Sensex trading higher today in line with other Asian stocks

Hang Seng and Shanghai Comp declined sharply after rating agency downgraded China's credit outlook. Sensex advanced to a new high supported by gains in power, consumer durable and banking stocks

Sonal Badhan,

Economist,

Bank of Baroda

Mumbai, December 6, 2023: Adding to weakening global growth conditions, Australia’s Q3CY23 GDP print shows that growth slowed more than expected (0.4%) to 0.2% (QoQ) in Q3, from 0.4% in Q2. Drag came mainly from net exports and household consumption. This has reaffirmed the views that RBA is done with its rate hiking cycle. Q4 looks even weaker with services PMI down to 46 in Nov’23 from 47.9 in Oct’23. In Eurozone too, conditions remain bleak with services activity continuing to contract, albeit at a slower pace (48.7 versus 47.8). Similar trend was seen in both Germany and France. On the other hand, services activity is showing some momentum in China (51.5 versus 50.4) and US (ISM at 52.7 versus 51.8), and slight moderation in India (56.9 versus 58.4). In US however, labour market is loosening, as JOLTS data showed that job opening fell to 8.7mn in Oct’23 (est.: 9.3mn) from 9.4mn in Sep’23.

• Barring Sensex, other global indices ended lower. US indices dropped amidst softening data (lower than expected Jobs report) as investors tried to gauge the trajectory of Fed’s interest rate path. Hang Seng and Shanghai Comp declined sharply after rating agency downgraded China’s credit outlook. Sensex advanced to a new high supported by gains in power, consumer durable and banking stocks. It is trading higher today in line with other Asian stocks.
• Except JPY and INR (flat), other global currencies ended lower against the dollar. DXY advanced (0.3%) amidst growing optimism that Fed is at the end of monetary tightening. EUR was lower given dovish commentary by ECB officials. It is trading stronger today while other Asian currencies are trading mixed.
• Barring China (flat), other global yields closed lower. Steep declines were noted in 10Y yields of UK (-17bps), Germany (-11bps) and US (-9bps). Weaker than expected US labour market data, dovish commentary from ECB officials and likelihood of a recession in the UK impacted investor sentiments. India’s 10Y yield fell by 1bps to 7.27%. It is trading further lower today at 7.25%.

(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.)