Macro headwinds continue to roil markets as rupee plunges to new low

India’s stock markets saw a fresh round of sell-offs on Wednesday after Brent crude prices climbed to a four-year high of $85 a barrel and the rupee dropped to a new low of 73.34 against the dollar.

Investors pulled out of equity markets on worries that the spike in oil prices and fall in the rupee would adversely impact the economy. Investor sentiment has already been fragile following defaults by Infrastructure Leasing & Financial Services (IL&FS), a lender to the infrastructure sector. The benchmark Sensex closed at 35,975.63, down 551 points, or 1.51 per cent, the most since March 16. The Nifty declined 150 points, or 1.36 per cent, to end at 10,858, a level last seen on July 9.

Brent crude prices were hovering above $85 a barrel — the most since November 2014 — on fears that the impending sanctions on Iran’s petroleum industry would lead to constricted supplies. Oil prices have gained 22 per cent since mid-August and are up more than 50 per cent in the past one year. The surge has come at a time when the dollar is gaining against most global currencies amid the US Federal Reserve embarking on monetary tightening.

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Global trade war concerns hurt most S-E Asian stocks; Singapore rises

The Philippines stocks fell on Tuesday on the peso’s continued slide coupled with renewed trade war concerns, while Singapore extended gains for a fifth session thanks to “window dressing” attempts by portfolio managers ahead of the third quarter close. Broader Asian stocks struggled as the latest round of US-China tariffs revived fears the trade dispute would knock global growth, with neither side looking to be in a mood to compromise.

MSCI’s broadest index of APAC shares outside Japan edged down 0.3 per cent.

“The failure of China and the US to come to terms on the negotiation table ... is creating weakness in major economies in Asia, and has resulted in most Southeast Asian equities to retreat from what they gained last week,” said Manny Cruz, a Manila-based analyst at Asiasec Equities Inc.

Filippino stocks fell the most in the region, down about 0.7 per cent after two days of gains, with financials and real-estate stocks weighing on the index.

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