Asian markets traded higher after last week’s rally in US stocks as investors’ risk appetite improved on hopes that the US Federal Reserve will not raise interest rates.
Investors will now await the speech of the chairman of the Fed of the United States Jerome Powell for future guidance on interest rate policy. Other stock market triggers for the domestic markets this week include ongoing second quarter results from current fiscal, domestic and global macroeconomic data, foreign capital flows and global market signals.
The domestic equity benchmark indices ended higher for the second consecutive session on Friday amid positive global signals such as improved risk appetite.
The BSE Sensex closed 282.88 points, or 0.44%, higher at 64,363.78, while the Nifty 50 gained 97.35 points, or 0.51%, to settle at 19,230.60.
“Markets are likely to consolidate with a positive bias. Q2FY24 corporate earnings have so far been in line, with BFSI and Autos leading the aggregate. The earnings spread has been decent. However, margin tailwinds are likely to moderate in 2HFY24 with base effect entry and pick-up in some commodity prices. Given the ongoing results season, sector and stock specific action will continue,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.
Here are key domestic and global market indicators for Sensex today:
Asian Markets
Asian markets traded higher following Friday’s rally in US stocks and bonds amid heightened bets of no further interest rate hikes.
MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.5%, having already rallied 2.8% last week and off a one-year low.
Japan’s Nikkei 225 gained 2% and Topix gained 1.45% to its highest level in more than a month. South Korea’s Kospi rose 2.14%, while Kosdaq jumped 3.39%.
Hong Kong’s Hang Seng index futures were higher at 17,867 compared to the HSI’s close of 17,664.12.
Australia’s S&P/ASX 200 rose 0.40%.
Gift Nifty was trading at around 19,445 level against the previous close of Nifty futures of 19,296, indicating a positive start for the Indian benchmark indices.
Wall Street
U.S. stock market indexes ended higher on Friday as bond yields fell sharply after data showed signs of a slowdown in U.S. jobs growth and a rise in unemployment, rekindling hopes that the interest rate cycle is nearing its peak.
The Dow Jones Industrial Average rallied 222.24 points, or 0.66%, to 34,061.32, while the S&P 500 gained 40.56 points, or 0.94%, to 4,358.34. The Nasdaq Composite finished 184.09 points, or 1.38%, higher at 13,478.28.
Read also: Wall Street week ahead: Investors eye Fed survey on banking conditions, US trade deficit data
US jobs data
U.S. job growth slowed in October, while the increase in annual wages was the smallest in nearly 2-1/2 years, indicating a softening of labor market conditions, Reuters reported.
The Labor Department’s employment report also showed that the unemployment rate rose to 3.9% last month, the highest level since January 2022, from 3.8% in September.
Nonfarm payrolls rose by 150,000 jobs last month after increasing by 297,000 in September. Economists polled by Reuters had forecast wages would rise by 180,000.
Japan’s service activity has slowest growth this year
Japan’s services activity expanded at the slowest pace this year in October, a trade survey showed.
The final purchasing managers’ index (PMI) from au Jibun Bank Service fell to 51.6 in October from 53.8 in September, weighed down by weak demand, Reuters reported.
The index was slightly above the flash reading of 51.1 and remained above the 50.0 threshold separating expansion from contraction, according to the survey compiled by S&P Global Intelligence.
South Korea reimposes stock short-selling ban
South Korea reimposed a ban on short-selling stocks from Monday until at least June to promote a “level playing field” for retail and institutional investors, financial authorities said.
The ban was lifted in May 2021 for trades involving the shares of companies with a large market capitalization included in the share prices of KOSPI200 and KOSDAQ150. The restriction remained in place for most other stocks, Reuters reported.
Read here: South Korea to reinstate ban on short-selling stocks until June 2024 to ‘level playing field’
“The measure is basically aimed at easing the ’tilted playing field’ between institutional and retail investors,” said Financial Services Commission (FSC) chairman Kim Joo-hyun.
Dollar goes down, bond yield goes down
The US dollar fell while other major global currencies were steady early Monday following the Federal Reserve’s dovish tone.
The dollar index, which measures the greenback’s strength against a basket of six currencies, was flat at 105.11. The dollar index fell more than 1% last week, its heaviest fall since mid-July and hit a six-week low.
The euro was at $1.0726, the Japanese yen weakened 0.16% to 149.60 per dollar, while the Sterling was steady at $1.2368.
Treasury yields fell last week after softness in US jobs and manufacturing data. Yields on 2-year notes have fallen 25 basis points in about two weeks, while 10-year yields are down half a percentage point and at 5-week lows around 4.59%.
Updated: 06 Nov 2023, 07:15 IST