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<keyword id="19900795" type="General" weightage="20" keywordseo="foreign-investors" source="keywords">Foreign investors</keyword> are currently making a beeline for <keyword id="19894886" type="General" weightage="100" keywordseo="China" source="keywords">China</keyword>, enthused by the gush of <keyword id="23496485" type="General" weightage="20" keywordseo="financial-stimulus" source="keywords">financial stimulus</keyword> injected by the government into the Chinese economy. While this may have temporarily sent their stock markets soaring, a recent report by the <keyword id="19899824" type="General" weightage="20" keywordseo="World-Bank" source="keywords" meta.keywordsubtype="org" meta.entityname="World Bank" meta.hostid="261" meta.entityid="World Bank">World Bank</keyword> notes that this might not be enough to push back the <keyword id="19904090" type="General" weightage="20" keywordseo="economic-slowdown" source="keywords">economic slowdown</keyword> that has already set in. China's growth rate is projected to slack further to 4.3% in 2025, down from its present rate of 4.8%. The <keyword id="19916574" type="General" weightage="20" keywordseo="OECD" source="keywords" meta.keywordsubtype="org" meta.entityname="OECD" meta.hostid="261" meta.entityid="OECD">OECD</keyword> also expects the country's growth to slow down to 4.5% in 2025 Experts believe that the recent economic push by the government, which includes lowering reserve requirement ratio (RRR) by 0.5% to 6.6%, lowering mortgage rates, injecting $142 billion into banks, among others, are too little to sustain long-term recovery. Notably, lowering RRR frees up $140 billion for banks to lend, while reducing mortgages and minimum down payments for housing purchases are directed to spur up the Chinese real estate segment. Per <keyword id="19906485" type="General" weightage="20" keywordseo="Goldman-Sachs" source="keywords" meta.keywordsubtype="org" meta.entityname="Goldman Sachs" meta.hostid="261" meta.entityid="Goldman Sachs">Goldman Sachs</keyword>, weak domestic demand, dwindling consumer confidence and spending and an endless real-estate crisis are some of the main reasons for the slowdown.The average Chinese citizen still grapples with job insecurity, stagnant salaries, and depreciating real estate and equity values. For instance, China's last public holiday of the year, the Golden Week, which ended on October 7 and commemorates the nation's founding, saw 2% less spending per domestic trip, as compared to pre-pandemic levels. "Low tourism spending per head and subdued services prices highlight the still weak domestic demand and continued consumption downgrading in the country,” the analysts at GS noted. <h2>Its all temporary</h2>The <keyword id="21360606" type="General" weightage="20" keywordseo="Hang-Seng-index" source="keywords">Hang Seng index</keyword>, which is up by 4.22% today, has been seeing a meteoric rise over the past few weeks. Inching up by a little over 24% over the last month, the Chinese markets have been seeing an significant influx of foreign investment, largely at the expense of other emerging markets like India. Foreign investors had offloaded shares worth Rs 27,142 crore between the first and third of this month, after foreign investments reached a staggering record-high of Rs 93,538 crore in September, as per NSDL data. Over the last 10 days, FIIs have constantly been net sellers, while DIIs have been net buyers. As of October 10th, DII (Domestic Institutional Investors) have put in Rs 50,183 crores in Indian markets, almost balancing out Rs 49,305.29 crore withdrawn by foreign investors. But whether this trend of FII inflow in China continues will largely depend on the fundamentals their economy, an area where India has an edge, thanks to strong confidence of domestic investors. Viram Shah, CEO of Vested Finance highlights that while the Hang Seng index's recent 26% surge over the last month has caught investors' attention, and while this bullish trend is expected to continue, driven by low Chinese stock valuations and hopes for economic improvement from government stimulus, there lies a long road ahead. "Foreign Portfolio Investors (FPIs) pulled out $5.4 billion from Indian equities over five consecutive sessions, ending Monday, October 7. While this suggests a possible rotation of funds from India to China, how long this shift will last will depend on the Chinese government’s ability to resolve the structural economic issues. While the market rally is encouraging, more policy steps are needed to boost economic activity and confidence in China", he added.

All eyes on China: Rush of foreign investors can do little to stave off a slowdown, says World Bank

