Mumbai (Maharashtra) [India], November 8 : Domestic markets entered a volatile phase, responding to global economic developments and fluctuations in local indicators, according to Union Bank of India report.
The 10-year government bond yield softened slightly, closing at 6.82 per cent, down from the previous session, while the 5-year bond yield held steady at 6.76 per cent. This shift in bond yields reflects cautious investor sentiment amid uncertain global conditions.
In the foreign exchange market, the Indian rupee faced a significant depreciation, ending the day at Rs84.3725 against the US dollar, down from Rs84.2800 in the prior session.
Analysts attribute the rupee's decline to capital outflows, which added pressure on the currency as investors moved funds to perceived safer assets abroad.
The Indian stock market took a sharp downturn, falling by over 1 per cent and erasing gains from the previous rally. This decline was fueled by renewed volatility following the results of the recent US presidential election, which introduced fresh uncertainty to global markets.
Experts noted that these political shifts, along with upcoming central bank decisions, contributed to an atmosphere of caution in Indian equities.
On the commodities front, Brent crude prices trended downward in today's trading, reflecting lower demand expectations amid mixed global economic signals.
Gold prices, on the other hand, saw a slight increase as investors turned to safe-haven assets, seeking stability amidst rising market unpredictability.
The Bank of England (BoE) announced a 25 basis-point cut to its key interest rate, bringing it down to 4.75 per cent. The decision, supported by the majority of the Monetary Policy Committee (MPC), is part of ongoing efforts to control inflation, which has been gradually decreasing.
Meanwhile, the US Federal Reserve announced a similar 25 basis-point rate cut on Thursday, signaling optimism about the economy's recovery trajectory. Experts expect this adjustment regardless of political shifts following the US election.
In Asia, the People's Bank of China (PBoC) continued its supportive stance. Governor Pan Gongsheng reassured foreign investors, emphasizing the bank's commitment to growth-boosting policies. Pan also pledged to improve communication with financial markets and to further open China's financial services sector to international participants.
Elsewhere, German industrial production recorded a 2.5 per cent decline in September, a steeper-than-expected drop that signals a slowdown in the country's manufacturing sector.
Meanwhile, in the euro area, retail sales increased by 0.5 per cent in September compared to August, with a year-over-year growth rate of 2.9 per cent across the Eurozone. These numbers reflect a cautious but positive outlook on consumer spending within the European Union.
On a global note, 2024 is set to become the warmest year since records began, according to the European Union's Climate Change Service agency. This announcement comes just ahead of the UN COP29 climate summit in Azerbaijan, where nations are expected to negotiate increased funding for climate initiatives. However, the recent US election outcome has led to tempered expectations for the summit's results.
On the domestic front, BVR Subrahmanyam, CEO of Niti Aayog, spoke about India's potential in joining key global trade agreements, specifically the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Subrahmanyam highlighted that these partnerships could be beneficial for India's Micro, Small & Medium Enterprises (MSME) sector, which currently accounts for 40 per cent of the country's exports.