat smuggling, could be reversed soon. On Monday, a government source stated that India "has no plans" to increase duties on gold and Silver imports. India's balance-of-payments is expected to decline sharply in the upcoming fiscal year April-March to a deficit between $66 billion and $70 billion compared to an estimated $26 to $28 billion by 2025-26. The 'central bank' has been prompted by the pressure on the rupee to limit the size and number of positions banks can hold in trading. The central bank has also tightened up on arbitrage trading. On Monday, the Indian rupee reached a new record low against the dollar of 95.31. On Monday, senior?government officials stated that India has enough?gasoline? and diesel? supplies. Fuel retailers lose about 100 rupees ($1.05) a litre of diesel and around 20 rupees a litre of gasoline when they sell the fuels at below-market rates. Since April 2022, state retailers haven't raised the price of gasoline or diesel. Reporting by Rajendra J. Jadhav, Nimesh Vora and Mayank Bhardwaj; editing by Edwina Gibbs, Raju Gopalakrishnan and Mayank Bhardwaj
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The MORNING BID AMERICAS 11-week countdown
What's important in the U.S. and international markets today by Mike Dolan Editor-at-Large of?Finance and Markets Iran's conflict has now lasted 11 weeks - twice as long as President Donald Trump said when he ordered the first strikes against Iran. And there is no end in sight. The weekend knocked down last week's hopes of a U.S. strategy to end the war, as Trump deemed Iran's response "totally inacceptable". Below, I'll go into more detail. Listen to the Morning Bid podcast. Subscribe to the Morning Bid daily podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. 11 WEEKS AND COUNTING The U.S.-Iran seem to be at odds about Tehran's nuclear plans and its control of Strait of Hormuz which is largely closed for oil and cargo shipping. The world oil price jumped overnight by nearly 5% in response to Trump's announcement, but then eased slightly so that Brent crude is now trading at about $104 a barrel. This was enough to stop the stock markets from continuing their upward trend. The AI frenzy, chip boom and energy crisis continue to compete for attention. Wall Street futures were mostly unchanged on Monday morning, following the S&P500's?against another series of record-highs last week. The Friday April U.S. Employment Report, which was in line with other labor market indicators from last week, showed little or no damage to the overall job creation as a result of the war. However, the employment disruption may take a while to arrive, and gas prices that are still high may bite at some point. China's'mainland' stocks rose ahead of the summit this week between 'President Trump' and Chinese President Xi Jinping. The meeting will start on Thursday. The energy shock could create an unsettling backdrop, but the above-forecast increases in Chinese consumer and producer inflation may be a cause for concern. Treasury Secretary Scott Bessent is also in Asia today, meeting with Japanese officials. After the poor results of local elections last week, Keir starmer's UK Labour Party has continued to put pressure on him. Starmer announced that he will not resign following weekend reports about a possible challenge to his leadership. He gave a speech Monday to 'increase the support of his party. On Monday, the United States will be focusing on existing home sales data, while Tuesday's focus will be on April inflation updates. Washington will also receive attention, as the U.S. Senate could vote on Kevin Warsh’s nomination to be the next Federal Reserve chair on Monday. The term of outgoing chair Jerome Powell will officially expire on Friday. The week's biggest earnings are Cisco? and Applied Materials. Chart of the Day China's export growth picked up in April, as factories raced against the clock to fulfill a wave orders from AI-related companies and other buyers who wanted to stockpile parts amid fears that the Iran War could drive global input costs even higher. Next week, when Trump visits Beijing for the summit of leaders that will likely extend the trade truce from last year, the focus will be on the export strength which has led to China's surplus in trade with the U.S. reaching $87.7billion so far this season. Watch today's events * U.S. April existing home sales (10 a.m. EDT), April Conference ?Board Employment Trends Index (10 a.m. EDT) * U.S. 3-year ?note auction (1 p.m. EDT) Scott Bessent, U.S. Treasury secretary, departs on a three-day trip to Tokyo Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed by the author are their own. These opinions do not represent the views of News. News is committed to the Trust Principles and ensures that it maintains its integrity, independence and neutrality.