<ul><li>The Reserve Bank of India is expected to shift its <keyword id="23437409" type="General" weightage="20" keywordseo="monetary-stance" source="keywords">monetary stance</keyword> to 'neutral'.</li><li>As per a report by <keyword id="19895773" type="General" weightage="20" keywordseo="Nuvama" source="keywords" meta.keywordsubtype="org" meta.entityname="Nuvama" meta.hostid="261" meta.entityid="Nuvama">Nuvama</keyword>, <keyword id="19920341" type="General" weightage="20" keywordseo="rate-cuts" source="keywords">rate cuts</keyword> are likely to commence in December.</li><li>The Monetary Policy Committee (MPC) is likely to maintain the <keyword id="20094323" type="General" weightage="20" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.5% in its upcoming sitting.</li></ul>The Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) will shift its monetary stance to 'neutral' from the current 'withdrawal of accommodation' in credit policy this month, and rate cuts are likely to commence in December, according to a report by Nuvama. As per the report, the Monetary Policy Committee (MPC) is likely to maintain the repo rate at 6.5% in its upcoming sitting. However, several factors, including a slowdown in economic activity and benign <keyword id="20196112" type="General" weightage="20" keywordseo="core-inflation" source="keywords">core inflation</keyword>, are likely to prompt the central bank to soften its stance, the report added. A weaker-than-expected Q1 GDP growth continued slowing of high-frequency indicators in the second quarter, core inflation to near record lows, and fiscal tightening could be the key reasons behind the move, the report added. Additionally, the U.S. Federal Reserve's recent move which indicates ease in the rates will influence RBI’s decision, the report added. The growth rate for the first quarter of financial year 2025 was below the RBI's projection at 7%. The growth rate for the same period stood at 6.7%, signalling weak economic activities. Since then, indicators such as vehicle sales, cement volumes, fuel consumption, GST collections, and rural wages have witnessed sluggishness. The government spending has also been subdued in recent months. Exports have also witnessed a sluggishness after showing recovery earlier this year. "Overall, domestic demand is slowing amid weak exports. At the same time, fiscal policy is tightening while core inflation is near a series-low. Against this evolving growth-inflation mix, a tight monetary stance may not be warranted, particularly when the Fed has also commenced easing," the report added. Going forward the report highlighted that the economy may be reverting to pre-pandemic levels of weak demand, with capital expenditure-to-GDP ratios plateauing. Further supporting its assertion, it stated that while headline inflation remains above target, core inflation has consistently declined over the past 16 months, currently ranging between 3.1% and 3.3%. This reflects weak pricing power in the economy and muted growth in consumption-driven sectors, the report added. Furthermore, it states that the RBI's fiscal policy is contractionary, with tax revenue growth declining into the single digits. This could have an effect on the government's ability to increase capital expenditure in the upcoming quarters. Given the slowing domestic demand, weak exports, and the tightening fiscal stance, the RBI's current monetary stance may no longer be appropriate, according to the report. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/september-auto-sales-automakers-report-a-decline-mahindra-and-mahindra-overtakes-tata-motors/articleshow/113925972.cms">September Auto sales – Automakers report a decline, Mahindra and Mahindra overtakes Tata Motors</a> <a href="https://www.businessinsider.in/business/auto/news/ola-electric-continues-to-lose-market-share-as-bajaj-auto-and-tvs-motor-gain/articleshow/113900252.cms">Ola Electric continues to lose market share as Bajaj Auto and TVS Motor gain</a> <a href="https://www.businessinsider.in/tech/mobile/webstories/upcoming-smartphones-launching-in-india-in-october-2024/slidelist/113804125.cms">Upcoming smartphones launching in India in October 2024</a>

RBI may shift monetary stance to 'Neutral', rate cuts likely by December 2024: Nuvama

New Delhi: Asian <keyword id="19900617" type="General" weightage="100" keywordseo="stock-markets" source="keywords">stock markets</keyword> on Monday plummeted early as selling pressure mounted after lower-than-expected US payroll growth and the Fed meeting date coming. The Japanese and Hong Kong markets faced high selling pressure, with major indices declining by more than 1.50 per cent. Japan's Nikkei 225 index declined by 1.84 per cent or 632 points, while Hong Kong's Hang Seng was down by 1.73 per cent or 301 points at the time of filing this report. According to experts, concerns of a slowdown in China and Germany have added fuel to the selling in stocks, which were already volatile due to <keyword id="19913707" type="General" weightage="20" keywordseo="Fed-rate-cut" source="keywords">Fed rate cut</keyword> expectations. "Eight days of volatility are assured for the markets as the Fed rate cut of September 18 comes within striking distance. The seasonality of poor September performance of markets is playing out as per expectations. On top of that, the slowdown in China and Germany is adding to global growth worries. The news of a top German car manufacturer mulling closing down car factories in Germany was symbolic of all that is troubling Germany," said Ajay Bagga, Banking and Market expert. Taiwan's markets also bled, with the country's major index, Taiwan Weighted, declining by more than 2 per cent. South Korea's KOSPI index plummeted by 1.15 per cent. Overall, a selling sentiment was witnessed among investors in the <keyword id="20155107" type="General" weightage="20" keywordseo="Asian-markets" source="keywords">Asian markets</keyword>. However, experts also noted that the impact of the other Asian markets will be less on Indian stocks because of the high buying by domestic investors, but some volatility can be expected. Bagga added, "For Indian markets, the impact is coming via FII selling. The good news is that despite the net FII outflows of over Rs 5.5 lakh crore from Jan 2022 to August 2024, the Rs 11 lakh crore plus of robust domestic inflows have meant every dip has been bought into in the Indian markets. We expect a couple of weeks of this volatility, but don't expect sharp cuts in the Indian markets given the domestic liquidity sitting on the sidelines." Indian stock indices took a sharp hit on Friday, the last trading day of the current week, with all sectoral indices closing deep in the red. The sell-off was broad-based, with the banking and energy sectors taking the biggest hit. Nifty 50 dropped 292.95 points, or 1.17 per cent, to 24,852.15, while the BSE Sensex fell 1,017.23 points, or 1.24 per cent, to 81,183.93. "The recent weakness in U.S. markets has stalled the momentum in Indian markets, causing participants to become cautious ahead of the upcoming jobs data," said Ajit Mishra, SVP, Research, Religare Broking. Weakness in global markets and selling by foreign portfolio investors seemed to have hurt domestic market sentiment.

