As the global financial markets gear up for trading on October 1, several key developments are set to influence the direction of major indices. Indian benchmark indices, the Sensex and Nifty 50, are expected to open mutedly, tracking cues from the GIFT Nifty which was trading around 26,002 earlier in the morning.
Indian Markets: Recent Trends and Expectations
On September 30, the Indian markets witnessed significant declines, with the BSE Sensex dropping by 1,272.07 points or 1.49% to close at 84,299.78, and the Nifty falling by 368.20 points or 1.41% to 25,810.80. This downturn was largely driven by rising geopolitical tensions and anticipation of Federal Reserve Chair Jerome Powell's speech. Despite this correction, experts view it as a routine adjustment following the indices' strong run-up in the last fortnight of September.
Global Market Performance
In the United States, the major stock indexes ended on a positive note on Monday. The S&P 500 reached a record high, gaining 0.42% to close at 5,762.48, while the Dow Jones Industrial Average and the Nasdaq Composite also posted gains. These increases came despite Federal Reserve Chair Jerome Powell indicating that the central bank is in no hurry to implement further interest rate cuts, suggesting two more rate cuts of 50 basis points this year if economic conditions align with expectations.
In Asia, the Chinese stock markets saw a significant rally, with the CSI 300 experiencing its best single-day gain since 2008. This rally, coupled with record turnover on the Shanghai and Shenzhen bourses, has sparked concerns that smart money might start moving back to China due to its valuation comfort compared to India. However, veteran investor Mark Mobius believes that China's outperformance will be temporary and has expressed confidence in India's market potential.
Commodity and Currency Markets
Commodity prices have seen notable movements, with iron ore prices rising 7.51% due to China's stimulus measures. In the currency market, the US dollar strengthened as Fed Chair Powell pushed back on aggressive rate cut expectations. The Japanese yen led the losses against the US dollar, while the euro remains under focus as ECB's easing expectations continue to be reassessed.
Economic Data and Upcoming Events
Investors are preparing for significant economic data releases this week, including the US jobs report, JOLTS job openings, and ISM manufacturing and services PMIs. These data points will be crucial in determining the pace of future rate cuts. Additionally, the Euro-area inflation print is due, which is expected to confirm the disinflation trends seen in France, Italy, and Germany.
In earnings news, several key companies are set to report their quarterly results on October 1, including Paychex, Inc., McCormick & Company, Inc., Acuity Brands, Inc., and United Natural Foods, Inc. These reports will provide further insights into the health of various sectors and their future growth prospects.
