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Global Market – Key events 5 to 9 Feb 2024

Global Market – Key events for 5th to 9th February 2024

This week we will focus on China’s economy, how Powell ‘s interview to “60 Minutes” and also discuss BOJ shift in policy change from negative interest rate.  This week has been relatively quite and focus has been on corporate earnings.

China’s Consumer Prices Drop at Fastest Pace Since 2009

China’s consumer prices fell last month at the fastest pace since the global financial crisis as the world’s second-largest economy struggles to shake off persistent deflation pressures.

Germany’s Industrial Downturn Stretches into A Seventh Month

German industrial output extended its slump to a seventh month in December, underlining the struggles gripping Europe’s largest economy.

China Tightens Some Trading Restrictions for Domestic and Offshore Investors

China is tightening trading restrictions on domestic institutional investors as well as some offshore units as authorities fight to stem a deepening stock rout, according to people familiar with the matter.

Powell Tells ‘60 Minutes’ Fed Is Wary of Cutting Rates Too Soon

Federal Reserve Chair Jerome Powell said Americans may have to wait beyond March for the central bank to cut interest rates as officials look for more economic data to confirm that inflation is headed down to 2%.

Trillions Of Yen Pile Up at Negative Rates in Bets on BOJ Shift

Japan’s biggest commercial banks are letting money accumulate in negative interest-rate accounts at the central bank — another sign that the world’s last sub-zero rate policy is coming close to the end.

Equichain Wealth Advisors: Market View & Opinion

In last few weeks in our coverage of global market, we have been focusing mainly on three countries and their central banks.  U.S., Japan & China.

We would like to highlight that market is optimistic and currently trading near its high as interest rate going down in US could be positive for risk-on sentiment, China’s effort to boost economy is also positive but the real concern in BOJ moving away from negative interest rate policy.

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Global Market – Key events this week 5 to 9 Feb 2024.pdf
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Global Market – Rewind 2023 – Part 2

Global Market – Review of 2023 – Part 2

We have covered from January 2023 to May 2023 in a flash back 2023.  In today’s article we will cover from June 2023 to December 2023 and how rally in last 1 – 2 months has changed global market narrative.

June 2023

• U.S. suspends debt ceiling limit till next U.S. Presidential election, till 1-Jan-25.  
• Non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” according to White House officials.
• ECB hikes rate by 25-bps to 4.00%.  ECB guides for continuation of rate hike to bring long term inflation at 2% and to keep interest rate higher as long as necessary.
• BOE – Bank of England raises rates by 50-bps to 5.00%, highest level since 2008.

July 2023

• U.S. CPI & Core CPI inflation data for June 2023 came in July 2023 was below market estimate.  Inflation rise in June 2023 was lowest growth since April 2021.
• Key risk indicator – Dollar Index was trading @ 100.80 & US 10-year bond yield @ 3.83%

August 2023

• Fitch downgrades U.S. ratings to AA+ from AAA.  Rating downgrade expects fiscal deterioration over next three years.
• BOE raises rates by 25-bps to 5.25%.  China cuts RRR rate in a bid to support economy.
• Jackson hole symposium – U.S. Fed chair Jerome Powell indicated interest rate to remain higher.

September 2023

• U.S. & China’s economic data – indicates mix picture.  Top two economic indicates opposite trends and interest rate policy by the respective central banks.
• Brent oil rose above $90 a barrel for the first time since November as the largest OPEC+ producers extended their supply cuts to year-end.
• U.S. Fed keeps rate unchanged on 20-Sep-23, indicates rate hike cycle may be done but signaled rate to remain higher for longer period of time.

October 2023

• ISRAEL-HAMAS war started in first week of October 2023 over the weekend, providing trigger to risk-off sentiment and resulting in surge in crude oil & Gold.
• US bond yield was trading at highest level since 2007.  US 30-year bond yield above 5% while 10-year bond yield around 5%.

November 2023

• Bank of Japan continue to maintain interest rate at -0.10% and US Fed keeps interest rate unchanged in first week of November 2023.
• In Diwali special article – we have focused on SAMVAT 2080 could belong to Gold, Oil, Inflation & Interest rate globally.
• US Fed meeting minutes – “Proceed Carefully” – indicating pause by US Fed and one more rate hike which was expected earlier is now ruled out after recent US FOMC meeting minutes.