Asian markets decline amid economic slowdown fears, experts say limited impact on India

<ul class="summary-list"><li>Analysts are increasingly recommending defensive stocks to blunt the impact of an economic slowdown.</li><li>Among defensive sectors, consumer staples have risen sharply recently. </li></ul>Amid fears of a recession and increased market volatility, analysts have been pointing to defensive stocks as a safe bet to hedge macro risk.Among defensive sectors — which include things like real estate and financials — investors recently have been pouring into consumer staples in particular.The S&amp;P 500's consumer staples sector has risen roughly 4.1% in the last month, handily outpacing the S&amp;P 500, which is up just over 1% in that time.Retailers like Walmart and Target have skyrocketed 9.2% and 5.7% respectively in the last month, while consumer goods producers like Clorox and Coca-Cola are up 11.2% and 4.5%."The US consumer is reacting to the softer labor market, exhausted pandemic savings, and high interest rates. Signs of this reaction are visible across many angles, including the degree of outperformance in staples versus discretionary stocks," Bank of America strategists said in a note earlier this month.Defensive stocks historically do well in times of economic uncertainty, which has led to <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/safe-defensive-stocks-ai-investing-rally-nvidia-semiconductors-selloff-outlook-2024-9">a growing chorus of analysts </a>recommending investors take positions in more "boring" companies, and resist the allure of high-flying bets on things like artificial intelligence."Lately, the market has skewed much more defensively as it has worried more about growth and less about high inflation or rates," Morgan Stanley's chief US equity strategist Mike Wilson said in a Monday note."Since the spring, the relative performance of defensives over cyclicals has been the strongest since the last recession ended," he added.Last week, Wilson said investors should <a target="_blank" href="https://markets.businessinsider.com/news/stocks/ai-stocks-overcooked-nvidia-seminconductors-morgan-stanley-mike-wilson-2024-9?_gl=1*1uze75i*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTcyNjU3MzcyNC4xNDcuMS4xNzI2NTc4MTEzLjUwLjAuMA..">reallocate AI investments</a> toward quality defensive stocks, including staples.That redirection could broaden a market rally that's been largely driven by tech stocks this year. The S&amp;P Global Semiconductor Index is down 6.26% for the month, with the tech sector seeing outflows of $2.97 billion in the last two weeks, according to LSEG Lipper data cite by The Financial Times. Consumer staples, meanwhile, have seen $1.43 billion of inflows in the same time period.This week, Bank of America equity strategy chief Savita Subramanian <a target="_blank" href="https://www.businessinsider.com/safe-dividends-bank-america-strategy-chief-savita-subramanian-federal-reserve-2024-9">similarly advocated for defensive stocks</a>."I know this is the most boring call of all time, but sometimes boring is good," Subramanian said in a Bloomberg interview on Monday.With the Federal Reserve likely to finally cut rates at its meeting this week, defensive stocks could be poised for further growth."Defensives tend to outperform cyclicals fairly persistently both before and after the cut," Wilson said.

Investors are pouring into this defensive corner of the stock market amid fears of an economic slowdown

<ul class="summary-list"><li>US stocks rose 1% as September jobs report eased fears of an economic slowdown.</li><li>The US added 254,000 jobs, surpassing estimates. The unemployment rate fell to 4.1%.</li></ul>US stocks surged about 1% on Friday after <a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">the September jobs</a> report soothed fears of an economic slowdown.All three major averages closed slightly higher for the week to cap off a four-week winning streak.The US economy added 254,000 jobs last month, well ahead of economist estimates of 150,000 jobs. The strong job gains pushed the unemployment rate lower to 4.1% from 4.2%.The leisure and hospitality sector saw the most job gains in September at 78,000, followed by health care, which added about 72,000 jobs, while government jobs rose by 31,000.Economists were mostly thrilled with the jobs report, with many arguing that the decline in the unemployment rate while inflation has continued to trend lower was evidence of productivity gains."The fact that inflation is easing at the same time means productivity growth is strong, and that should keep the Fed on track for more rate cuts — an added tailwind for the economy and markets," Carson Group strategist Sonu Varghese told Business Insider.In terms of future rate cuts, the <a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-report-fed-rate-cut-outlook-november-labor-market-2024-10">market slashed its expectations of another jumbo 50 basis point cut</a> at the Federal Reserve's next FOMC meeting in November.According to the CME FedWatch Tool, odds of a 50-basis point cut dropped to 0% from 53% last week. Consensus now expects two 25-basis point rate cuts from the Fed at their next two FOMC meetings before year-end."This solid payroll report validates an potential half point reduction in fed funds was completely unwarranted. Fed funds futures market is responding accordingly," LPL Financial chief economist Jeffrey Roach said.ING's chief economist, James Knightley, said the jobs report was "unambiguously strong.""On the face of this the Fed should be hiking rates with these sorts of figures, not cutting rates," Knightley said in a note on Friday.Here's where US indexes stood shortly at the 4:00 p.m. closing bell on Friday:<ul><li><a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 5,751.07, up 0.9% </li><li><a target="_blank" href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 42,352.75, up 0.81% (_341.16 points)</li><li><a target="_blank" href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq composite</a>: 18,137.85, up 1.22% </li></ul>Here's what else happened today:<ul><li><a target="_blank" class="" href="https://www.businessinsider.com/spirit-airlines-chapter-11-bankruptcy-billion-debt-restructuring-2024-10">Spirit Airlines stock plunged after a report said it was considering filing for Chapter 11 bankruptcy protection.</a></li><li><a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-payroll-report-fed-rate-cut-outlook-labor-market-2024-10">Why one firm is skeptical about the blockbuster jobs report and is still expecting another jumbo rate cut.</a></li><li><a target="_blank" class="" href="https://www.businessinsider.com/russia-economy-ukraine-war-outlook-moscow-sanctions-west-firms-uchicago-2024-10">Russia is facing a 'time bomb' at the heart of its economy amid its ongoing war with Ukraine, an economist said.</a></li><li><a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/costco-starts-selling-platinum-bars-gold-silver-retail-success-2024-10">Costco is selling platinum bars for $1,090 as it diversifies its booming precious-metals business.</a></li><li><a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/nvidia-stock-price-jensen-huang-blackwell-gpu-demand-ai-tech-2024-10">Nvidia stock moved higher after CEO Jensen Huang said demand for its next-generation GPU chip was "insane."</a></li></ul>In commodities, bonds, and crypto:<ul><li><a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">West Texas Intermediate</a> crude oil was up 1.00% to $74.45 a barrel. <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude</a>, the international benchmark, was higher by 0.55% to $78.05 a barrel.</li><li><a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price">Gold</a> was down 0.39% to $2,668.80 an ounce.</li><li>The 10-year Treasury yield was higher by 13 basis points at 3.98%.</li><li><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> was higher by 2.59% to $62,320. </li></ul>

