Global Economies Losing Steam!

This week has been quite eventful! Indian equity benchmarks posted a weekly gain again with the Nifty closing above 10,800 for the first time in 10 days after a discounted elections results and RBI governor news and also supported by stable oil prices and rupee with rate cut hope. Nifty clocked in a weekly gain of 1.05 per cent, while the Sensex ended 0.81 per cent firmer for the week. While the Nifty Midcap Index outperformed with a gain of over 3 per cent.

 

NOV CPI INFLATION LOWEST SINCE JULY 2017 &  OCT IIP HITS 1-YEAR HIGH

India’s industrial output growth shot up in October, rising to an 11-month high of 8.1 per cent as manufacturing growth accelerated and capital goods production rose by the highest margin in the current financial year.

The two-other sectors of electricity and mining output also saw significant jumps in the latest month, data for which was released on Wednesday. Of 23 sub-sectors within manufacturing, only two recorded a year-on-year contraction, down from seven in September.

Consumer inflation for the month of November fell to an over one-year low of 2.33 per cent. This is the fourth straight month where retail inflation has been below the RBI’s medium-term target of 4 per cent, supporting its decision to hold interest rates at its meeting in September. Now market speculates on a rate cut.

 

CHINESE ECONOMY GROWS AT ITS WEAKEST PACE SINCE 2003

On the global front, Asian markets closed lower on Friday as China reported a slew of economic data that missed expectations, deepening worries about headwinds facing the world’s second largest economy.

China reported that industrial production in November grew 5.4 percent year-on-year, lower than market expectation of 5.9 per cent.

Retail sales in the country rose 8.1 per cent last month, below the market expectation of 8.8 per cent and the weakest pace since 2003.

Japanese PPI’s decreased in October to 2.3 per cent (YoY) from 3.0 per cent in October. The month-on-month figure printed -0.3 per cent, down from 0.4 per cent a month before and below expectations of -0.1 per cent and the biggest drop since August 2016.

 

ECB TO END BOND BUYBACKS BUT NO GUIDANCE ON RATE HIKE

Even European data also sparks concerns of a global economic slowdown. Major European PMI data disappoints (Misses: Euro Zone, Germany, France (France moved into contraction); market expectations of a delayed ECB rate hike starting to formulate. Manufacturing PMI fell to a 33 month low and underlying details point to a slowdown in activity. Manufacturing order books is falling for the third straight month and at the fastest rate since November 2014. ECB plan to end its bond-buying program at year-end, but no new guidance on a first rate hike due to poor data.

 

COMING UP NEXT WEEK!

Next week is the most crucial one of December 2018.

FOMC view of the US and global economy and the Federal Reserve rate decision! The great December hike, will it come?

Apart from this global inflation data to drive markets next week!