Other Asian stocks are trading mixed
Aditi Gupta
Economist,
Bank of Baroda
Mumbai, May 14, 2024: Global markets remained range-bound ahead of US CPI data. Inflation in the US is expected to moderate to 3.4% from 3.5% in Mar’24, with core inflation at 3.6% (from 3.8% in Mar’24) on a YoY basis. Incidentally, New York Fed Survey showed an
uptick in consumers’ 1-year inflation expectations. Moreover, consumers’
expectations of increase in home prices rose to its highest level since Jul’22.
Separately, reports that the US may impose significant tariffs on certain Chinese
imports kept markets on edge. China is expected to start the sale of its special long
term treasury bonds worth 1tn yuan this week to support its ailing economy. In India,
CPI inflation inched down to 4.8% in Apr’24, even as food inflation remained
considerably elevated at 8.7%, thus pushing back RBI’s rate cut trajectory.
Global stocks ended mixed. Investors remained cautious ahead of earnings
report of major tech companies. Apart from this, inflation readings of major
economies (US, Germany) are also due along with comments from the Fed
Chair. Hence, global stocks traded thinly. Sensex rose by 0.2%, led by capital
goods stocks. It is trading further higher today, while other Asian stocks are
trading mixed.
Global currencies ended mixed. DXY declined as investors’ focus remains on
US CPI report due on Friday. JPY depreciated by 0.3% as higher interest rate
differential with the US continued to weigh on the currency. INR too was
marginally weaker amidst a slowdown in FPI inflows. However, it is trading
stronger today, in line with other Asian currencies.
Global yields closed mixed. US 10Y yield fell a tad ahead of inflation data which
would shed light on the trajectory of Fed rate. Japan’s 10Y yield firmed up by
3bps. Notably, its 20Y yield firmed up to its highest in a decade, as BoJ reduced
the quantum of bond purchases. India’s 10Y yield fell by 1bps. It is trading
marginally lower today at 7.11%.
(The views expressed in this research note are personal views of the author(s) and do not necessarily reflect the views of Bank of Baroda. Nothing contained in this publication shall constitute or be deemed to constitute an offer to sell/ purchase or as an invitation or solicitation to do so for any securities of any entity.)