December 2023

• Global sentiment has turned positive after US Fed meeting minutes.  
• Global market rallied in range of 3% to 7% in the month of November 2023 and setting the trend for December 2023 on positive note.

Equichain Wealth Advisors: Market View & Opinion

Global market closed the year 2023 on high note and the key reversal came from November 2023 and clear trend emerge post US Fed meeting minutes which highlighted – “Proceed Carefully”.  Now if we look back and compare to Jackson Hole Symposium event in August 2023, which indicated interest rate to remain higher for longer period of time.

We strongly believe that positive news from global central banks has been factored and now the focus will shift to corporate earnings.

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Global Market – Rewind 2023 – Part 1.pdf
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Daily Reports

Daily Report 21-Jul-23

Wall Street: TESLA & NETFLIX was down after result, NASDAQ & S&P500 ended down by 2.05% & 0.68% respectively.  DOW30 ended in green with 0.47% gains.

INFY Q1FY24 result in-line with estimate, revised revenue guidance downward to 1% – 3.5% from earlier 4% – 7%.  INFY ADR down by 8.5% overnight, expect to open with deep cuts.

RELIANCE will come out the result today.  LT result on 25-Jul-23 will consider Buy-back and special dividend and record date for same will be 2-Aug-23.

F&O data: FII added 11091 contracts in index futures, net long position for FII is now above 1 lakh contracts in index futures, net long position now stands at 70.68%.

Approach on Indices: GIFT Nifty indicate down opening due to INFY & other IT stocks could remain under pressure, Nifty @ 19697 & Banknifty @ 45110 could act as support level in case of any correction.  Banknifty will continue to outperform.

GIFT NIFTY @ 19880 Vs 19967 Nifty future previous close at 8:05 AM

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21-Jul-23 Daily-Report.pdf
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Global Market – U.S. inflation softening & U.S. Fed preparing for another rate hike

Global Market – Inflation softening & U.S. Fed preparing for another rate hike

This week we will discuss softening of inflation to below 4%, lowest level since April 2021.  US Fed is behind the curve in this cycle.  US CPI & Core CPI data do indicate softening, so now the focus will shift to US Fed meeting on 26-Jul-23.  

US CPI & PPI data – indicate softening

After strong jobs data in first week of July and US FOMC meeting minutes, market is now factoring in 25-bps rate hike on 26-Jul-23.  But CPI & Core CPI data released this week could trigger one more pause before US Fed could review its decision.

Equichain Wealth Advisors: Market View & Opinion

US Fed has long term inflation target of 2% and latest data released is still above U.S. Fed’s long term inflation target.   Current US interest rate is at 5.00% – 5.25%.  In year 2006 – 07, interest rate in US was at 5.25% and sustain at that level for 14-months before we have seen sub-prime crisis.

We believe, economic slowdown and inflation cooling has direct co-relation.  Corporate earnings may get impacted with leg effect as interest rate hike takes some time to show its impact on bottom of pyramid.

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Global Market – U.S. inflation softening & US Fed preparing another rate hike.pdf
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Global Market – U.S. Fed focus to shift to inflation on strong jobs data

Global Market – US Fed – focus shift to inflation on strong jobs data

This week we will discuss another part of the world where high inflation is problem will be back in focus as US Fed meeting on 26-Jul-23.  Last week, we have discussed that China’s PBOC is reducing policy rates and support growth and providing stimulus package.  

US Fed to hike to highest level seen in year 2000

US Fed current policy rates is 5.00% – 5.25%.  If US Fed increase policy rates by 25-bps on 26-Jul-23 to 5.25% – 5.50% – it will be highest policy rates in 21st Century near to rates seen in the year 2000.  Back in 2006 – 2007 policy rates in U.S. were at 5.25% before market has seen sub-prime crisis followed by recession.

