NEW DELHI: Modi government's efforts to kickstart the investment cycle has so far seen a tepid response from the markets. The S&P BSE Sensex slipped over 4% since November, and is now down to over 7%. The fall in the index was largely on account of both local and global factors, which are likely to play out in the near future as well.
While this may well be the most important week for capital markets in the past 9 years, when the Fed is widely expected to hike rates on Wednesday, precisely 7 years to the day since it cut rates to zero, the week sets off with a quiet start today with just the Euro area industrial production reading due out this morning and nothing expected out of the US this afternoon.
NEW DELHI: All eyes will be on Janet Yellen as the US Federal Reserve kickstarts its two-day policy meet later on Tuesday. Although analysts are not factoring in a rate hike in April, a dovish commentary can give a good leg-up to markets across the globe, including India. US Federal Reserve raised interest rates last December for the first time in 10 years and had guided for at least two rate hikes in 2016. Some analysts expect the US central bank to hike rates only once compared with two anticipated earlier.
NEW DELHI: The benchmark equity indices closed flat for the week ended April 22 and the coming week is likely to be no different. Quarterly earnings, F&O expiry, the outcome of the US Federal Reserve's rate-setting meeting and trend in global markets will decide the trend for the market in the coming week, experts said. The Nifty50 slipped below its crucial psychological level of 7,900 and any fall below the 7,850 level can result in some correction in the index towards its next support level at 7,790.
The FOMC may have cut its rate hike forecast from 4 to 2, following by an even more dovish speech by Janet Yellen, but Goldman is convinced the Fed is wrong. As a result, after looking at today's payrolls report, its chief economist Jan Hatzius said that "we ultimately think the committee will move faster than the two-hike pace implied by the latest “dot plot”, despite the dovish signals from the March meeting and Chair Yellen’s remarks this week" and that "we continue to expect the FOMC to raise rates three times in 2016."
Wall Street analysts don’t expect stellar earnings for large-cap banks this earnings season; however, robust results posted by JPMorgan Chase & Co. and Citigroup Inc. this past week might build up strong growth expectations for other banks too.
Bank of America is expected to release its fourth-quarter earnings on Tuesday for the three-month period ending December 31. Investors will be keeping a close watch on the earnings and the subsequent movement in Bank of America stock.
On Thursday morning, the employment cost index, or ECI, for the first quarter will be released. Unlike the average hourly earnings number released in the monthly jobs report, the ECI is a more comprehensive measure of compensation, taking into account things like how much employers spend on things like benefits in addition to wages.
After last week's economic fireworks, this one will be far more quiet with earnings dominating investors' attention: US financials reporting this week include JPM and Wells Fargo tomorrow, BofA on Wednesday, GS and Citi on Thursday, BoNY and MS on Friday. Industrial bellwethers Intel (Thurs) and General Electric (Fri) are also on this week’s earnings docket. On the macro front, this coming week we have two MPC meetings - both in LatAm. For Brazil consensus expects a 25bps hike in the policy rate. For Chile consensus forecasts monetary policy to remain on hold.
This week Wall Street's big investment banks will report on how they did in Q4 2012, and while they won't be reporting the train wreck numbers that made the financial crisis so... exciting, there are a few stories to watch that could make a major impact on the world of finance.
At the start of this year speculations regarding interest rate hike gained momentum and financial stocks became the center of focus in U.S. markets. Consequently, investors hoped for a liftoff in rates and predicted a bright future for U.S. banks, which were likely to benefit from the potential boost in earnings. Apart from the macro factors, individual bank performances were also gauged by analysts as investors weighed in their investment opportunities.