Following a recent decline in tech and AI stocks, the FTSE 100 and European markets closed higher on Friday, with Wall Street also expected to follow suit. This comes after the release of data showing the US PCE price index was largely as expected, leading traders to bet on an upcoming Fed interest rate cut. The pound remained steady against the US dollar.
FTSE 100 Rebounds as US Inflation Data Raises Fed Interest Rate Cut Hopes
Background:
The FTSE 100 Index is a market capitalization-weighted index of the 100 largest companies listed on the London Stock Exchange. It is a key benchmark for the performance of the UK stock market and the broader European economy.
The Federal Reserve System (Fed) is the central bank of the United States and plays a crucial role in setting interest rates and managing the money supply.
Recent Developments:
Declining Tech and AI Stocks: The FTSE 100 and European markets had experienced a decline in the values of tech and artificial intelligence (AI) stocks in recent weeks. These stocks have been under pressure due to rising interest rates, concerns over competition, and the recent sell-off in the tech sector.
Market Rebound: On Friday, the FTSE 100 and European markets rebounded, closing higher. The rebound was driven by the release of data showing that the US core personal consumption expenditures (PCE) price index, a measure of inflation, remained largely as expected. This data eased concerns about persistently high inflation and led traders to bet on an upcoming Fed interest rate cut.
Fed Interest Rate Cut Bets: The prospect of a Fed interest rate cut boosted sentiment in the markets. Investors believe that lower interest rates would support economic growth and boost corporate earnings, benefiting stock prices.
Pound Remains Steady: The pound remained steady against the US dollar on Friday, holding onto its recent gains. This suggests that the market is not overly concerned about the UK's economic outlook.
FAQs:
1. What is the significance of the PCE price index? Answer: The PCE price index is the Fed's preferred measure of inflation. It tracks the changes in prices paid by consumers for goods and services.
2. How does the Fed's interest rate decision affect the stock market? Answer: Interest rate cuts tend to support stock prices by making it cheaper for businesses to borrow and invest. Conversely, interest rate hikes can dampen economic growth and weigh on stock valuations.
3. What is the current outlook for the FTSE 100? Answer: The FTSE 100 is expected to benefit from the Fed's potential interest rate cut and the resulting boost to corporate earnings. However, the index remains vulnerable to geopolitical risks and concerns over slowing economic growth.
4. Why did tech and AI stocks decline recently? Answer: Tech and AI stocks have been under pressure due to concerns over rising interest rates, competition, and a sell-off in the broader tech sector.
5. What factors could impact the UK economy in the coming months? Answer: The UK economy is facing headwinds from rising inflation, geopolitical uncertainty, and the impact of the war in Ukraine. The government's fiscal and monetary policies will also play a role in shaping the economic outlook.
Indian equities continued their upward trend for the second day, with Nifty and Sensex both registering gains of over 1.5%. Bank Nifty also saw an increase of nearly 2%, led by gains in HDFC Bank, ICICI Bank, SBI and Axis Bank. This surge can be attributed to the positive sentiment post the state election results, which have been deemed as highly positive for the market. Analysts predict that the rally may continue for a few more days, driven by short covering and bullish momentum. Meanwhile, Asian markets also traded in the green as the US Treasury secretary selection caused a downward movement in the dollar and bond yields.
HDFC Bank's stock soared to an all-time high as it received a delivery-based buying of Rs 31,135 crore as part of MSCI rebalancing. The private lender recorded a delivery volume of 17.4 crore shares, with a delivery percentage of over 81%, driving its market capitalisation to reach an impressive Rs 13.57 lakh crore. The November round of MSCI indices rejig is expected to bring in foreign passive flows of $2.5 billion, boosting the bank's weightage in the Global Standard Index. This news has attracted the attention of investors, with BSE Ltd. also recording a high delivery turnover worth Rs 2,928 crore.