US FOMC meeting minutes for June 2023 policy

Almost all members agreed for more rate hike needed and guided for at least 1 – 2 more rate hike in 2023.  Powell said at a conference in Madrid hosted by the Bank of Spain last week. “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.”  

Equichain Wealth Advisors: Market View & Opinion

We believe, it is time keep balance approach as globally risk-on sentiment is high despite fear of further rate hike by U.S. Fed.  We do believe that such high interest rate in U.S. could have global impact and market has not fully factored in steepest rate hike by US Fed in last 15 – 16 months.

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Global Market – U.S. Fed focus to shift to inflation on strong jobs data.pdf
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Weekly Reports

8-Jul-23 Technical & Fundamental Insight

Last week – review

Going into trade this week, we maintain status quo and keep exposure around 70% to 85%.  Momentum in indices continue at the beginning of the week which later witness some selling pressure on Friday.  Nifty Small-cap 100 gain by 2.60% this week, other indices gain was capped below 1%.

Technical Insight

• Nifty level for this week would – support level @ 19181 & 18977 & resistance level @ 19512 & 19781.  Nifty likely to continue in consolidation zone with negative bias.

• Banknifty level for this week would – support level @ 44773 & 44228 & resistance level @ 45655 & 45990.  Banknifty seems to be in consolidation zone in uptrend.

Approach on Technical: Indices RSI & RSI average trading near 70 level before seen some supply at higher level after rally of 4% – 5% on Nifty & Banknifty with out any correction.  Fast up move on Indices do indicate some consolidation would be healthy.

Our strategy would to find fresh entry opportunity on correction, Nifty @ 18977 & Banknifty @ 44228 & 43345 would provide healthy entry opportunity.  We would avoid chasing momentum and play catch-up in upward momentum.  

Fundamental Insight

1) Annual Economic Review: Amidst Durable Domestic Growth, External Risks Persist
2) India’s Services PMI Stays Strong Despite Easing In June
3) India Should Push to Add Its Bonds to Global Indexes: RBI Report

Equichain Wealth: Market View & Strategy

Market will now focus on earnings season; IT will start earnings season with HCLTECH & TCS to come out with result on 12-Jul-23 & INFY on 20-Jul-23.  HDFCBANK which usually comes out with result in 2nd week and first among private banks to declare earnings is yet to announce day for Q1FY24 result.

We will continue to maintain strategy to remain invested in range of 70% to 85% and continue keep cautious stance.  Recent run-up seen on indices was too fast as compared to expectation.  Global cues continue to remain muted and indicate rate could go higher.

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8-Jul-23 Fundamental & Technical Insight.pdf
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Daily Report 6-Jul-23

Wall Street had muted session with minor cuts as US FOMC meeting minutes revealed hawkish signal and indicated rate hike on 26-Jul-23, next US Fed meeting.

Reacting US FOMC meeting outcome, US 10-year bond yield is now trading a 3.95% & Dollar index at 103 indicates further rate hike expected.

Crude oil prices remain steady, WTI Crude @ $72 & Brent crude trading around $77 level.  Base metal prices remain stable.

F&O data: FII added 4605 contracts in index futures, net long position now at 72.39%.  Nifty PCR @ 1.37 Vs 1.47 previous.  Banknifty PCR @ 1.08 Vs 1.38 previous.

Approach on Indices: GIFTNIFTY indicate flat to negative start, with weekly F&O expiry, today could be a day of big correction which is overdue for some time now.  On lower side Nifty @ 19154 & Banknifty @ 44530 to act as strong support level.  

GIFTNIFTY @ 19488 down 24 points at 8:00 AM

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6-Jul-23 Daily-Report.pdf
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Weekly Reports

1-Jul-23 Technical & Fundamental Insight

Last week – review

We went into last week with muted expectation, but indices witness healthy rally in a holiday shorten week and F&O expiry.  HDFCBANK & HDFC merger will be effective from 1-Jul-23 and that trigger huge rally in HDFC twins.  All major indices were up by around 2.5% recording in one of the best weeks in recent times.

Technical Insight

• Nifty RSI @ 72.04 & RSI average @ 64.08.  Nifty RSI back to above 70 level and gap between RSI & average has more than 8 and indicate overbought zone in near term.

