2023-05-11 06:34:57
Morning commentsIndian markets could open flat to mildly higher, in line with mixed Asian markets today and mostly higher US markets on Wednesday.…U.S. stock indexes ended mostly higher after volatile trading on Wednesday after data showed April U.S. consumer price inflation cooled to the lowest annual rate in two years, though core inflation, excluding food and energy prices, remained high.
U.S. consumer price index rose 0.4% in April, up from a 0.1% rise in the prior month, but over the past 12 months consumer inflation increased 4.9%, down from a 5% year-on-year increase in March. The annual rate is now the lowest since April 2021, while the number is still way above the Fed’s 2% target. Economists polled by the Wall Street Journal had forecast the CPI increasing 0.4% and advancing 5.0% over the past year. The core inflation rate rose 0.4% in April for the second straight month, in line with economists forecasts.
Traders hoped that the lower-than-expected inflation data may leave room for the U.S. central bank to refrain from raising interest rates further at its June meeting. Fed funds futures traders boosted the likelihood of a July interest rate cut, seeing a 42% chance of a quarter percentage point cut that would take the fed funds rate down to 4.75% and 5%, after factoring in a pause at between 5% and 5.25% in June, according to CME FedWatch Tool.
Treasury yields tumbled following the report, further supporting a stock market which has been worried about higher rates snuffing out economic growth. The yield on the 2-year Treasury fell about 11 basis points to 3.91%, while the rate on the 10-year declined 8 basis points to 3.44%.
The cost of insuring U.S. government debt against a default soared to its highest level ever on Wednesday amid a continued lack of progress on the U.S. debt ceiling in Washington. The spread on one-year U.S. credit-default swaps widened to a record high of 175 basis points from 163 basis points on Tuesday, based on data from S&P Global Market Intelligence. Moreover, the one-year U.S. CDS spread is now far wider than comparable spreads for Mexico, Greece and Brazil — which stood at 34 basis points, 44 basis points, and 56 basis points respectively on Wednesday.
Talks on raising the U.S. federal government's $31.4 trillion debt ceiling entered a new phase on Wednesday as some areas of potential compromise emerged after Tuesday's White House meeting.
Most exit polls after the Karnataka assembly elections see Congress poised to assume power in the southern state. In the 224-seat Vidhan Soudha, parties or coalitions need 113 seats to register a victory. Five of ten exit polls estimate the party to cross the majority mark in the recently concluded state assembly elections on Wednesday, and one even predicted a clean sweep by the party.
China’s consumer price index rose 0.1% in April year-on-year, the slowest since early 2021. Month-on-month, prices declined by 0.1%. Economists surveyed by Reuters expected to see consumer prices rise 0.4% from a year ago and remain unchanged from the previous month.
Asia-Pacific markets traded mixed after Wall Street saw a tech rally as the U.S. consumer price index rose less than expected for April.
Nifty managed to end in the green on May 10 aided by last hour buying. At close, Nifty was up 0.27% or 49.15 points at 18315.1.Nifty formed a long legged doji on May 10, but failed to make a new high compared to the previous session. Nifty continues to remain in an uptrend but its pace has slowed dramatically. Outcome of exit polls for Karnataka state elections was broadly in line with expectations and hence may not impact market sentiments much. A break of the 18180-18344 band could determine the direction of the markets in the near term.
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