Indian markets could open lower, in line with mixed Asian markets today and mixed US markets on Sept 27
The U.S. stock market closed mixed Friday, with the Dow Jones Industrial Average finishing at a record peak after investors analyzed fresh data showing inflation continued to cool in August. Major U.S. equities indexes were mixed on the final trading day of the week as investors digested the latest Personal Consumption Expenditure (PCE) data showing consumer price pressures cooled in August, reinforcing expectations that the Federal Reserve will continue cutting interest rates. US stocks gained for a third consecutive week as investors were repeatedly reassured that the economy is cooling without falling off a cliff.
August’s personal consumption expenditures price index — the Federal Reserve’s favored measure of inflation — increased 0.1%, matching expectations from economists polled by Dow Jones. PCE increased 2.2% at an annualized pace, below the 2.3% forecast. Excluding the volatile food and energy components, the PCE price index increased 0.1% after an unrevised 0.2% rise in July. In the 12 months through August, core inflation advanced 2.7% after climbing 2.6% in July.
The University of Michigan’s consumer sentiment index rose to 70.1 in September from 67.9 in August. This month’s print beat a Dow Jones estimate of 69.3. The Commerce Department reported a moderate rise in consumer spending while inflation pressures continued to ease. Adjusted for inflation, consumer spending rose 0.1% after climbing 0.4% in July. Economists estimated that the so-called real consumer spending was running at a 3.4% annualized rate so far this quarter. It grew at a 2.8% pace in the second quarter.
Crude oil sold off Thursday on a report that Saudi Arabia is committed to increasing production later this year, even if it results in lower prices for a prolonged period. OPEC+ recently postponed planned output hikes from October to December, but analysts have speculated that the group might delay the hikes again because oil prices are so low.
Investor hopes for a soft landing for the U.S. economy will be put to the test this week, as the government releases closely watched labor market data following a series of disappointing jobs reports. Investors will also watch an address from Fed Chairman Jerome Powell, set to speak on the economic outlook before the National Association for Business Economics on Monday.
Interest rate futures contracts now reflect a 54% chance of a half-point cut in November, versus a still-hefty 46% chance of a quarter-point cut.
China’s official manufacturing purchasing managers’ index came in at 49.8 in September, compared with 49.1 in August, 49.4 in July and 49.5 in June. The data slightly beat the 49.5 expected among economists polled by Reuters. However, China’s Caixin PMI was 49.3, compared to 50.4 in August, according to the private survey compiled by S&P Global. The Caixin data released on Monday indicated that China’s manufacturing sector experienced its sharpest contraction in 14 months in September, driven by declining demand and a weakening labor market. The Caixin/S&P Global services purchasing managers’ index (PMI) dropped to 50.3 in September from 51.6 in August, the lowest since September 2023.
Japan’s benchmark Nikkei 225 index tumbled nearly 5% early Monday after the country’s ruling Liberal Democrats chose Shigeru Ishiba, a former defense minister, as the next prime minister. Ishiba has said he supports the Bank of Japan’s independence and normalization path in principle, and that the country needs to defeat deflation. Ishida seems to favour normalising interest rates.
Iron ore futures surged in Singapore after the cities of Shanghai, Guangzhou and Shenzhen eased rules on housing purchases, following through on the central government’s latest efforts to prop up the embattled property sector.
First-tier cities such as Guangzhou lifted all home purchase restrictions over the weekend, while Shanghai and Shenzhen announced plans to ease key buying curbs. China’s central bank also said on Sunday it would tell banks to lower mortgage rates for existing home loans before Oct. 31, as part of sweeping policies to support the country’s beleaguered property market as the economy slows.
Asia stock markets turned hesitant on Monday as strife in the Middle East offset more stimulus measures in China, while the Nikkei dived on concerns Japan’s new prime minister favoured normalising interest rates.
Nifty snapped its six-session winning streak on Sept 27 after hitting its highest level of 26277.35 points. At close, Nifty was down 0.14% or 37.1 points at 26178.9. Nifty stayed in a 126 point range on Sept 27 and formed a small negative candle. After a series of upticks, Nifty seems to have taken a breather. Nifty could now face resistance from the 26250-26475 band on the upside, while 25849 could offer support in the near term.