• Banknifty RSI @ 65.36 & RSI average @ 55.93.  Banknifty gap between RSI & RSI Average is around 10 points indicate overbought zone.

Approach on Technical: Indices rally this week was sharp which has increase gap between RSI & RSI average by 8 to 10 points on Nifty & Banknifty, indicate overbought zone in near term.

Our strategy this week would be seek buying opportunity around on Nifty around 18932 & 18765 & Banknifty around 44530 & 44253.  Going into trade next week do indicate overbought zone and current momentum could take indices higher on Monday before we expect some cool-off or profit taking.

Fundamental Insight

1) Share Of Loans Bearing Over 9% Interest Rate Hits 56.1% In March, Says RBI
2) Commerce Minister Asks Bankers to Ensure Enhanced, Affordable Credit to MSME Exporters
3) HDFC Bank-HDFC Merger To Be Effective July 1

Equichain Wealth: Market View & Strategy

This week, SGX Nifty will start to trade in GIFT CITY from Monday 3-Jul-23 and will be now know as GIFTNIFTY.  Market momentum remains strong and major economic data will come only later in the week.

Our strategy going into this week will be to find suitable entry opportunity and would be preferred on decline and will continue to maintain exposure around 70% to 85% as we mentioned in last week.  We would continue to seek opportunity with basket of stocks and place our allocation to be beneficial going into result season.  We are optimistic on Banks & infrastructure and have cautious view on IT sectors.

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1-Jul-23 Fundamental & Technical Insight.pdf
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Global Market – BOE hike rate by 50-bps & Powell’s testimony

Global Market – BOE hike rate by 50-bps & US Fed Chair Jerome Powell testimony

This week we will discuss, BOE surprises street by raising interest rate by 50-bps to 5.00% and US Fed chair Jerome Powell in a testimony over 2-days to US Congress indicated further rate hike by 1 or 2 before end of 2023.

BOE raises rates by 50-bps to 5.00% – highest level since 2008.

The nine-member Monetary Policy Committee voted 7-2 for an increase to 5%, the highest level in 15 years and the biggest move since February.

Markets had priced in only a 40% chance of a half-point hike, with most economists anticipating a quarter point.

US Fed chair Jerome Powell – may need one or two more rate hike in 2023

Policymakers feel “it will be appropriate to raise rates again this year, and perhaps twice,” if the economy performs about as expected, even as they’ve been hiked to an appropriately restrictive level, Powell told the Senate Banking Committee Thursday.

Fed officials held rates steady last week after 10 straight increases, giving themselves more time to evaluate how the economy is responding to recent banking stress and higher borrowing costs.  The move left the Fed’s benchmark rate steady in a range of 5% to 5.25%.

Equichain Wealth Advisors: Market View & Opinion

Barring BOE decision which hike rate by 50-bps, decision by all other major banks were in-line with market estimate.  Last week US Fed “PAUSE” on rake hike, ECB raise rates by 25-bps & BOJ maintain its negative interest rate policy and guidance on JGB remains at -0.50% to 0.50%.

We believe further rate hike could impact global economy, which could be pushed in recession for short period of time and globally central banks are prepared to take pain in near term for long term objective to keep inflation at 2%.

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Global Market – BOE hike rate by 50-bps & Powell’s testimony.pdf
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Daily Reports

Daily Report 19-Jun-23

Wall Street witness some profit booking as trading near its recent high as all major central banks policy is out.  US Fed chair Jerome Powell testimony this week will be key event.

Defense stocks will be in focus as PM Modi’s visit to U.S. – there is already HAL & G.E. deal which is announced, details of the deal will provide further clarity.

F&O Data: FII are net long in Index futures by 18385 contracts, long: short exposure now stands at 55.13%:44.87%.

VIX @ 10.84: trading near lower end of the range.  

Approach on Indices: SGX Nifty indicate flat opening, Nifty likely to test new life time high and see some profit booking.   Banknifty above 44360 could test new high.  Indices likely to trade in narrow range.

SGX Nifty @ 18909 up 11 points at 9:00 AM

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19-Jun-23 Daily-Report.pdf
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