Macro & Markets Review - 5th September, 2023

Key economic developments

·??????? UK's annual growth in consumer spending on credit and debit cards decelerated to 2.8% in Aug-23, down from 4.0% in Jul-23, with the banks attributing the slowdown to persistent rainy weather conditions.

·??????? Japan's Services PMI rose to 54.3 in Aug-23 from 53.8 in Jul-23, reflecting the fastest expansion in three months, boosted by robust consumer spending and a rebound in inbound tourism.

·??????? China's central government approved a new bureau under the NDRC to boost private sector growth with policy formulation and troubleshooting support.

·??????? India's Aug-23 edible oil imports reached a record 1.85 mn MT, driven by refiners ramping up purchases ahead of festival season

·??????? RBI permits UPI transactions for pre-sanctioned bank credit lines

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Equity Market

Global equity indices had a mixed close on Monday with China's Shanghai Composite gaining 1.4%, buoyed by real estate-related stocks following measures announced to support property sector. Japan's Nikkei gained 0.7%, while India’s Nifty ended 0.4% higher on positive global cues, amidst reduced expectations of US rate hike. US markets were closed Monday on account of Labor Day. In contrast, Germany's DAX and UK’s FTSE 100 both closed down 0.1% and 0.2% respectively as investors remained sceptical about the rally in Asian markets.

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Currencies

On Monday, global currencies traded in a tight range as US markets remained shut for Labour day holiday. Rupee ended 3p lower versus the Dollar at 82.71, while advanced market currencies of EUR and GBP were able to edge higher by 0.2% and 0.3% respectively.

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Bond Yields

On Monday, Indian bond yields increased by nearly 3 bps amidst rising crude oil prices and worries over monsoon. US bond markets remained closed on account of US Labor Day holiday. In Japan, 10-year government bond yields rose by 2bps, with investors awaiting a significant 10-year JGB auction and closely monitoring monthly business updates from companies.

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Commodities

Brent oil future ended 0.5% higher at USD 89/bl as hopes grew for the Federal Reserve to leave interest rates unchanged in Sep-23. Gold price edged slightly by 0.1% as markets gained confidence in the Federal Reserve's potential pause on interest rate hikes.

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