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India shares and rupee drop on Modi's austerity call, while crude prices spike
Indian shares and the rupee fell on Monday after Prime Minister Narendra Modi called for a series of measures including fuel conservation, less imports, and gold purchases as surging energy prices put pressure on foreign exchange reserves. India, the world's largest oil importer and consumer and third-largest oil importer, said late last month that there was no plan to increase the pump prices of diesel and gasoline. It is one of the few countries who have not raised prices despite global price increases. The Nifty 50 dropped 1.49%, to?23.815.85. Meanwhile, the BSE Sensex fell 1.7%, to 76.015.28. The rupee recorded a record-breaking closing?low at 95.31 to the dollar, falling about 0.9% for the day. This is its steepest drop in a single-day since March 27. Brent crude rose more than 2.6%, to around $104 per barrel, after U.S. president Donald Trump dismissed the Iranian response on Sunday to Washington's peace proposal as "unacceptable." Arun Kejriwal of?Kejriwal Research and Investment Services called the market's slide on Monday a "knee jerk reaction" after the Prime Minister's remarks. He said that the oil prices, which refuse to drop and remain below $100 despite efforts by Iran and the U.S. for peace, will continue to weigh on sentiment. 13 of 16 major sectors posted losses. Small-caps and midcaps both fell by about 1.5%. Oil marketing companies - Indian Oil, BPCL, and HPCL all fell between 2.3% and 3%. Reliance Industries, the index heavyweight, lost 3.3%. Stocks of travel-related companies such as Indian Hotels, Lemon Tree, Chalet Hotels, Thomas Cook, and Yatra Online have fallen between 1% to 4.5%. Airline ?operator IndiGo lost 4.9%. Jewellers' shares also fell. Shares of Senco Gold, Kalyan Jewellers and Titan all fell between 6.7% to 9.3%. State Bank of India dropped 4.5% and extended losses after missing the quarterly profit forecast, pulling?PSU Banks 2.5% lower. Hyundai Motor India ?rose 2.8% on a smaller-than-expected fall in quarterly profit, and agro chemicals firm UPL gained 3.6% on quarterly profit rise.
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Zelenskiy: 20 countries interested to deal with Ukraine on drones
Volodymyr Zelenskiy, Ukrainian President said that nearly 20 countries are interested in drone agreements with Ukraine. Four agreements have already been signed. Zelenskiy, who has been visiting the Middle East and Europe since the Iran War began in late February 2011, has leveraged Ukraine's drone warfare expertise into a number of successful diplomatic agreements. Zelenskiy stated?on X that "nearly 20 countries have been involved in a variety of stages. Four agreements have already signed and the first contracts based on these?agreements is now being prepared." After signing long-term security agreements with Saudi Arabia and Qatar in late March, Ukraine signed deals on drones and defence in Germany, Norway, and the Netherlands in April. Ukraine and Azerbaijani president Ilham Aliyev signed agreements on defence, energy and other issues last month. Zelenskiy said in his blog that Ukraine will launch security cooperation with another country within the framework of drone deals, but did not specify which. Zelenskiy, without elaborating, said that Ukraine has already begun to receive the necessary amount of fuel, thanks to these agreements. Zelenskiy is hoping that his drone diplomacy can help Ukraine secure energy supply deals with Middle Eastern countries as well as market for its agricultural products. (Reporting and editing by Gareth Jones; Anna Pruchnicka)
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Stocks of Indian jewellers fall after Modi calls for a pause in gold purchases to protect the rupee
Shares of Indian jewellery retailers fell on Monday after Prime Minister Narendra modi asked people to refrain from purchasing gold for one year in order to protect their foreign exchange reserves. This sparked fears of tariff increases to curb the imports of metal. Oil prices have soared since the Iran War, which has put pressure on India's balance-of-payments and the rupee. India is the third largest oil consumer and importer in the world, importing more than 90% its crude 'oil and half its natural gas needs. Modi's comments about gold on Sunday were made in tandem with other measures that were urged. These included fuel conservation, a greater number of people working at home, and limitations on travel and imports. India is in high demand for gold, especially at weddings. Gold jewellery is seen as an important?part of the bride's outfit and a popular gift given by family and friends. India is the second largest gold consumer in the world, but imports are used to satisfy nearly all its needs. On Monday, shares of jewellery manufacturers such as Titan Gold, Senco Gold, and Kalyan Jewellers dropped between 6% to 8%. Surendra Mehta is the national secretary of the India Bullion and Jewellers Association. He said that there are fears the government may increase import duties on gold by a large amount for one year to discourage imports. "Duties may be increased even higher than in previous years." New Delhi raised tariffs on imports of gold in?2012-2013 to stabilize a rapidly depreciating rupee. Jewellers are now concerned that the duty reductions made to reduce smuggling in 2024 from 15% to 6% could be reversed. However, a government source stated on Monday that India does not plan to raise import duties on gold and silver. India's balance-of-payments is projected to decline sharply in this fiscal year, with a deficit ranging from $66 billion to $70 billion. This compares to an estimated $26 billion to $28 billion between 2025 and 26. The central bank has been prompted to limit the size and number of positions banks can hold in order to reduce the pressure on the rupee. The central bank has also tightened up on arbitrage trading.