Stock market today: US stocks notch 4-week win streak after strong jobs report eases fears of an economic slowdown

<keyword id="1334" type="General" weightage="20" keywordseo="china" source="Orion">China</keyword>'s GDP dipped to 4.7 per cent in the second quarter, the government said on Monday, as the ruling <keyword id="20004538" type="General" weightage="20" keywordseo="Communist-Party" source="keywords">Communist Party</keyword> began a key meeting stated to be a defining moment for President <keyword id="19946362" type="General" weightage="20" keywordseo="Xi-Jinping" source="keywords" meta.keywordsubtype="org" meta.entityname="Xi Jinping" meta.hostid="261" meta.entityid="Xi Jinping">Xi Jinping</keyword>'s leadership to revive the world's second-largest economy. The four-day meeting called the 'Third Plenum' is being attended by 376 full and alternate members of the Communist Party of China (CPC) Central Committee to primarily examine issues related to comprehensively deepening reforms and advancing China's modernisation to work out a course correction for the economy plagued by deepening demographic crisis, sluggish growth and mounting local government debts. Kicking off the meeting, Xi, 71, who is also general secretary of the party, delivered a work report and expounded on a draft decision of the CPC Central Committee on further comprehensively deepening reform and advancing Chinese modernisation, the official media reported. The meeting, however, began here on a disappointing note for the party leadership as the National Bureau of Statistics (NBS) announced the GDP for the second quarter expanded by 4.7 per cent well below the 5.3 per cent annual pace of growth in the first quarter of the year. The silver lining for the CPC, which is searching for a new set of reforms to shake off the post-COVID lockdown blues, the economy posted a five per cent growth in the first half, within the range of the official growth target fixed for the year. "The current external environment is complicated, while domestic demand remains insufficient. We still need to consolidate the foundation for economic recovery," the NBS said on Monday. While the third plenum of the CPC was regarded as important to set the reform agenda for the next decade, the meeting was seen as a defining moment for Xi, who is into the unprecedented third five-year term as the economy was unable to shake off its slowdown mode resulting in a sense of unease about the recovery in the near future. Ahead of the meeting, Xi presided over a host of meetings to set the tone for the key plenum and chart the direction for the nation's future reform highlighting that "the furthering of reform must focus on refining and developing the system of socialism with Chinese characteristics, and advance modernisation of the country's governance system and governance capacity". A readout of a key party meeting presided over by Xi in February said: "Reform measures need to be sharply focused, targeting the most pressing problems. Reform efforts must be substantial and impactful." The event could be the most important "defining moment" of President Xi Jinping's rule since a similar gathering in 2013 that set out his vision for reforming the country, a political researcher from Tsinghua University, who requested anonymity, told the Hong Kong-based South China Morning Post. He said the watershed third plenum would be used by the party elite to review achievements under Xi's leadership and lay down plans to hit goals set for 2035, "which will lay the groundwork for the President's grand legacy of the great rejuvenation of the Chinese nation by 2049". The plenum is also taking place at a time when China, struggling with various curbs and sanctions from the US and the EU, especially its high-tech products, is trying to assure both foreign business and the private sector at home about the country's economic prospects to attract investments. Neil Thomas, a fellow for Chinese politics at the Asia Society Policy Institute's Centre for China Analysis, said Xi would use the plenum to advance his existing agenda focused on party control, technological self-reliance, financial de-risking, social welfare, and supply-side industrial policy. But the political challenges of economic pessimism could lead to some very modest 'positive surprises', he told the Post. The most intriguing new signals ahead of the plenum suggest the possibility of more pro-business policies in hi-tech domains, although Xi does not want to unleash entrepreneurs and markets but rather harness them to develop technology and boost manufacturing, he said.

