As indicated by the SGX Nifty, the benchmark stock market indices opened weak on June 6, first day of trading this week. Sensex is down 146.45 points or 0.26 percent at 55622.78. The broader Nifty shed 28 points or 0.17 percent at 16556.30.
Asian shares flat
Asian shares made a muted start on Monday as caution gripped ahead of a critical reading on US inflation, while the euro gained on the yen amid wagers the European Central Bank will take a major step toward policy tightening this week.
RBI MPC meet begins today
With inflation showing no signs of abatement, the Reserve Bank is likely to increase the benchmark lending rate in quick succession in its forthcoming monetary policy review on Wednesday, a hint for which has already been given by Governor Shaktikanta Das, opined experts.
There are speculations that the central bank may go for at least 35 basis points (bps) hike over and above the 40 bps hike effected last month after an off-cycle Monetary Policy Committee (MPC) meeting. Experts are expecting more hikes in repo rate in the coming months.
Governor Das-headed MPC will meet for three day beginning Monday. The decision taken during the meeting will be announced by the governor on Wednesday.
US stocks fall sharply on Friday
US stocks fell sharply Friday, leaving major indexes with weekly losses, after better-than-expected May payrolls data reinforced expectations for a series of interest-rate rises by the Federal Reserve in coming months. For the week, the S&P 500 fell 1.2 percent while the Nasdaq declined 0.98 percent and the Dow lost 0.94 percent after all three indexes had risen sharply the week before.
Global equity markets fell as US Treasury yields reached two-week highs on Friday (2.946 percent) after data showed the American economy generated a greater-than-expected number of jobs in May, signaling the Federal Reserve will likely continue raising interest rates in its effort to curb inflation.
The technology sector led the way south as Treasury yields rose and a report that Tesla Inc. may be considering job cuts amid CEO Elon Musk’s misgivings about the economic outlook.
US May non-farm payrolls up
US May nonfarm payrolls rose a bigger-than-expected 390,000 data, versus expectations for a gain of 328,000, from an upwardly revised gain of 436,000 in April. The unemployment rate was unchanged in May at 3.6% and average hourly earnings rose 0.3 percent to $31.95 in May. While wage gains slowed slightly to 5.2 percent year over year from 5.5 , they likely remain “too strong for policy makers to take their foot off the brake,
The Institute for Supply Management said its US services index fell to 55.9 percent in May from 57.1 percent a month earlier.
India services sector PMI at highest level in 11 years
Activity in India’s services sector improved to its highest level in eleven years as lifting of virus curbs bolstered demand, though sentiment going forward may be tempered by rising inflation. S&P Global India Purchasing Managers Index for services rose to 58.9 in May from 57.9 in April, making it the best reading since April 2011.
China services activity contracts for third straight month in May
China's services activity contracted for a third straight month in May, pointing to a slow recovery ahead despite the easing of some COVID lockdowns in Shanghai and neighbouring cities, a private business survey showed on Monday. The Caixin services purchasing managers' index (PMI) rose to 41.4 in May from 36.2 in April, edging up slightly as authorities began to roll back some of the strict restrictions that have paralysed the financial city of Shanghai and roiled global supply chains.
FPIs outflow continues for 8th straight month
Continuing its heavy selling spree for the eighth consecutive month, foreign investors pulled out nearly Rs 40,000 crore from the Indian equity market in May on fears of an aggressive rate hike by US Federal Reserve that dented investor sentiments.
With this, net outflow by foreign portfolio investors (FPIs) from equities reached at Rs 1.69 lakh crore so far in 2022, data with depositories showed.
Oil prices jump in early trade
Oil prices jumped in early trade after Saudi Arabia raised prices sharply for its crude sales in July, an indicator of how tight supply is even after OPEC+ agreed to accelerate its output increases over the next two months.
The increase for July shipments resumes a streak of hikes that started in February and was only broken when state producer Saudi Aramco cut prices from record levels for this month.
Aramco raised its key Arab Light crude grade for Asian customers by $2.10 a barrel from June to $6.50 above the benchmark it uses. The market was expecting a boost of $1.50, according to a Bloomberg survey of refiners and traders.
(With inputs from Reuters, Agencies)