Barring S&P 500 and Hang Seng (flat), other global indices ended lower. Disappointing earnings results dragged down US indices
Jahnavi Prabhakar,
Economist,
Bank of Baroda
Mumbai, May 29, 2024: Investors will turn their attention towards key inflation reading from both sides of the Atlantic. US PCE data, Fed’s preferred indicator for tracking inflation could possibly sway rate cut expectations. On the other hand, Fed official Kashkari stated, ‘many more months’ of positive inflation data in needed before Fed could dial back on rates. Separately, US consumer confidence index inched up to 102 in May’24 (97.5 in Apr’24). In Australia, inflation edged up to 3.6% in Apr’24 (highest in last 5-months) from 3.5% in Mar’24 led by acceleration in prices of housing (4.9%), food (3.8%), alcohol and tobacco (6.5%) and transport (4.2%). Core CPI (excl food, automotive fuel and holiday travel) remained steady at 4.1% in Apr’24. Higher than expected inflation has also pushed back possibility of rate cut by Central Bank.
§ Barring S&P 500 and Hang Seng (flat), other global indices ended lower. Disappointing earnings results dragged down US indices. The focus will shift towards upcoming PCE data which will offer some guidance on Fed’s interest rate outlook. Sensex ended lower with sharp losses in real estate and power sector. It is trading lower today, in line with other Asian markets.
§ Global currencies ended mixed. DXY rose marginally led by positive macro data and hawkish comments from Minneapolis Fed President. JPY depreciated further led by expectations of widening yield differential between Japan and other advanced economies. INR too depreciated led by weak global cues. It is trading further lower today, in line with other Asian currencies.
§ Except China and India, global yields inched up.10Y yield in US rose sharply by 9bps tracking muted demand in treasury auction. Comments from a key Fed official suggesting rate hikes are not entirely ruled out, and a surprise uptick in US consumer confidence index also impacted sentiments. India’s 10Y yield inched up (7.10% GS 2034), led by higher oil prices. It is trading flat today.
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