Sensex & Nifty closed on flat note on Friday, however indices booked weekly gains of 2% each. Sentiment remained muted following this week�s weak services and manufacturing PMI data, government�s high borrowing plans, and fresh high crude oil prices. IHS Markit India Services PMI fell to 51.5 levels in January 2022 from 55.5 levels in December 2021, below market expectations of 53 levels and pointing to the weakest reading since July 2021. Still, this was the sixth straight month of expansion in the service sector.
Investors will watch out for US inflation data and UK GDP growth data. Domestic investors will watch out for RBI monetary policy decision and Q3 earnings.
FIIs/FPIs have sold Rs. 333 billion in January 2022 and Rs. 36 billion in February 2022. Foreign Institutional Investors (FIIs) Derivative Statistics have shown a rise in the open interest (OI) in stock futures, index options, stock options and index futures.
Wallstreet indices closed on mixed note, Nasdaq and S&P 500 closed on positive note fuelled by Amazon�s better than expected earnings. On NFP front, US economy added 467,000 jobs in January 2022, much above markets expectations of 150,000 strengthening the case for faster monetary policy tightening. During the week, Dow Jones gained by 1%, Nasdaq surged by 2.5%, and S&P 500 up by 1.5%. �US treasury touched 25 months high of 1.93% amid strong NFP data.
European indices closed on negative note on Friday, amid worries of higher inflation could dent growth & could force policymakers to hike interest rates. During the week, DAX down by 2.63% and FTSE up by 0.65%.
Crude oil prices rose above USD 90 per dollar as winter storm in US hit oil production. �OPEC and its allies stuck with their plan to release more barrels into a strengthening market gradually. During the week crude prices rose by 3.60%.
Gold prices edged lower to below USD 1800 an ounce on Friday after the payrolls report showed an unexpected strong gain in US employment for January, reinforcing the Fed's view the labour market is recovering and raising the odds the central bank will deliver a bigger rate hike in March 2022.
Global Economy
The ECB maintained key interest rates at record low levels in February 2022 and policymakers expects inflation pressure to ease in coming months. ECB confirmed it will discontinue net asset purchases at the end of March 2022.
Annual inflation rate in the Euro Area edged higher to a fresh record high of 5.1% in January 2022 from 5% in December 2021, compared to markets expectation of 4.4%.
Japan Services PMI plunged to 47.6 levels in January 2022 from 52.1 levels in the previous month and a flash reading of 48.8 levels.
The Bank of England raised its key Bank Rate by 25bps to 0.5% during its February 2022 policy-meeting, in line with expectations. It is the first back-to-back increase since 2004, pushing borrowing costs to the highest level in 2 years although four policymakers voted for an even bigger 50bps rate hike.
The ISM Services PMI for the US fell to 59.9 levels in January 2022 from 62.3 levels in December 2022, pointing to the slowest growth in the services sector since February 2021.
The number of Americans filing new claims for unemployment benefits fell by 23,000 to 238,000 in the last week of January 2022, the lowest reading in 3 weeks and below market forecasts of 245,000, as demand for labour remains strong and the impact of the spread of the omicron coronavirus variant apparently starts to fade.
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