Hindustan Unilever Limited (HUL) has recently separated its ice cream business, with a valuation exercise already completed. However, the move has faced complications as a panel formed by HUL to evaluate the prospects of this business has discovered that softy ice cream mix is subject to an 18% GST. In addition, a video showing tampering of Amul ice cream has resurfaced, causing concerns for GCMMF. These developments, along with HUL's earnings and FII outflows, have contributed to a fall in the markets for the fourth day in a row. Despite this, there is a silver lining as the Sensex has rebounded, with FMCG seeing growth and Adani Energy receiving a SEBI notice for its shareholding categorization.
In a significant move, India will see its weight in the MSCI Emerging Markets Index rise from 19.3% to 19.8% in 2024, leading to an estimated $2.5 billion in passive foreign inflows. This increase is largely due to notable upgrades for several Indian companies, including Kalyan Jewellers India Ltd., Voltas Ltd., and BSE Ltd. With no Indian stocks removed, India's total representation in the index expands to 156, and an additional 13 Indian stocks have been added to the MSCI Small-Cap Index. This surge in representation not only boosts India's weight in the index but also signals potential for further growth and upgrades in the future, solidifying its position in global markets.
The much-awaited IPO of NTPC Green Energy is set to be finalised today, with allotment messages being sent to investors. The grey market premium has seen a slight increase over the weekend, with the stock currently trading at a premium of 2.78%. The listing date is scheduled for November 27 and interested investors can check the official IPO allotment status on various platforms such as BSE, NSE, and Kfin Technologies. Additionally, the allotment status can also be checked easily by following certain steps.
Following a recent post by a user named "DogeDesigner," which claimed that X had become the #1 news app on Apple's AppStore in India, billionaire Elon Musk confirmed the news. Musk acquired X, formerly known as Twitter, in October of 2022 for $44 billion. According to Statista.com, India ranks third in the world for the number of Twitter users, with over 25 million users. After the announcement, Musk's followers praised the platform, with users from Australia, Germany, Brazil, and India congratulating X on its achievement. This comes after a mass exodus of users from X to alternative platforms, like Bluesky, after the 2024 United States presidential election.
Delhi-based water and wastewater management provider, Enviro Infra Engineers Ltd., launched its initial public offering on Friday, which was fully subscribed at 2.08 times. As of Monday, the IPO has been subscribed 8.34 times, with a grey market premium of Rs 52 and an estimated listing price of Rs 200 per share. The company aims to raise Rs 650.43 crore through the public issue, with a price band of Rs 140-148 per share and a minimum bid requirement of 101 shares. Enviro Infra had previously raised Rs 195 crore from anchor investors and its IPO will close on November 26, with a fresh issue of Rs 572.46 crore.
In a groundbreaking partnership, Octaviant Financial and Starr Insurance have teamed up with Marsh to offer drug warranty services for pharmaceutical companies. Through their subsidiary, Actuaria Insurance Services LLC, Octaviant will provide comprehensive drug warranties, backed by Starr as the lead underwriter. These warranties are issued directly to end payers, providing them with financial recovery if a patient does not achieve the intended benefits from a high-cost therapy. As pharmaceutical companies continue to develop advanced therapies with high price tags, this partnership offers a solution to address concerns from payers and promote confidence in these innovative treatments.
After changing its name and main object of business, Spright Agro Limited has now ventured into the world of agricultural trading and commodities. With a history of successful textile production and recent operations in the steel industry, the company is expanding its already diverse portfolio. This new move is expected to greatly impact the market, making Spright Agro a force to be reckoned with. Along with their dedicated customer care and support, this move proves that the company is committed to continuously evolving and staying ahead of the game.
The Indian Premier League (IPL) 2025 mega auction kicked off in Saudi Arabia with a bang, as cricketers like Shreyas Iyer, Rishabh Pant, and Arshdeep Singh were sold at record-breaking prices. Rishabh Pant was picked up by Lucknow SuperGiants for a whopping price of ₹27 crore, making him the most expensive player in IPL history. Other notable sales include England's Jos Buttler to Gujarat Titans for ₹15.50 crore and Australia's Mitchell Starc to Delhi Capitals for ₹11.75 crore. With a total of 577 players up for auction and different budgets for each team, it will be an interesting event to follow.