Morning Pulse

Our View on Equity Market:

The Dow and Nasdaq finished the previous week with gains of 5.5% and 8.2%, respectively. Tech and Consumer discretionary stocks led the gains. In the current week, investors will be watching for any signs of progress on ceasefire talks. U.S. Federal Reserve Chair Jerome Powell is scheduled to delivered a speech later today. Apart from this, investors are also watching the course of Covid, which is causing shutdowns of Chinese cities and is spreading again at a higher rate in Europe. Brent crude Oil prices have risen to USD111 levels after falling to USD 100 levels in the previous week. The Asian markets are trading in the green. The Nifty ended the previous week with gains of 4.2% led by buying in Banks, Metals and Realty. In today’s market the Adani group of stocks would be in focus as reports indicate that the group plans to take stake in Saudi Aramco. Price of diesel sold to bulk users has been hiked by Rs 25/lit, which should be a relief to OMCs. JSPL has reported that its subsidiary has repaid USD 357mn loan.

Global Markets:

U.S. stock indices closed higher on Friday, as investors took the Federal Reserve’s interest rate hike and uncertainty over the Russia-Ukraine war in stride. Volatility in markets has become the norm this month as investors struggle to forecast economic growth and corporate profitability amid high inflation, rising interest rates from central banks around the world, Russia’s invasion of Ukraine, and ongoing lockdowns to combat Covid-19 in China.
At Fed’s meeting, the Fed increased benchmark interest rates by 25 basis points as expected, promising more, with Fed Chairman Jerome Powell cheering investors with an optimistic view of the economy. U.S. data for existing home sales and leading indicators, both for February. Investors were also weighing hawkish comments from central bankers. St. Louis Federal Reserve President said the central bank risked losing credibility by moving too slowly to bring inflation down.
European markets closed higher on Friday, notching their best weekly gain since 2020, as investors tracked negotiations between Russia and Ukraine and digested a big week of central bank decisions. The Russian central bank held its monetary policy steady and maintained its key interest rate at 20%. The bank warned of considerable uncertainty, however, as Russia’s economy undergoes a large-scale structural transformation amid a barrage of international sanctions.

Debt/FX Markets:

U.S. Treasury yields settled lower on Friday, as investors monitored negotiations between Russia and Ukraine. The yield on the 10-year Treasury note fell 5 bps to 2.14%. The yield on the 30-year Treasury bond moved 7 bps lower to 2.408%.

Commodities:                 

Oil futures ended higher on Friday, after talks between Moscow and Kyiv made little progress. The U.S. and its allies have hit Russia with severe sanctions, with Washington also banning imports of Russian crude. Western sanctions have largely attempted to exempt Russian energy flows, but market participants have warned that Russian supply is likely to be sharply curtailed in the months ahead.
U.S. gold futures finished sharply lower on Friday, after demand for the safe-haven metal was hit by hopes of progress in peace talks between Russia and Ukraine as well as the fallout from a U.S. interest rate hike. U.S. gold futures settled down 1.2% to $1,919.60.