Macro & Markets Review - 29th August, 2023

Key economic developments

·??????? China Evergrande Group's market value plunged by USD 2.2 bn, a staggering 79% drop, as its shares resumed trading in its bid to restructure its massive offshore debt.

·??????? US and China to launch export control dialogue and form a working group on commercial issues, according to the US Commerce Department

·??????? According to Department for Promotion of Industry and Internal Trade data India's FDI decreased by 34% YoY to USD 10.94 bn in April-June quarter of this FY24

·??????? Japan's unemployment rate edged up to 2.7% in Jul-23, with a slight weakening in labour demand, posing concerns for both the Bank of Japan and the government.

·??????? A busy week of economic data releases, featuring the U.S inflation measure, PCE price index, non-farm payrolls report, and Germany's inflation data on the horizon.

·??????? India braces for its driest monsoon in 8 years, with El Nino affecting Sep-23 rains after an exceptionally dry Aug-23, according to two weather officials reported by Reuters on Monday.

·??????? Indian government to continue the free grains scheme for an additional six months, potentially until Jun-24

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Equity Market

On Monday, major global indices ended in gains with S&P 500 up by 0.6% as investors await US inflation, jobs data. Japan's Nikkei rose 1.7%, led by gains in electronics shares, as concerns eased about the Fed's further tightening. China’s Shanghai Composite and India's Nifty, closed higher by 1.1% and 0.2% respectively after China unveiled a raft of supportive policies to boost capital markets following its mortgage easing measures while UK markets closed for a public holiday.

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Currencies

On Monday DXY, INR and CNY remained broadly unchanged. EUR was up 0.2% at USD 1.082 ahead of euro zone inflation data later this week. JPY depreciated by 0.1% to 146.5 as Bank of Japan Governor confirmed no change in monetary policy due to inflation slightly below the 2% target.

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Bond Yields

Most bond yields held broadly steady on Monday. India and US bond yields falls by 3bps, in response to hawkish remarks by Powell. German 10-year bond yield edged 1bp higher ahead of inflation data. While UK markets closed for a public holiday.

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Commodities

Brent crude oil dipped 0.1% to USD 84.42/bl amid fears of U.S. interest rate hikes impacting demand, while gold up by 0.3% at USD 1,920 per oz amid a retreat in the dollar and Treasury yields ahead of crucial U.S. inflation and jobs data.