By Anjali Shukla Nov 09 2015 , London, Tolerance, or the lack thereof,
is being hotly debated across India. Opinions are severely divided as some sections of the world’s largest democracy cry foul over rising fundamentalism and perceived threat to the nation’s secular fabric and freedom to protest. Global markets, on the other hand, were united in their protest against the US Federal Reserve’s interest rate hike by the turn of the year. Investor sentiment across the globe slumped as the latest payroll data from the US confirmed a case for policy tightening. Most Asian markets closed in green on Friday ahead of the crucial US payrolls data. Indices saw a mixed performance amidst some more disappointing data from China and the fears of a nearly inevitable interest rate hike by the US Federal Reserve before the year end. The markets did see a turnaround midweek as the local media reported the Chinese president Xi Jinping saying the economy could maintain annual growth of about 7 per cent over the next five years. However, uncertainties remain, given the continued weakness in global trade and high domestic debt. The Shanghai Composite index regained some of its losses this week as sure sign the government crackdown on short selling and a return of margin debt are yielding results. The manufacturing data, albeit dismal, showed activity in the sector hasn’t bottomed out yet. The official purchasing managers’ index remained unchanged at 49.8 in October. This is being viewed as an impact of the monetary policy easing. However, the woes are far from over as other economic indicators, including housing sales and steel production continue to falter. In Japan, its central bank has said it is optimistic about the pace of economic recovery and insisted it will be sure to act, as the need arises, in order to achieve the inflation target at the earliest. The Bank of Japan said it sees inflation to be around the targeted 2 per cent in the second half of financial year 2016. Japan’s Nikkei 225 closed up 0.78 per cent at 19,265.60. The Shanghai index closed up 1.91 per cent at 3,590.03. Hang Seng closed down 0.80 per cent to 22,867.33. Indian markets witnessed a joyless week closing with marginal losses on Friday. Sentiment has been running haywire with speculation on the results for Bihar assembly elections. The signals from the international shores did not help allay the anxiety, with the benchmark BSE index closing in red for most days of the week. The US, yet again reiterating it is firm on raising interest rates by the end of the year, weighed heavy on the markets. Further, adding to woes was the disappointing manufacturing data from China, underlining once more the growing slump in the economy. Economic data on the home front did not help much either as India’s manufacturing sector grew at the slowest pace in nearly two years for October. The Nikkei manufacturing purchasing managers' index fell 50.7 in October from 51.2 in September. On the bright side, fresh figures from controller general of accounts showed the government may be on track to meet its fiscal deficit target of 3.9 per cent for FY16. The market movements for now are not only hinged upon socio-political developments within the borders, but also the state of the global economic growth. Given the current scenario, the sentiment will continue to be guided by the developments in the overseas economies. The benchmark BSE index closed down 0.15 per cent to 26,265.24. Nifty closed down 0.01 per cent to 7,954.30. The indices in Europe dragged, ending on a mixed note on Friday as the robust US employment report more than convinced the markets the US Fed is closer to raising interest rates, come December. Investor sentiment was also dampened by the weak economic figures. Overall, it was a mixed week despite a start on a high note, with the markets extending the rally, backed by the European Central Bank chief Mario Draghi’s comments the central bank is ready to act to support the euro-area economy. However, the cheer wasn’t sustained over the following days as the European commission cut its growth and inflation outlook for the euro-area for 2016 on the back of struggling global outlook and lower oil prices. Investors are looking forward to the ECB meeting next month in hopes of further stimulus for the economy. On the data side, Eurozone manufacturing PMI rose to 52.3 in October from 52 in September, the final reading showed. The producer price index for the domestic market fell 3.1 per cent versus a year ago. The ECB’s stand to boost stimulus starts to make more sense in the backdrop of dismal economic indicators, with struggling factory production, sagging output and a drop in employment growth rate. As soon as it became clear that there is little likelihood of the US Federal Reserve backing down from its stance of an interest rate hike in December following the October payrolls data beating estimates, market sentiment slumped. The indices closed low on Friday, as investors mulled the impact of Fed’s action in the coming weeks. While the strong jobs report is a positive signal showing the US economy is on track to recovery, the data also more than confirms the possibility of monetary policy tightening. According to the report non-farm payrolls rose by 2,71,000 in October. The rate of unemployment dropped to 5.0 per cent in October. The Fed has been holding off the rates since September in view of the global economic weakness, sliding oil prices as well as an entire summer of market rout. However, there isn’t a compelling reason to stick to the stance anymore as the US economic growth seems like it is getting back on track. All in all, it was a mixed trading week for the US indices as well. Over the coming week data for producer prices and retail sales will provide further insight into the state of the economy. Nasdaq closed up 0.38 per cent, at 5,147.12. Dow Jones Industrial Average closed up 0.26 per cent, at 17,910.33. S&P 500 closed down0.03 per cent to2,099.20. Source: mydigitalfc.com, Image: flickr.com