GLOBAL MARKET UPDATE 6/4

• US ISM non-manufacturing index slipped to 57.3 in March from 59.7 in February, below market consensus of 59.5, led by declines in production and employment indices.

 

• Australia’s central bank left its benchmark interest rate at 4.75 % for a fourth straight meeting, as floods disrupt coal mining in the nation’s northeast and a rising currency tempers inflation.

 

• China raised interest rates for the fourth time (benchmark 1-year lending rate was increased to 6.31% from 6.06%) since the end of the global financial crisis to restrain inflation and limit the risk of asset bubbles in the economy.

 

• Moody’s Investors Service cut Portugal’s credit rating yesterday for the second time in three weeks amid expectations that the country will be unable to avert a European bailout. It downgraded the long-term government bond ratings by one level to Baa1 from A3, and said it’s considering another reduction.

 

• The minutes of the March FOMC meeting suggest that participants saw macro data as consistent with a recovery that was gaining traction and ongoing gradual improvement in labor market. As expected, Committee members felt that rapidly rising commodity prices posed upside risks to stability of longer-term inflation expectations and outlook. Policy makers however differed over whether to begin removing record stimulus this year as they debated the path of monetary policy after the completion of their USD 600 bn bond-purchase program.

 

• Indian stock markets ended the day on a flat note yesterday. Profit booking in the morning session saw the benchmark indices slip into the negative territory after touching a near 3-month high on Monday. Mixed cues from the Asian peers also failed to provide significant cues to the Indian markets. However, strong FII inflows helped the indices recover intraday losses in subsequent trade.

 

• Overnight, the US stocks ended flat as the technology sector lost steam despite earlier gains driven by M&A activity. The Dow fell for the first time in three days.

 

• Today, Asian markets were mixed tracking subdued cues from the US markets & China's latest rate increase on Tuesday dampened sentiment. Stocks fluctuated as Chinese banks & insurance companies advanced. Exporters dropped amid concern the Federal Reserve will withdraw stimulus measures. Today, Indian equity benchmarks were positive with moderate gains in opening trade & rose 0.2% despite rising crude oil prices on Middle East tensions. Stocks slipped later on lack of clues from Asian markets. Buying was seen in metal, Auto, cement, telecom, ADAG, power & select financial companies' shares.