Sensex Opened Lower Today

In Japan and Australia, stronger than expected retail sales in Jan'24 is likely to keep pressure on their respective Central Banks to keep their policy stance unchanged

Sonal Badhan,

Economist,

Bank of Baroda

Mumbai, February 29, 2024: US GDP growth for Q4CY23 has been revised downward to 3.2% from 3.3% estimated earlier. This was largely due to lower than expected private inventory investment. However this was somewhat offset by upward revisions made to consumer and government spending. Stronger than anticipated consumption trends have revived fears of PCE probably coming in hotter than expected. Investors await more details on this, to gauge timing and quantum of Fed’s rate cuts. Dip in weekly volume of mortgage applications (-5.6% for week ending 23 Feb) due to elevated mortgage rates is expected to hamper real estate sector’s growth. Elsewhere, in Japan and Australia, stronger than expected retail sales in Jan’24 is likely to keep pressure on their respective Central Banks to keep their policy stance unchanged. Domestically, we expect GDP growth to come in at 6.4% for Q3FY24. 

• Global indices ended mixed as investors remained cautious ahead of the release of key macro prints (US PCE, Eurozone inflation and China’s PMI). Amongst other indices, Shanghai Comp dropped the most followed by Hang Seng. Sensex ended in red and was dragged down by losses in power and oil & gas stocks. It opened lower today, while other Asian stocks are trading lower.
• Barring INR and CNY (flat), other global currencies ended lower. Dollar firmed up by 0.1% with PCE data expected to influence timing of rate cut by Fed. Yen weakened as investors remained cautious of any possible intervention by the authorities. INR ended flat. It is trading stronger today, while other Asian currencies are trading mixed.
• Global 10Y yields closed mixed. US 10Y yield fell the most, following downwardly revised Q4CY23 GDP print. Investors also await PCE report for more cues on Fed’s rate trajectory (~63% chance of rate cut in Jun’24). India’s 10Y yield ended flat, awaiting domestic growth data. It is trading a tad lower today at 7.06%.

(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.)