US Inflation Rises and India’s Slow GDP Growth

In the week gone by, global stock markets showed a mixed performance across various regions, as rising treasury yields and heightened geopolitical tensions in the Middle East, following the fall of the Assad regime in Syria, also weighed on investor sentiment. In this blog, we’ll know in detail what happened last week (December 9, 2024 to December 13, 2024) all across the globe.

US Inflation Rose

In the US, Consumer inflation for November rose at its fastest at 2.7% but was largely in line with expectations but producer prices rose more than expected and shot up 3.0% after increasing 2.6% in October.

The high PPI data has reinforced the need for a patient approach in the Fed monetary policy. Meanwhile, investors are also seeking more cues on what President-elect Donald Trump’s policies will entail for inflation and the economy, with his plans for increased trade tariffs expected to increase price pressures.

Europe Monetary Policy Decision

In Europe, attention remained focused on the European Central Bank’s (ECB) final monetary policy decision for the year. On Thursday, the ECB reduced interest rates by a quarter percentage point, marking its fourth rate cut in 2024.

It also signaled the potential for additional easing as the region grapples with domestic political instability and looming trade tensions with the United States. The ECB’s actions highlight its ongoing efforts to support an economy trailing behind global peers amid dissipating inflationary pressures.

China’s Slow Growth

China’s economic performance continued to show signs of weakness. Export growth slowed to 6.7% YoY in November, significantly below October’s 12.7% increase, while imports contracted unexpectedly by 3.9%, deepening the 2.3% decline seen the previous month.

Besides, investors were also disappointed as the policy updates from China’s high-profile legislative meeting failed to deliver large-scale economic stimulus as expected. Both the Politburo and CEWC look more like a policy recap of the stimulus measures in the past months rather than a new supporting deal for the economy.

Additionally, China’s Consumer Price Index (CPI) growth slowed to 0.2% YoY in November, a five-month low, down from 0.3% in October. Meanwhile, the Producer Price Index (PPI) contracted by 2.5% in November, an improvement from October’s 2.9% drop. These figures reflect subdued domestic demand and ongoing economic challenges in the region.

India’s Stock Market Remained Volatile

Back at home, domestic markets experienced significant volatility amid weak global cues due to elevated US dollar and bond yields. In a recent meeting, the Reserve Bank of India’s (RBI) monetary policy decision to maintain the repo rate while reducing the Cash Reserve Ratio is expected to inject ₹1.16 lakh crore into the financial system, bolstering liquidity and aiming to stimulate economic growth.

However, concerns over slowing GDP growth persist, with India’s economy expanding at just 5.4% in Q2 FY25. While private investments and exports showed signs of improvement, subdued consumption remains a critical challenge.

Inflation data for November provided some relief, as retail inflation eased to 5.5% from 6.2% in October, driven by lower food prices. Month-on-month, retail prices fell by 0.15%, with food prices declining by 0.6%.

Conclusion

Going forward, domestic markets will likely be influenced by global cues, economic indicators, and investment flows from institutional players. Crude oil prices and the rupee’s exchange rate will be key factors shaping future market trends. So, open Demat account with SMC Global Securities and invest as per your investment objective and risk profile.

Reference:
SMC Global Securities’ Research Team

Author: All Content is verified by SMC Global Securities.