Global equities face their worst week since March as markets plummet:

 Global equities face their worst week since March as markets plummet:

Global equities headed for their biggest weekly decline in more than three months after a series of central bank rate hikes that pushed bond yields higher and heightened fears of a recession.

Asia's biggest losses came in Hong Kong, where traders rallied after a holiday on Thursday. Friday's decline extended the losing streak to four straight days amid fears that even if China extends more aid to the economy, it won't have much of an impact on markets.

 

"They probably can't ignite the spirits to the extent that stimulus would make them high growth multiples," said Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore, on Bloomberg Television. He expects Beijing to try to cushion the economy and keep growth just above 5% as investors worry about regulatory uncertainty, real estate problems, and geopolitical tensions. Stock exchanges on the mainland remained closed on Friday.

Two-year Treasury yields hovered at 4.78% and near their highest level since March after Federal Reserve Chair Jerome Powell said the US might need another rate hike or two in 2023.

Rate hikes by policymakers in England, Norway, and Switzerland underscored the upward pressure on bond yields. Australian and New Zealand 10-year bond yields rose on Friday. The interest rate of the Japanese 10-year benchmark remained stable.

 

US stock futures eased slightly, bringing little relief from Treasury Secretary Janet Yellen's view that the risk of a US recession is receding. She suggested that a drop in consumer spending could be the price to pay for completing the campaign to curb inflation.

 

There are signs that the S&P 500's conviction is low this year as the index looks set to end its longest weekly winning streak since 2021. The latest Bank of America Corp. survey shows that a net 25% of global money managers are still underweight US equities, despite a recent improvement in allocation.

Signs of risk aversion were also seen in the currency markets, with the gauge of dollar strength rising 0.2% as commodity currencies such as the Australian dollar and Norwegian krone fell.

The yen has fluctuated to around 143 against the dollar following its recent depreciation, fueling speculation that Tokyo authorities could resort to verbal intervention. Stronger-than-expected inflation also fueled speculation that the Bank of Japan might adjust its price forecasts or adjust its ultra-loose monetary policy.

In commodities, oil contributed to a fall of more than 4% on Thursday as concerns over high-interest rates unsettled investors and overshadowed a fall in US crude inventories. Gold faced its biggest weekly decline since early February.

 

Modi meets Elon Musk and Ray Dalio as global money flows to India:

 Modi meets Elon Musk and Ray Dalio as global money flows to India:

Indian Prime Minister Narendra Modi's trip to the United States could not have come at a better time. A booming economy, stock indexes at record highs, and a rapidly growing consumer market are attracting great publicity as they showcase the country's potential to American business leaders and investors.

 

Equities in India have attracted nearly $10 billion in net inflows from overseas since March, which will be the highest in any quarter since the end of 2020. Rupee-denominated bonds are expected to see the longest streak of monthly purchases by foreign funds in almost a week Four years The local currency offers the second-best carry yields in Asia this year, according to Bank of America.

Modi's visit promises more: Tesla Inc. is likely to make a significant investment in India, CEO Elon Musk said after meeting with the South Asian country's leader, who also urged Bridgewater Associates founder Ray Dalio to close the investment in the country strengthen. General Electric Co. and Hindustan Aeronautics are expected to sign a deal to produce engines for Indian fighter jets during Modi's trip.

"Investors agree that India is going through a 'golden loop' period," Samiran Chakraborty and Baqar Zaidi, economists at Citigroup Inc., wrote in a note this week after a meeting with equity and securities investors in fixed income in London.

 

The influx of foreign funds and the pandemic-driven retail investment boom have propelled India's benchmark NSE Nifty 50 index to all-time highs, with the index rising nearly 9% this quarter.

Citi economists write that despite high valuations, investors are willing to hold on to their “long” positions in India. "There was no discernible fear of an immediate reversal in these portfolio flows."

 

Strategists at UBS Global Wealth Management and Société Générale have revised their views on India this week.

 

However, risks loom on the horizon. Late arrival of the monsoon rains, which are key to inflation and growth, could jeopardize the recovery of Indian consumption. Additionally, a strong rebound in China – where equity valuations have become too low for some fund managers to ignore – could hurt Indian stocks as they are touted as one of the main beneficiaries of the exit from China.

 

There are also early signs of a slowdown in foreign direct investment in India. Those inflows fell 22% to $46 billion in the year ending March. The drop, led by manufacturing, came despite the government's program to provide financial incentives for manufacturing goods in India.