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Dollar strengthens as US-Iran negotiations reach a deadlock
The dollar strengthened as investors fretted about the deadlock in the talks between Iran and the United States, leaving the Strait of Hormuz, a vital waterway, virtually closed. This prompted oil prices to rise. Donald Trump rejected Iran's response on Sunday to the U.S. proposal of?peace?talks for ending the war. He said Tehran's requests were "totally inacceptable". Brent crude futures - which are about 45% higher now than before U.S. and Israel started strikes against Iran on February 28 - jumped up to 4.6% over night and ended the day at $103 per barrel, a 2% increase. The MSCI All-World Index was relatively flat for the day. In Europe, STOXX 600, and U.S. Stock Futures were also stable. In the last two week, the correlation between oil prices and stock markets has become 'positive,' meaning that they are more likely to move together than in opposite directions. This was the dominant dynamic during most of the war. Investors can look past energy prices at the moment, due to the strong enthusiasm for tech and macro data. This includes last week's U.S. Solid Payrolls Report, which showed that the global economic situation is stable. "Markets are good at learning how to deal with situations that we once thought impossible. This is where crude oil is at the moment. If it rises another 50% then we will have to 'navigate another test,' said Chris?Beauchamp, chief market strategist at IG. If you look at the earnings figures, they are really good. We would be firing on all cylinders if it weren't for the Iran issue. "But people are happy to believe there must be some sort of deal with Iran no matter how ugly," said he. Iranian media reported that an Iranian plan sent to Washington stressed the need to end the war on all sides and lift sanctions against Tehran. It also called for reparations and recognition of Iran's control over the Strait. Bruce Kasman said that the conflict in the Middle East has now entered its 11th weeks. "Energy costs have risen, but they remain at levels which are more of a headwind than an expansion-ending obstacle." Our commodities team expects operational stress to increase in June. Since the start of the war in late February, Iran has effectively closed the Strait. This essentially shuts down a corridor which normally handles a fifth or more of oil and gas shipments around the world. The dollar gained modestly 0.2% on the Japanese yen. Meanwhile, the euro dropped 0.1% to $1.1777 and sterling fell by 0.16% to $0.3613. Pressure is mounting on British Prime Minister Keir starmer after the Labour Party suffered heavy losses in the local elections last week. Overnight, optimism over AI drove Chinese stocks to new highs. South Korea's KOSPI index, which is heavily dominated by chipmakers, rose 4.3%. On Monday, data showed that?China’s producer prices rose to a near four-year high. Meanwhile, consumer inflation also accelerated due to the increased global energy costs. Trump will visit China on Wednesday and meet Chinese President Xi Jinping for their first face to face talks in over six months. Gold fell 1.3% on commodity markets to $4,654 per ounce, despite the fact that it was not widely regarded as a safe-haven or a hedge against inflation. (Editing by Shri Navaratnam Stephen Coates, and Gareth Jones).
Europe invested 200 billion euros so far to boost EV sector, New Automotive data shows
New Automotive data released on Monday showed that countries in the European Economic Area and Switzerland invested almost 200 billion euros ($235 billion) into their electric vehicle eco-system.
The continent has invested a total of?60 billion euro in the battery supply chain to date, as it tries its best to compete with China's monopoly.
The International Energy Agency reported earlier this year that China will produce more than 80% all batteries in 2025. This includes those used for applications outside of the EV industry.
New Automotive reported that "Europe produces batteries for about one-third of the?EVs sold in the United States, and capacity announced could meet future demands if fully utilized."
The research group whose stated goal is to accelerate the transition to electric vehicles said that 60?billion euro was also invested in EV production, centered on the conversion and?selective? new EV-only facility.
The public rollout of charging infrastructure in Europe has cost between 23 billion and 48 billion euros. Over 1 million public charging stations have been installed across Europe. Over 3.5 billion euro were invested into the manufacturing of this infrastructure.
In a separate press release, Chris Heron (secretary general of the campaign group E-Mobility Europe) said that these investments supported more than 150 000 jobs. If all projects announced are fully realized, a further 300.000 jobs will be created.
New Automotive's report, however, revealed a disparity at the national level. Germany, a major auto manufacturer, accounted for almost a quarter (25%) of investments in the region.
New Automotive reported that "the country anchors both domestic production as well as wider European value chains. Leading OEMs are?transitioning on a large scale along with?major battery manufacturers," New Automotive stated. After pressure from the region’s auto industry, the European Commission announced a plan to lift the European Union’s effective ban on new combustion-engine vehicles from 2035. This is the biggest retreat in recent years from the green policies of the bloc.
Heron stated that Germany, Italy, and 'Central and Eastern Europe' have officially opposed the EU 2035 framework for cars and vans, while more than half of tracked investments are concentrated within these regions.
He added that "France, and Spain are the other two major beneficiaries of these investments".
(source: Reuters)