Sensex Is Trading Further Lower Today

Nikkei edged down amidst hawkish undertone in BoJ's Governor statement, Asian stocks are trading mixed

Aditi Gupta, 

Economist,

Bank of Baroda

Mumbai, January 24, 2024: Global markets were volatile as investors reassessed the future path of global monetary policy. While BoJ kept policy rates steady, it signalled a possible shift in Apr’24. On the other hand, the probability of a rate cut by Fed in Mar’24 has declined to 46.2% from about 75.6% a month earlier. All eyes are on ECB meeting today. Separately, UK posted a lower than expected budget deficit, paving the way for possible tax cuts. In Japan, flash PMI for Jan’24 signalled an improvement (51.1 from 50 in Dec’23), led by services. Separate data also showed that exports rose by 9.8% in Dec’23 to a record high, led by a surge in exports to China and US. Import growth however, declined by 6.8%. In Australia, the flash composite PMI edged up to a 4-month high at 48.1 (46.9 in Dec’23), but remained in the contractionary zone. 

• Global stocks closed mixed. Stocks in China were buoyed by sentiments following remarks of China’s Securities Regulatory Commission, to boost markets. Hang Seng rose by 2.6%, supported by technology stocks. Dow Jones fell as aggressive rate cut bets by Fed have been pared down. Nikkei edged down amidst hawkish undertone in BoJ’s Governor statement. Sensex fell by 1.5%. It is trading further lower today, while Asian stocks are trading mixed.
• Except CNY, other global currencies depreciated. DXY rose by 0.3% as investors reassessed the possibility of rate cuts by Fed. EUR fell the most by 0.3% as Eurozone’s flash consumer confidence dipped in Jan’24. INR depreciated by 0.1% amidst weakness in domestic equities. However, it is trading a tad stronger today, while other Asian currencies are trading mixed.
• Except India, global yields closed higher. UK’s 10Y yield rose the most by 8bps despite sharp moderation in public sector net borrowing in Dec’23. Germany’s 10Y yield rose by 6bps ahead of ECB policy decision. The uncertainty over timing of easing financial conditions is leading to volatility in sovereign yields. India’s 10Y yield closed flat and is trading at 7.17% today.

(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.)