Sensex Is Trading Higher Today, While Asian Stocks Are Mixed

There are signs of a slowdown in the housing market as well, with US pending home sales dropping to its lowest in over 20 year

Mumbai, December 4, 2023: A slew of data from US and Eurozone reinforced views that global rates have peaked, with bets now being placed on the timing of rate cuts. In US, inflation as measured by the PCE price index slowed down to 3% in Oct’23 vs. 3.4% in Sep’23. Initial jobless claims increased by 7,000 to 218,000, suggesting a weakening momentum in the labour market. There are signs of a slowdown in the housing market as well, with US pending home sales dropping to its lowest in over 20 years. In the Eurozone as well, inflation moderated to 2.4% (est. 2.7%), leading analysts to expect a rate cut as early as Apr’24. Separately, manufacturing activity in Japan remained subdued with PMI at 48.3 vs. 48.7 in Oct’23, led a fall in both output and new orders. In India, GDP growth remained buoyant at 7.6% in Q2FY24. Even core-sector output rose by 12.1% in Oct’23 compared with 9.2% in Sep’23.

• Global stocks ended higher. Easing PCE inflation in the US and a softer labour market data, provided comfort of easing financial conditions going ahead. Apart from this, pick up in retail sales numbers in Germany and moderation in inflation expectations in UK, also supported investor sentiments. Dow Jones rose the most, followed by Nikkei. Sensex rose by 0.1%, supported by consumer durable stocks. It is trading higher today, while Asian stocks are mixed.
• Global currencies depreciated against the dollar. DXY rose by 0.7%, even as macro data reinforced views of easing monetary policy. EUR was lower by 0.7%, after soft inflation data. INR depreciated to a new record-low. However, it has reversed its losses today. Asian currencies are also trading higher.
• Global yields closed mixed. In UK, 10Y yield firmed up by 8bps as a BoE official spoke of a restrictive monetary policy amidst worries over persisting inflation. US 10Y yield also rose by 7bps ahead of Fed Chair’s speech. China’s 10Y yield fell a tad by 1bps, as growth concerns remain. India’s 10Y yield rose by 3bps, ahead of auction results. It is trading flat today.