Jan 29, 2005|
Global roundup: Eyes on the Fed!
In the last one week, while the Indian stock markets have seen a sharp recovery that to an extent has alleviated investors' fears, it is not the case with the global indices. While the benchmark Dow Jones index closed marginally in the positive, Nasdaq and the broader S&P 500 indices closed in the red.
While the corporate results season in India has been commendable in the background of higher input cost (commodities and crude oil) and higher capital expenditure plans, it is not the same case as far as the US markets are concerned. While technology majors like Microsoft managed to beat street 'expectations', select pharma and oil companies posted mixed results. Commodity majors, like in India, posted robust results and the outlook remains the one that of positive atleast for the next six months.
As far as the US economy is concerned, the GDP growth slowed in the last quarter as compared to the trend witnessed in the last few quarters. To put things in perspective, GDP growth of the US economy in the fourth quarter was 3.1%, the slowest since the start of 2003 (graph below). At the same time, inflation firmed in the US economy. A price index on personal spending adjusting for food and energy cost rose 1.6% in the fourth quarter. Also, there are reports of upward revision in budget deficits, which is a cause of concern.
Given this backdrop of mixed signals from the US economy, the Federal Reserve is expected to meet next week and it is widely expected that interest rates will be further raised. Though there are speculations as to whether the increase will be faster in the coming meeting close on the heels of the release of the Fed meeting minutes on January 6th 2005, it remains to be seen how the Fed views the broader economic indicators. There are two things to watch out for. One, the stand of the Federal Reserve, which till now has been that of 'measured' increase in interest rate, if required, so as to maintain price stability and secondly, the outlook on the US economy itself.
Overall, while increase in interest rates may be 'expected' by experts, what investors in India have to understand is that this may impact money flow into the country. While January 2005 is too short to conclude whether the selling by the Foreign Institutional Investors (FIIs) will sustain or not, it is likely that a gradual rise in interest rate in the US could have a bearing on money flow. So, all eyes are on the Fed for the moment.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 24, 2017
Online shopping if done sensibly can help you save money and carries many other advantages.
Aug 24, 2017
Kelly, Mattis, McMaster, Cohn, and Mnuchin are in charge. But these Pentagon bureaucrats and Wall Street hustlers may be worse than a loose-cannon president.
Aug 23, 2017
Mr Market lured investors into believing they'd bitten into a crash. Did you take the bait?
Aug 23, 2017
Nowhere was the darkness deeper than in the nation's capital. There, no light shone. No flicker of awareness...observation...learning...or reflection appeared.
More Views on News
Aug 17, 2017
A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.
Aug 21, 2017
Most Indians who cannot find jobs, look at becoming self-employed.
Aug 16, 2017
The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?
Aug 16, 2017
Ensure your financial Independence, and pledge to start the journey towards financial freedom today!
Aug 22, 2017
Post demonetisation, a cut in bank savings deposits rates was in the offing.
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407