The latest US non-farm payroll data surpassed expectations, indicating potential strength in the job market. European inflation data has risen, displaying signs of persistence. On the other hand, US Federal Reserve officials seemed convinced that inflation was coming under control, with upside risks diminished, while almost all participants indicated a lower target range for the federal funds rate by the end of 2024.
In the Red Sea, attacks on shipping vessels are causing supply chain bottlenecks, potentially leading to temporary increases in shipping costs and inflation concerns. Overall, there's a likelihood of near-term volatility spiking, potentially transitioning into a consolidation mode.
Sensex & Nifty closed in positive territory on Friday amid rally driven by IT sector stocks, however on weekly performance basis IT stocks dragged index performance. On macro-economic data front, India’s GDP expanded by 7.3% which slightly higher than RBI’s forecasts. Domestic manufacturing and service PMI levels contracted and expanded respectively. FIIs/FPIs domestic inflow stood at Rs. 47 billion (as of 7th January 2024)
In the upcoming week, investors will closely watch for inflation data from US, China, and India. Domestic earnings season will kick-off from next week with IT stocks reporting Q3 numbers.
Equity Market Summary:
- US indices finished a volatile session flat on Friday, as investors digest the latest economic data and assess the future path of the Fed monetary policy. All the major indices ended near the flatline, halting a 9-week win streak.
- European indices recovered slightly from gap down opening and closed in negative territory on Friday. European inflation data showed slight uptick to 2.9% rising from 2.4%.
- US ISM Services PMI unexpectedly fell to 50.6 levels in December 2023, the lowest reading in 7 months, compared to 52.7 levels seen in November 2023.
- US economy added 216,000 jobs in December 2023, more than a downwardly revised 173,000 in November 2023, and well above market forecasts of 170,000.
- Japan Services PMI was revised lower to 51.5 levels in December 2023 from 52 levels in the preliminary figure.
