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Major Asian stock markets have opened the day on a negative note with stock markets in Japan and Hong Kong are trading lower by 1.9% and 1.8% respectively. Benchmark indices in Europe ended their previous session on a positive note stock markets in France and Germany ending the day higher by 1% and 0.9% respectively. While, the benchmark indices in the US ended the day lower by 0.2%. The rupee is trading at 67.15 per US$.
Indian stock markets have opened the day on a negative note. The BSE Sensex is trading lower by 176 points (down 0.7%) and the NSE Nifty is trading lower by 54 points (down 0.7%).Further, BSE Mid Cap and BSE Small Cap are trading lower by 0.2% and 0.01% respectively.
As per an article in Livemint, India's merchandise exports contracted at their slowest pace in 18 months in May.
Exports contracted marginally by 0.8% in May. The positive is that the growth in the non-petroleum export turned positive. During the month, the non-petroleum exports grew by 1.1% YoY.
Reportedly, 13 of the top 30 export items reported a growth in May. Exports of gems & jewellery, chemicals and engineering goods grew by 24%, 11% and 2% respectively. While, exports of pharmaceutical products and petroleum products declined by 14% and 16% respectively.
Further, imports too witnessed a decline of 13.1%. Imports of petroleum products, gold and iron & steel declined by 30%, 39% and 28% respectively during the month. Moreover, the trade deficit too reduced by around 40% YoY to US$ 6.27 billion during the month.
The slowdown in the contraction of exports is a good sign for the Indian economy. However, the global economy continues to remain in a weak spot which puts forth the question of whether the slowdown in the contraction of exports is sustainable.
In another news update, the Federal Reserve kept the interest rates unchanged in its policy meeting on Wednesday. The slow pace of improvement in the job market was the prime reason behind keeping the interest rates unchanged.
Further, the Federal Reserve lowered the country's economic forecast for 2016 as well as 2017. Updated projections from Fed points to annual GDP growth of only 2% for the foreseeable future.
It's been almost eight years of near zero interest rate and the growth is hovering just around 2%. This validates the view that zero or negative interest rates have not helped the developed nations to boost their economy. Recently, an article was published in the Vivek Kaul's Diary, stating how the negative interest story is a horror show. You cannot miss reading this interesting piece. Click here to access it.
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