China's Communist Party begins key meet to stem economic slowdown, following 4.7% dip in GDP

<ul class="summary-list"><li>The International Monetary Fund raised its growth forecast for the US economy to 2.8% this year.</li><li>It expects slower growth of 2.2% next year as the government cuts back and the job market cools.</li></ul>The International Monetary Fund raised its growth forecast for the US, projecting the world's largest economy would expand by 2.8% this year instead of the 2.6% it predicted in July.in its latest <a target="_blank" class="" href="https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024">World Economic Outlook </a>released on Tuesday, IMF staff cited stronger consumption fueled by "robust increases in real wages" and wealth effects, along with non-residential investment, as the two main reasons for the increase. However, they predicted GDP growth would slow to 2.2% in 2025 as the US government curbs its spending and the labor market cools, sapping consumption.The IMF projected global growth of 3.2% in both 2024 and 2025, virtually unchanged from its previous prediction. They underscored their latest forecast for global growth over the next five years of 3.1% was "mediocre" compared with the pre-pandemic average."Persistent structural headwinds — such as population aging and weak productivity — are holding back potential growth in many economies," the agency's staff wrote.They projected only a slight slowdown in China to 4.8% this year due to resilient net exports, and revised their April forecast for 2025 upward by 0.4 percentage points to 4.5%. They noted the Chinese government's stimulus measures "may provide upside risk to near-term growth."The UN financial agency said that growth in the euro area appears to have troughed in 2023, and it anticipates an acceleration to 0.8% expansion in 2024 driven by stronger exports, then 1.2% in 2025 on the back of improved domestic demand.IMF staff made downward revisions to its growth outlook for the Middle East, Central Asia, and sub-Saharan Africa, citing disruptions to the production and shipping of oil and other commodities as well as "conflicts, civil unrest, and extreme weather events."In contrast, they upgraded their April forecasts for emerging and developing Asia by 0.3 percentage points for both 2024 and 2025, to 5.4% and 5.0%. They cited "surging demand for semiconductors and electronics, driven by significant investments in artificial intelligence, has bolstered growth."

The IMF just raised its growth forecast for the US economy this year — but expects a slowdown in 2025

<ul class="summary-list"><li>The first-quarter GDP report surprised investors with disappointing growth, while consumer prices kept rising.</li><li>The provides the backdrop for stagflation, which can't be combated with rate cuts.</li></ul>The latest GDP and inflation readings were what investors were least eager to see, and could hint at serious trouble ahead. "This was a worst of both worlds report – slower than expected growth, higher than expected inflation," wrote David Donabedian, chief investment officer of CIBC Private Wealth US. First-quarter growth fell well behind estimates, rising at an <a href="https://www.businessinsider.com/gdp-gross-domestic-product-first-quarter-economy-growth-2024-4?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*1c405xn*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcxNDA1Mjk4My4zNDMuMS4xNzE0MDYwODk5LjYwLjAuMA..">annualized rate of 1.6%</a>, according to the <a href="https://www.bea.gov/data/gdp/gross-domestic-product" target="_blank">Bureau of Economic Analysis</a>. Not only is that far under forecasts of 2.5%, but it also fails to live up to the 3.4% increase achieved in the fourth quarter. While such a cooldown would usually bolster calls for interest rates to start easing, the report noted a hotter-than-expected rise in consumer prices as well. That puts serious limits on the Federal Reserve's ability to take action, as the central bank has made clear it needs inflation to climb lower before any rate cuts can happen. Stocks — which have long priced in those cuts — <a href="https://markets.businessinsider.com/news/stocks/stock-market-today-q1-gdp-sp500-earnings-meta-microsoft-alphabet-2024-4" target="_blank">sold off sharply</a>. It's also bad news for the economy, as sputtering growth and higher prices are the key ingredients for stagflation, which is characterized by economic listlessness and stubbornly elevated inflation over a prolonged period. Such a scenario that can be even harder to combat than a <keyword id="6357558" type="General" weightage="20" keywordseo="recession" source="Orion">recession</keyword>, because of the dynamic outlined above: the Fed's hands are largely tied. America's last dalliance with stagflation came in the 1970s. The precedent can offer a glimpse into how the US economic picture could unfold, and makes it clear why economists are desperate to avoid a re-run. Early that decade, geopolitical disagreement prompted the OPEC coalition to restrict crude exports to the US, and energy <a href="https://cepr.org/voxeu/columns/wage-price-spirals-historical-evidence" target="_blank">prices rocketed</a> in response. With additional help from high government spending and the <a href="https://www.businessinsider.com/today-is-the-40th-anniversary-of-nixon-ending-the-gold-standard-2011-8">dollar's de-coupling from gold</a>, inflation surged into double digits, while the economy <a href="https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions" target="_blank">tumbled</a>. The period was so tumultuous that it undid long-standing <a href="https://www.businessinsider.in/investment/news/keynesian-economics-a-depression-era-idea-thats-seen-a-resurgence-in-the-21st-century/articleshow/87594974.cms" target="_blank">macroeconomic theories</a>, and required the Fed to step up its role in the economy. In order to finally reign things in, then-Fed Chairman Paul Volcker was forced to raise interest rates a staggering 20%, calming price highs but throwing the US into a deep recession. It's for this reason current analysts <a href="https://www.businessinsider.com/what-is-stagflation-explained-oil-outlook-low-growth-high-inflation-2021-10">shudder at comparisons</a> to the period 50 years ago, and why stagflationary forecasts bear weight. JPMorgan's Jamie Dimon is among those who have recently made allusions to the stagflationary 1970s, warning that markets have become too cheerful about the state of the economy. "I worry it looks more like the '70s than we've seen before," the prominent bank chief <a href="https://fortune.com/2024/04/24/jpmorgan-jamie-dimon-economy-1970-stagflation-fear/" target="_blank">said at the Economic Club of New York</a> last week. His point — one he's asserted <a href="https://www.businessinsider.com/jamie-dimon-jpmorgan-economy-looking-like-1970s-stagflation-inflation-rates-2024-1?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*1v016fo*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcxNDA1Mjk4My4zNDMuMS4xNzE0MDY3NDAzLjI2LjAuMA..">on multiple occasions</a> — comes from the fact that fiscal spending has once again exploded, while the economy is poised to bear a number of inflation-drivers: from <a href="https://www.businessinsider.com/jamie-dimon-soft-landing-outlook-recession-inflation-jpmorgan-geopolitics-2024-4">green industrialization to global remilitarization</a>. But stagflation remains a long shot. Despite sticky-high inflation, markets continue to price in at least one rate cut this year. Further, Barclays analysts led by Pooja Sriram pointed out after the GDP report that final sales to domestic purchasers rose by enough to suggest "demand conditions remain strong." Friday's personal consumption expenditures report — viewed as the Fed's main inflation bellwether — will offer investors a clearer picture of where inflation is headed. If it goes higher, the Fed will have little choice but to become more tighten policy, according to Donabedian. "We are not far from all rate cuts being backed out of investor expectations. It forces Chair Powell into a hawkish tone for next week's FOMC meeting," he said.

