Treading Water, Are We?
DSIJ Intelligence / 23 Jul 2013
After a storng trading session on the global markets, how are Indian markets likely to shape up today?
The QE-centric US markets ended on a positive note yesterday. These gains can be attributed to the fact that existing-home sales fell by 1.2% to 5.08 million in June 2013. This figure was well away from market expectations of 1.9% growth in home sales. This reinforced the Federal Reserve’s commitment to low interest rates and its intention of not cutting the scale of bond purchases till there was significant improvement in the economy.
This resulted in gains on the US markets between 0.01% and 0.35%. The S&P notched up to its 23rd record close this year yesterday. European stocks too held on to their seven week high.
Asia too has seen a positive opening, taking cues from the US markets. Asia Dow is trading higher by 1.26%. The Nikkei, Hang Seng and Shanghai Composite are trading higher by 0.94%, 1.83% and 1.61% respectively. Singapore is trading higher by 0.30%. The SGX Nifty was seen trading higher by 38.50 points at 07:50 AM earlier today. The extent of upward movement in global indices, especially in Asia, is suggestive of an up-move on the Indian markets as well.
There are not many cues for global markets to pick on at the moment and investors globally only seem to be treading water. While they would see strong gains today, a period of volatility will begin tomorrow onwards. This will also provide for more directional trends on the markets.
Euro-zone PMIs are scheduled to be released on Wednesday and the UK GDP on Thursday. More crucial would be the next week where there meetings of the US FOMC, BoE and ECB are scheduled. Some key macroeconomic indicators are also scheduled to be released in the US next week. These events and data points will be the determining factors of the trend that global markets will see. They will not only give more clarity on the current economic health but also on the prospective moves of the respective central banks.
Till that happens, the markets are expected to pick up existing cues and try to stay buoyant. Volatility however, will begin tomorrow onwards.
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