Sensex Is Trading Further Higher Today

INR is trading weaker today

Aditi Gupta

Economist,

Bank of Baroda

Mumbai, March 13, 2024: Inflation in US remained sticky, reinforcing the belief that the Fed is likely to remain on a wait and watch mode before easing monetary policy. CPI inflation in US rose by 3.2% on a YoY basis in Feb’24, higher than an estimated 3.1% increase. Core CPI remained sticky at 3.8% from 3.9% in Jan’24. Even in India, CPI inflation was unchanged at 5.1% in Feb’24. Food inflation picked up, led by vegetables and fruits, even as core inflation moderated further. On the other hand, inflation in Germany eased to 2.5% in Feb’24 from 2.9% in Jan’24 (YoY), led by lower energy and food prices. Separately, UK’s unemployment rate rose to 3.9% in Nov’23 to Jan’24 from 3.8% in the period Oct’23 to Dec’23. Average earnings decelerated to 6.1% from 6.2% in the same period, suggesting that underlying price pressures are easing.

• Except Nikkei and Shanghai Comp (lower), global stocks closed higher. Investors digested the stickiness in US inflation, which has reinforced the view of watchful approach from Fed. Stocks in Japan traded cautiously tracking spring wage negotiations. China’s stock market was impacted by news of strains in the property sector. Sensex inched up, led by technology stocks. It is trading further higher today, while Asian stocks are trading mixed.
• Most global currencies traded in narrow ranges as investors assessed Fed rate path. DXY was 0.1% higher, as inflation in US remained sticky. GBP fell as UK’s labour markets showed signs of softening. JPY too depreciated by 0.5% as BoJ Governor expressed concerns over the economy. INR ended broadly flat, but is trading weaker today. Other Asian currencies are also trading lower.

Except UK (lower), global yields closed higher. US 10Y yield rose the most as core CPI reading topped estimates. 10Y yield in Germany also firmed up despite ECB officials hinting at initiating rate cuts in spring this year. In UK, 10Y yield eased as average weekly earnings softened. India’s 10Y yield rose a tad by 1bps. It is trading at the same level today.

(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.)