Investors In US Monitored Quarterly Earnings And Better Than Expected PPI Report

Sensex is trading further higher today while other Asian stocks are trading lower

Jahnavi Prabhakar,

Economist,

Bank of Baroda

Mumbai, January 15, 2024: The expectations of rate cut by Fed in Mar’24 has regained prominence (likelihood of rate cut at 79.5% from 73.2% in the previous week) given softer than expected PPI print (-0.1% in Dec’23 against expectation of +0.1%). Elsewhere, PBoC defied market expectation and kept the interest rate unchanged for medium term lending facility at 2.5% On the domestic front, CPI inflation rose to a 4-month high to 5.69% for Dec’23 led by food inflation which remained sticky at 9.5%. However, some moderation in prices is expected in the coming months. Investors this week will closely watch China’s GDP print for Q4CY23, industrial production, retail sales, unemployment and inflation figures for Japan scheduled to release later this week.

• Global markets ended mixed. Investors in US monitored the quarterly earnings and better than expected PPI report. Nikkei continue to climb higher supported by gains in machinery, precision instrument and shipbuilding sectors. Sensex jumped by 1.2% to an all-time high led by strong gains in IT stocks. It is trading further higher today while other Asian stocks are trading lower.
• Global currencies closed mixed. DXY was up by 0.1%, owing to heightened geo-political risks (US & UK warplanes engaging in Yemen). EUR and GBP fell the most, while JPY also gained on safe haven demand. INR was up by 0.1%. It is trading further higher today, while other Asian currencies are trading mixed.
• Except yields in Asia (flat/higher), global yields elsewhere closed lower. 10Y yields of UK and Germany fell the most. Weakness in China’s trade data and more than expected drop in US PPI drove investor sentiments. India’s 10Y yield was up by 2bps, as oil prices build up. However, following global cues, it is trading much lower today at 7.14%.

(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.)