The US economy may be barrelling towards stagflation, an outcome worse than recession

Economists at the country's largest lender, SBI, today said they see India's Q2 real GDP growth slowing down further to 6.5% in the September quarter of this fiscal year. Amid concerns over the country's economic growth rate and whether it is slowing down, the analysts said they expect FY25 growth to come "closer to" 7%. SBI analysts join a long line of agencies like Fitch, ADB, IMF, Moody, World Bank, S&amp;P, and even RBI in forecasting India's GDP growth for FY25 in the range of 6.8% to 7.2% for FY25, driven by robust consumption and investment. SIP inflows have been at an all-time high, and so has QIP (qualified institutional placement) fundraising. As many as 71 companies raised Rs 88,678 crore this year through QIPs. Activity in Indian primary markets also remained robust, with 78 mainboard IPOs in 2024; this is a 111% rise from just 38 listings in FY23. Between April and June 2024, India's real GDP grew by 6.7%, the lowest growth seen in 15 quarters, pushing experts to believe that India is caught in a cycle of slowdown. "There is some incipient pressure evident on the domestic economy. Based on our analysis of 50 meaningful leading indicators (both consumption and demand-centric), a dip looks plausible across select cohorts of agriculture, industry, and services in Q2," the <keyword id="22337294" type="General" weightage="20" keywordseo="SBI-economists" source="keywords">SBI economists</keyword> added. Stating that they track 50 indicators to gauge economic activity, SBIs note said the proportion of indicators showing acceleration declined to 69% in Q2 FY25, as against 80% in Q2 FY24 and 78% in Q1 FY25. However, things might be changing now, given that rural demand has started looking up amidst muted urban demand. SBI also explained that the ongoing regulatory tightening on unsecured lending and roadblocks that are hindering rollover/refinancing of debt through unsecured credit are dismantling the unwarranted exuberance that had built up post-pandemic, especially in the urban areas. Madhu Lunawat, CIO &amp; Fund Manager, Bharat Value Fund states that the overall investment environment remains strong due to favorable economic conditions supporting government policies &amp; reforms. "The sustainable inflow from domestic investors is going to support the Indian equity market in any kind of correction. The long-term bullish structure of Indian economy will continue to attract new domestic &amp; global investors to participate in India’s growth story through various Investment avenues.” <h2>Rate cuts not on cards</h2>RBI Governor Shaktikanta Das clarified today that changing the monetary policy stance to 'neutral' does not mean a rate cut is imminent in the central bank's next policy announcement. Notably, RBI MPC is set to meet between December 4 and 6, 2024, to decide if the prevailing repo rate of 6.5%, which has stayed unchanged for the last 2 years, should be brought down or not. In its last meeting, The <keyword id="20501100" type="General" weightage="20" keywordseo="RBI-monetary-policy" source="keywords">RBI monetary policy</keyword> committee had shifted its stance to 'neutral' indicating that it is open to adjusting interest rates based on economic conditions. "It should not be assumed that we have done this, so therefore the next step is a rate cut. A change in stance doesn't mean that the next step is a rate cut in the very next meeting. It's not so," Das said. Das also cautioned that inflation remains a key factor, and inflation and CPI prints for October are expected to stay high.

SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

In a rather dampened <keyword id="19915531" type="General" weightage="20" keywordseo="forecast" source="keywords">forecast</keyword> for the Indian economy, <keyword id="19908266" type="General" weightage="20" keywordseo="ICRA" source="keywords" meta.keywordsubtype="org" meta.entityname="ICRA" meta.hostid="261" meta.entityid="ICRA">ICRA</keyword> has forecast a sharp <keyword id="20637625" type="General" weightage="20" keywordseo="slowdown" source="keywords">slowdown</keyword> in India's <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword>. The credit rating agency has projected a year-on-year expansion of 6.0% in <keyword id="22106354" type="General" weightage="20" keywordseo="Q1-FY2025" source="keywords">Q1 FY2025</keyword> — the lowest in the last six quarters. In Q4 FY2024, India recorded an impressive 7.8%. The Reserve Bank of India had expected the growth momentum to continue this financial year as well. Earlier this month, the RBI governor had projected a 7.1% growth in Q1, while the growth rate for the entire financial year FY2024-25 was projected to be at 7.2%. The central bank had attributed this potential robust growth to improved agricultural activity, sustained buoyancy in services activity, healthy balance sheets of banks and corporates, thrust on capex by the government, visible signs of pick up in private investment, and improving prospects of global trade. However, RBI’s growth projections for this financial year were slightly moderated due to lower-than-anticipated corporate profitability, general government expenditure, and core industries output. As per ICRA, the sharp drop in GDP growth is primarily due to parliamentary elections and a contraction in government capital expenditure weakening urban consumer confidence. Another main cause could be the weakening urban consumer confidence, which reported a surprising downtick in the May and July 2024 rounds of the Central Bank’s Consumer Confidence Survey. “The lingering impact of last year’s unfavourable monsoon and an uneven start to the 2024 monsoon prevented a broader improvement in rural sentiment. Lower volume growth combined with diminishing gains from commodity prices weighed upon the profitability of some of the industrial sectors. The heat wave also affected footfalls in various service sectors, even as it provided a significant boost to electricity demand,” said Aditi Nayar, Chief Economist at ICRA. Despite the Q1 slowdown, ICRA expects economic activity to pick up in the latter half of FY2025, projecting an overall GDP growth of 6.8% for the full year, with a potential to exceed 7% in the second half. The agency expects decelerated growth in Gross Value Added (GVA) as well, easing to 5.7% in Q1 FY2025 from 6.3% in the previous quarter. This slowdown is primarily attributed to a decline in industrial growth, which is predicted to moderate to 6.4% from 8.4%, along with slight reductions in the services sector's growth and a modest improvement in agricultural GVA. The difference between GDP and GVA growth is expected to narrow to around 30 basis points (bps) in Q1 FY2025, down from 148 bps in the previous quarter, due to lower growth in net indirect taxes amid a rise in government subsidies. ICRA's analysis indicates that industrial GVA growth is likely to moderate in Q1 FY2025, with a slowdown in manufacturing and construction offset by growth in electricity, mining, and quarrying. Additionally, a contraction in government and state capital expenditure, along with a significant drop in new project announcements, has contributed to the overall slowdown. Manufacturing profit margins have also been under pressure due to rising global commodity prices and narrowing deflation in input costs, which, combined with slower growth in manufacturing output, suggests a deceleration in manufacturing GVA growth. In the agricultural sector, GVA growth is projected to be modest at 1.0% in Q1 FY2025, amidst declining output from most rabi and summer crops and a deficient rainfall in June 2024. With growing concerns around inflation and unemployment in India and across the world, the latest forecast could further fuel the fears around recession and slowdown in major economies. However, a much clearer picture will emerge with the actual quarterly estimates of GDP for Q1 from the National Statistical Office (NSO) next week. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/digital-initiatives-to-triple-indian-retail-borrowing-to-usd-2-5-trillion-by-2030-sp-global/articleshow/112263945.cms" data-type="tilCustomLink" target="_blank">Digital initiatives to triple Indian retail borrowing to USD 2.5 trillion by 2030: S&amp;P Global</a>

ICRA forecasts slowdown in India's economy: GDP growth expected to hit six-quarter low in Q1 FY2025

<ul class="summary-list"><li>China's oil demand growth has slowed this year.</li><li>That's due to China's big shift to EVs and natural gas, Goldman Sachs analysts said. </li></ul>Oil demand in China has slowed markedly this year amid the country's shift to electric vehicles and natural gas, Goldman Sachs analysts said.The firm estimates that oil demand growth in the country is down to 200,000 barrels per day for 2024 compared to last year, with overall consumption down by 300,000 barrels a day. The shift from gas-fueled cars to electric and hybrid vehicles alone has reduced demand by 500,000 barrels a day, the analysts said. China's EV sector has expanded rapidly, with three of its biggest electric car makers <a target="_blank" href="https://www.businessinsider.com/chinese-electric-vehicles-byd-selling-record-cars-tesla-competition-deliveries-2024-7">hitting record sales in June</a>. A <a target="_blank" href="https://www.businessinsider.com/chinese-ev-makers-outpacing-tesla-in-one-key-area-2024-7">report</a> from last month finds Chinese EV companies are catching up to — and even beating — industry leader Tesla when it comes to innovation.In an earlier report, the analysts predicted the surge in electric and hybrid sales will cause China's road oil consumption to peak in 2025, years ahead of most emerging market economies.The analysts say the oil demand slowdown also indicates broader concerns around China's dependence on manufacturing."While oil data now send a too pessimistic message about China economic activity (fuel switching does not lower GDP), overcapacity highlights the fragility of China's manufacturing bet," the analysts wrote.The oil slowdown comes as China's economy faces a slowdown across the board, with a <a target="_blank" href="https://www.businessinsider.com/china-economy-housing-market-real-estate-crash-investors-outlook-construction-2024-3?utm_medium=ingest&amp;utm_source=markets&amp;_gl=1*1i3p3gk*_ga*MTY3OTgyNjg0MS4xNzIxMDE2MDM2*_ga_E21CV80ZCZ*MTcyNDE3MTUxMi41My4wLjE3MjQxNzE1MTQuNTguMC4w">struggling property sector</a> and <a target="_blank" href="https://www.businessinsider.com/china-economy-weak-domestic-demand-factory-activity-amid-strong-export-2024-7?utm_medium=ingest&amp;utm_source=markets">weak consumer sentiment</a>.On Monday, the country's two main stock exchanges <a target="_blank" href="https://markets.businessinsider.com/news/stocks/chinese-stocks-sentiment-indicator-flows-foreign-investors-china-economy-2024-8#:~:text=China's%20economy%20is%20facing%20headwinds,first%20half%20of%20the%20year.">stopped reporting daily data</a> on flows from foreign investors, part of a greater move away from reporting real-time data as the <a target="_blank" href="https://www.businessinsider.com/china-economy-growth-consumer-spending-demand-real-estate-debt-crisis-2024-8">economy remains stuck in a rut</a>.

