Sensex Is Trading Further Higher Today, Other Asian Stocks Are Mostly Trading Lower

Global market indices reacted differently to different outcomes

Dipanwita Mazumdar

Economist,

Bank of Baroda

Mumbai, February 5, 2024: Global market indices reacted differently to different outcomes. On macro front, US non-farm payroll rose at a solid pace, adding 353K in Jan’24 against expectation of 185K. Average hourly earnings remained sticky rising by 0.6% on MoM basis (est.: 0.3%). University of Michigan’s 1 and 5 year inflation expectation index also remained firm. Fed Chair in his recent interview pushed off expectation of rate cut in Mar’24. In other developments, Japan’s services PMI inched up to 53.1 in Jan’24 from 51.5 in Dec’23, led by higher business confidence. The Caixin PMI services data of China remained above the 50 mark at 52.7, albeit a notch down from 52.9 in Dec’23. China’s Securities Regulatory Commission again vowed to prevent market fluctuation. In Japan, BoJ offered to purchase bonds, in an effort to check gains in short term rates. On domestic front, RBI’s policy would be closely monitored.

•  Global stocks ended mixed. Investors’ focus remained on the changing narrative around Fed rate cuts. US indices ended higher as tech giants reported strong earnings. Stocks in China tumbled despite government’s attempts to stabilize the market. Sensex rose by 0.6%, led by gains in oil and gas stocks. It is trading further higher today, while other Asian stocks are mostly trading lower.
•  Except INR, other global currencies weakened against the dollar. DXY jumped up by 0.8% as robust jobs report pushed back the possibility of Fed rate cuts in Mar’24. JPY depreciated the most by 1.3%. INR appreciated by 0.1% supported by lower oil prices and optimism over Budget announcements. However, it is trading weaker today, in line with other Asian currencies.
• Global yields closed mixed. US 10Y yield rose at the sharpest pace by 14bps as rate cut expectations have been brushed aside for the Mar’24 meeting. The effect was felt in other economies such as UK and Germany. After the Budget phenomenon, India’s 10Y yield stabilised.  It is trading higher at 7.09% today, as RBI surprised the market with a 4-day VRRR announcement.

(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.)