Macro Pulse - September 8, 2023

KEY MACRO HIGHLIGHTS:

US jobless claims hit lowest level since February:

U.S. initial jobless claims fell to 216,000 in the week ended Sept. 2, the lowest level since February and below market estimates (Refinitiv: 234,000), from a revised 229,000 in the prior week.

Fed officials keep options open over future U.S. interest rate policy:?

Federal Reserve Bank of New York President, John Williams, said that he is keeping his options open over future U.S. interest rate policy, acknowledging falling inflation and a better-balanced economy, which suggests there is no urgency for a rate rise later this month. Williams cautioned that while many parts of the economy appear to be on the mend from the impact of the coronavirus pandemic, the Fed is currently in a position where it's challenging to provide guidance beyond reiterating its commitment to get inflation back to target.

Read his remarks here

German industrial output falls in July: ?

German industrial production fell by 0.8% MoM, in July slightly more than market expectations (Refinitiv: -0.5%), underlining the challenges faced by the manufacturing sector after a winter downturn in Europe's largest economy.

India digital rupee transactions tracking below target:?

Transactions in the Indian digital rupee are averaging close to 18,000 a day, well below the target of hitting a?million?transactions a day by year-end.

Key indicators/ Events to monitor:

US wholesale inventories data for July will be the key data focus tonight with market expecting a 0.1% MoM contraction. Germany will also release the final print for its August inflation data (est. 6.1% YoY or 0.3% MoM unchanged from prelim estimate).

Equities

Domestic Equity

Indian equity indices?closed higher at a more than one-month high, led by gains in banks and power stocks, with a technical breakout lending support. The Nifty 50?index settled 0.59% higher at 19,727.05, while the S&P BSE Sensex?climbed 0.58% to 66,265.56. The benchmark index also caught up with the moves in small and mid-cap stocks, which rose 0.5% and 0.8%, respectively. Ten of the 13 major sectoral indexes advanced, with Nifty Realty?gaining 1.48%, public sector enterprise rising 1.46% and banks?gaining 1%. Among individual stocks, Coal India?rose?7.1%, highest gainer in the Nifty 50 index, on expectations of higher demand.

Global Equity

Global indices ended lower as investor sentiments continued to be fraught with uncertainty over the Fed’s monetary policy outlook. Tension between US and China over semiconductors underpinned uncertainty as well. China’s Shanghai Comp led losses to decline by 1.1%, followed by Japan’s Nikkei (-0.8%). US S&P 500 stocks retreated for a third day in a row by 0.3% with solid jobless claims data reinforcing the case for the Fed to keep rates elevated.

Currencies

Most global currencies ended weaker. DXY rose to a near 9-month high of 105.1 supported by hopes of a soft landing. EUR and GBP fell by 0.3% each as investors expect a pause by ECB and BoE. CNY fell to a 16-year low of 7.329 amidst growth concerns. INR fell to a fresh record-low of 83.2 led by a dollar rally, FPI outflows and rising oil prices.

Bonds

Barring China, global yields closed lower. Demand for sovereign yields increased as macro data points gave conflicting signals. UK’s 10Y yield fell the most by 5bps tracking tumbling house prices data. US and India’s 10Y yield fell by 3bps each.

Commodities

Brent crude price fell by 0.8% on Thursday to settle at USD 89.9 pb, amidst demand concerns after weak data from China. Gold prices declined marginally by 0.1%, while copper prices declined by 0.6%.

Source: PL Research, CEIC, CMIE Economic Outlook, Refinitiv, Bloomberg, Investing.com.