GIFT Nifty cools down after surge overnight, softer US inflation lifts S&P 500, Nasdaq 2%

GIFT Nifty on NSE IFSC jumped 1.2%; S&P 500 in the US gained up to 2%, as inflation cooled off more than expected.

The GIFT Nifty index on NSE IFSC exchange cooled down in morning trade on November 15 after surging over a percent late evening on the previous day as it tracked gains in US benchmark indices S&P 500 and Dow Jones Industrial Average.

Both the US benchmarks posted their best day since April as a surprise cool off in retail inflation for October buoyed the markets.

At 07.31 am the GIFT Nifty was trading at 19,729, down 19.50 or 0.10 percent on the NSE IFSC exchange. The GIFT Nifty index rose to a high of 19,740 on November 14, up 240 points from the previous close of 19,500. The underlying NSE Nifty 50 had ended the November 13 trading session at 19,443 points. November 14 was a trading holiday in India.

Earlier during the day, in a surprise move, the benchmark S&P 500 briefly surpassed the 4,500 mark for the first time in two months, while the tech-heavy Nasdaq reached a fresh two-month high. This surge followed the release of data indicating a slowdown in the U.S. CPI inflation for October, attributed in part to lower gasoline prices, according to a Reuters report.

US CPI inflation cools off more than expected

The Consumer Price Index (CPI) rose by 3.2 percent in the 12 months through October, a decrease from the 3.7 percent reported in September. Economists polled by Reuters had anticipated a 3.3 percent year-on-year increase. Core prices, excluding the volatile food and energy components, experienced a 4.0 percent rise, slightly below economists' estimates of a 4.1 percent increase.

The positive news on inflation had a ripple effect on the U.S. Treasury yields, causing a drop, particularly in the two-year yield, seen as a key indicator of short-term interest rate expectations. It slid to two-week lows, reflecting the market's response to the evolving economic landscape.

S&P 500, Nasdaq Composite soar around 2%

The Dow Jones Industrial Average rose 490 points or 1.4 percent to settle at 34,827.70 on November 14. S&P 500 climbed 84.15 points or 1.9 percent to end at 4,495.70. The Nasdaq Composite surged 326.64 points or 2.37 percent to close at 14,094.38 .

The unexpected slowdown in inflation fueled speculations about a shift in the Federal Reserve's strategy, Bloomberg reported. This development intensified the "Goldilocks narrative," suggesting that the economy, while remaining resilient, was experiencing disinflation.

This raises the possibility that the Federal Reserve's next move may be a cut in mid-2024, signalling a shift from the previously anticipated aggressive hiking cycle.

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