2023-05-15 06:33:59
Morning commentsU.S. stocks ended lower Friday, surrendering early gains after a report from the University of Michigan showed consumer sentiment soured in May, helping to revive recession fears. The Dow Jones Industrial Average and S&P 500 each booked back-to-back weekly losses. For the week, the Dow slid 1.1%, the S&P 500 slipped 0.3% and the Nasdaq edged up 0.4%.
The University of Michigan’s index of consumer sentiment dropped to 57.7 in May based on a preliminary reading, from 63.5 in April. That’s the lowest level since November and below an expected May reading of 63 by economists polled by The Wall Street Journal. Consumers’ inflation expectations over the next five years rose to 3.2%, from 3% in April. That’s the highest reading since 2011.
Federal-funds futures in the US see an 83% probability that the central bank will hold rates steady next month in its new range of 5%-5.25%, according to the CME FedWatch tool. In July, the odds favor the Fed standing pat (a 58.5% probability), but with a 31% chance of a quarter-point cut and a 10.4% probability of an equal-sized increase.
U.S. equity funds faced huge outflows in the week ended May 10, on caution over the U.S. debt ceiling and concerns over disappointing earnings forecasts from some top companies. According to Refinitiv Lipper, U.S. equity funds faced outflows worth $5.7 billion, which was their seventh consecutive week of outflows.
The Congressional Budget Office said on Friday the U.S. faces a "significant risk" of defaulting on payment obligations within the first two weeks of June without a debt ceiling increase.
India's retail inflation cooled to its lowest since October 2021, falling within the central bank's target range for the second straight month, raising the bar for further rate hikes. The Consumer Price Index-based inflation stood at 4.7% in April as compared with 5.66% in March.
India’s factory output rose lower than expected in March, as electricity and consumer goods production took a hit. This was the slowest rate of growth for the indicator in five months. The Index of Industrial Production expanded 1.1% in March, as compared with a revised growth of 5.78% in February. Manufacturing output expanded 0.5%, compared to 5.6% in last month. Electricity generation dipped 1.6%, compared to 8.2% in February.
In China, the medium-term lending facility remained at 2.75%, in line with consensus forecasts. The decision came against the backdrop of falling inflation, which raised speculation that the central bank may ease monetary policy.
Thailand’s currency strengthened against the greenback as the country’s opposition party was on course to secure a win in its general election, ending nearly a decade of conservative rule backed by the military.
Asian stocks started cautiously on Monday as investors braced for economic data this week, while awaiting a host of U.S. Federal Reserve officials to speak to vindicate market pricing of rate cuts this year.
Nifty closed almost flat for the second consecutive session on Friday suggesting a tug of war between bulls and bears. On weekly charts, Nifty gained 1.36% after a flat week. While India CPI numbers came in better than expected, the IIP numbers disappointed. The Karnataka elections outcome was not favourable to the NDA Govt at the centre. We could see a negative opening for Nifty on Monday. Nifty could remain in the 18042 – 18358 band for the near term.
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