INDIA: Country Wrap: India's Contribution to Global GDP to Rise
Market Summary: The focus on China arguably gives India a short respite having been in the sights of the US recently. The NIFTY 50 delivered a positive though modest week of gains last week, yet is giving some of those gains back in Monday morning trade. Bonds are following regional trends, with yields edging lower. The IGB 10-Yr is at 6.52% and with all issuance in sub 1-Yr bills this week, the market is likely to take it's lead from equity performance and global trends. The INR is relatively stable in its start to the week, relatively unchanged at 88.72
- The National Critical Minerals Mission (NCMM) has also set aside Rs 500 crore to safeguard against supply shocks and ensure steady access to minerals for domestic industries. The Indian government is preparing to launch the National Critical Mineral Stockpile (NCMS), a programme aimed at safeguarding the country’s access to rare earth elements crucial for clean energy and high-tech industries, according to a report by the Economic Times (ET). (source MoneyControl)
- India is set to contribute about 20% of global GDP growth, supported by strong domestic demand and structural reforms, according to Shaktikanta Das, a principal secretary to Prime Minister Narendra Modi. India’s economy has shown “remarkable dynamism and resilience” despite global uncertainty, aided by prudent macroeconomic and financial policies, said Das, a former governor of the country’s central bank. Over the next three to four years, growth will be led by manufacturing and emerging sectors such as semiconductors, EVs, renewables, and biotechnology. New-age and high-growth sectors are also expected to expand rapidly, benefiting from supply chain diversification and strategic policy support, said Das at Kale Memorial Lecture in Pune on Saturday (source BBG)
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AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
