India’s manufacturing PMI rebounded sharply to a 3-month high of 55.3 in July 2021 from 48.1 in June 2021. The recovery was led by improved domestic demand conditions and the easing of lockdown restrictions. The index moved back into expansion as international demand strengthened, resulting in higher new export orders. Further, manufacturing jobs have also shown an improvement after a gap of over 15 months.
Retail sales in Germany rose more than estimated by 4.2 per cent in June 2021 (est.: 2 per cent) from an upwardly revised growth of 4.6 per cent in May 2021, on an MoM basis. Sales in the department stores picked up by 34 per cent on a MoM basis, while online retail sales registered a drop; reflecting a shift in the behaviour pattern of consumers following the lifting of restrictions. On YoY basis, retail sales picked up by 6.2 per cent in June 2021 from 1.8 per cent decline in June 2020.
Manufacturing activity in major economies eased in July 2021. In the US, the ISM index moderated to 59.5 in July 2021 from 60.6 in June 2021. In the Eurozone (62.8 from 63.4) and UK (60.4 from 63.9) as well, it edged down, led by an easing pace of output growth and new orders. Employment conditions however remained robust in all the economies. Input cost on the other hand shot up to record levels due to supply-side bottlenecks.
Bonds: Global yields closed lower as Delta variant continued to threaten global recovery. US and UK’s 10Y yield fell the most by 4bps each. In the US, Covid-19 hospitalizations in Louisiana and Florida have surged to their highest points of the pandemic. Japan also expanded its state of emergency. Thus, crude prices fell by 4.5 per cent (US$ 73/bbl). India’s benchmark 10Y yield fell by 1bps (6.2 per cent), taking global cues. It is trading flat today.
Currency: Global currencies closed mixed against the dollar. DXY fell by 0.1 per cent as the US manufacturing index eased in July 2021. GBP depreciated by 0.1 per cent led by moderation in manufacturing PMI. INR appreciated by 0.1 per cent as oil prices eased. It is trading higher today, in line with other Asian currencies.
Equity: Barring Dow, other global indices ended higher as investors continued to monitor corporate earnings. Amongst other indices, Shanghai Comp (2 per cent) surged the most followed by Nikkei (1.8 per cent). Sensex (0.7 per cent) too ended in green led by gains in real estate stocks. It is trading higher today, while other Asian stocks are trading mixed.
[Based on inputs from Bank of Baroda]