Wall Street Upbeat On Strong Earnings | NDTV Profit
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00:00Right, straight up to the day's market action. Now both the Sensex and the Nifty closed at fresh highs.
00:06For the fifth straight session, the Sensex rose 0.15% to settle at over 81,000,
00:12while the Nifty gained over 0.2% and ended above the 25,000 mark.
00:18Some of the Nifty top caners were Power Grid, Coal India and HDFC Bank.
00:24The top laggards included M&M, Tata Steel and ITC.
00:30And let's now move on to a quick look at the global markets.
00:34Wall Street remains upbeat on a better-than-estimated earnings season.
00:38S&P 500 rose 0.5% and Nasdaq advanced nearly 0.8%, while the Dow dipped marginally.
00:45Yesterday, U.S. Federal Reserve Chair Jerome Powell also signaled a rate cut in September.
00:52If inflation continues to ease, the European markets, however, moved lower,
00:56with the Bank of England cutting the key rate to 5% from 5.25% for the first time in four years.
01:05And joining us right now is Peter Cardello.
01:09He's the Chief Market Economist at Spartan Capital Securities.
01:12He's joining in from Italy. Hi, Peter. Thank you for joining in.
01:18Peter, the Bank of England, of course, has cut rates for the first time in four years.
01:23European markets probably still processing it.
01:26They turned a bit lower earlier in the day. But how do you see the larger impact?
01:31Well, I think, you know, it's going to be a bit of a positive, you know,
01:34that the Great Britain's economy has been under pressure and they needed to do something.
01:42Obviously, with the new government in charge, they are trying to prop up the economy as much as they can.
01:51And even though inflation is somewhat sticky, they have taken that step,
01:59which I think was necessary in order to get the economy moving again.
02:08It's a combination of several factors, the exiting out of the eurozone a couple of years ago,
02:17certainly from an economic standpoint, backfired.
02:22And then, of course, we had the high rates of inflation.
02:26So you had two very negative factors impacting the British economy.
02:33But I think the risk might be well rewarded.
02:38I don't think this is going to be the only cut. I think there'll be more cuts ahead.
02:44You know, if you look at things on a global scale here in the States, we're headed for lower rates.
02:54While in Japan, they reversed monetary policy and now they're looking at higher rates.
03:00But in general, I think the trend to lower rates is now in motion.
03:06So, of course, the statement that came in from the Fed yesterday also seemed to signal
03:13that a rate cut could now be on the cards in September.
03:18Yes, I think there was a clear signal from that.
03:21Not so much in the communique, because the communique really didn't offer that.
03:27But certainly Jerome Powell did during the press conference.
03:32And he mentioned that not once, but many times, that a rate cut is likely in September.
03:40And I think he also made it a point to communicate to the markets that the risk lies on both sides.
03:54Higher inflation, which would mean perhaps no rate cuts and maybe even a hike.
03:59And, of course, risk to an economic downturn.
04:04And I think that we're probably headed for a surprise in September.
04:10I think we could see a half of a percent point drop in interest rates.
04:16Because if you look at some of the macro news that we've been getting lately,
04:21certainly it's not been all that great.
04:25Look at the PMI today.
04:28That fell rather sharply.
04:30That's in contraction now.
04:32And so factory activity is basically falling out a bit.
04:39And that's a key to future growth.
04:46Also, we had the jobless claims out today.
04:51And we saw that on a weekly basis they were up 15,000.
04:58But if you look at the continuous claims, they are getting close to 2 million.
05:06And that's indicative of the fact that the job market is likely to surprise on the downside and not on the upside.
05:16When I say the downside, I mean weaker than we've been looking at.
05:20So there's a good possibility that tomorrow's non-farms are going to come in lower than market consensus.
05:30On a bit of a separate issue now, how do you see the increasing tensions in the Middle East playing out?
05:36Specifically impacting crude as well as the global markets?
05:42Yeah, sure.
05:43Well, you know, a technical erosion was abated just the other day because of the latest heightened geopolitical tension.
05:57The assassination of one of the Amash chiefs in Iran certainly is a problem going forward for the region.
06:08And that means that more retaliation from both sides is probably going to happen within a special timeframe.
06:22And that just supports oil prices.
06:25And even from a fundamental viewpoint, over the past five weeks, we've been seeing huge amounts of drops in crude stockpiles.
06:39And that, from a fundamental viewpoint, is positive.
06:44So I think with the escalation of geopolitical worries, that the price of oil is likely to get back around that $82, $83 level.
06:56All right.
06:57Peter Cardillo, thank you very much for joining us on this broadcast.
07:02Thank you.