China's EVs are fueling a big oil demand slowdown

<ul class="summary-list"><li>The US economy looks strong, judging by GDP growth, profits, productivity, and the labor market.</li><li>JPMorgan Asset Management is upbeat heading into 2025, but a major risk looms.</li></ul>It looks like the most obvious threats to the economy have been neutralized for now, but a veteran strategy chief fears that an under-the-radar risk poses a threat to the global expansion.This economic backdrop bears little resemblance to the <a target="_blank" href="https://www.businessinsider.com/us-economy-stagflation-disaster-high-prices-inflation-high-unemployment-2022-3">so-called stagflationary environment</a> of 2022, a year where <a target="_blank" href="https://www.statista.com/statistics/188185/percent-change-from-preceding-period-in-real-gdp-in-the-us/">US GDP shrank in the first two quarters</a> as <a target="_blank" href="https://www.businessinsider.com/inflation-cpi-price-growth-june-2022-7">inflation hit multi-decade highs</a>.Fast forward to late 2024, and GDP has grown by at least 3% for <a target="_blank" href="https://www.bea.gov/data/gdp/gross-domestic-product">three of the last four quarters</a> and is expected to do so again in the third quarter, according to JPMorgan Asset Management. The firm estimates that consumer spending, which <a target="_blank" href="https://fred.stlouisfed.org/series/DPCERE1Q156NBEA">accounts for about two thirds of US GDP</a>, also likely accelerated to 3.5% on an inflation-adjusted basis last quarter, up from 2.8% in Q2.Meanwhile, price growth is <a target="_blank" href="https://www.businessinsider.com/inflation-september-cpi-consumer-price-index-federal-reserve-interest-rates-2024-10">remarkably close to the Federal Reserve's 2% target</a>, which allowed the US central bank to <a target="_blank" href="https://www.businessinsider.com/fed-cuts-interest-rates-how-much-september-fomc-powell-inflation-2024-9">start the interest rate easing cycle with a bang</a> in mid-September.Perhaps most encouraging is that the labor market appears to be healthy. <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-unemployment-rate-nonfarm-payroll-growth-federal-reserve-2024-10">Job additions easily exceeded estimates</a> in September, and the unemployment rate is <a target="_blank" href="https://www.bls.gov/news.release/pdf/empsit.pdf">in check at 4.1%</a>.Corporate earnings growth, productivity growth, and business fixed investment all seem to be headed in the right direction as well. The same is true of wage growth, which JPMAM found has topped inflation for the last 17 months, underpinning solid consumer spending in the process.These signals have given David Kelly, JPMAM's chief global market strategist, great confidence.The economic outlook "seems remarkably benign with solid economic growth, low unemployment, resilient profits, a slow drift down in inflation, and gradual easing from the Federal Reserve," Kelly said in written commentary on October 28. The market veteran added that there aren't "signs of an imminent change in the economy's path."<h2 id="59ff7859-06ea-46e1-a918-af568c5cb476">A 'tariff'ying risk</h2>That seemingly picturesque backdrop helps explain why the S&amp;P 500 has risen 22% this year and is near record highs. But Kelly believes investors can't let their guards down."Investing has always been as much about risk as about return, and the key to long-term success is being prepared for both," Kelly said in his commentary.Kelly said to be wary of elevated stock valuations — which he and his colleagues at JPMAM <a target="_blank" href="https://www.businessinsider.com/investing-strategy-real-estate-stocks-bonds-portfolio-jpmorgan-asset-management-2024-10">said last week</a> could put a lid on future returns — and the market's heavy tilt toward mega-cap growth companies, even though <a target="_blank" href="https://www.businessinsider.com/cheap-stocks-to-buy-strong-growth-market-outlook-garp-bmo-2024-10">that has been changing</a> in recent months.However, neither of those overhangs is more serious than the potential fallout from a domestic or international political shock. When asked last week about the biggest risk to his long-term outlook, Kelly quickly arrived at an answer: a fierce global trade war marked by escalating tariffs."No matter which set of economists you have sitting here, every one of 'em will tell you that tariffs are not a good idea," Kelly said at JPMAM's <a target="_blank" href="https://www.businessinsider.com/investing-strategy-real-estate-stocks-bonds-portfolio-jpmorgan-asset-management-2024-10">annual long-term capital market assumptions conference</a> on October 21. "You can use it as a threat, though it's kind of like a nuclear threat — the whole point is, if you actually end up using it, you kind of screwed up somewhere."Economists usually disapprove of tariffs, which are taxes on foreign imports, in most cases. Tariffs promise to generate revenue for the home country while aiding domestic industries, but they can drive up consumer prices and prompt counter-tariffs that lead to trade wars.In a worst-case scenario, tariffs would result in higher prices and lower growth due to the waste and inefficiency that they create while hurting importers and exporters in both countries."A trade war could cause us to push up our inflation forecast and push out our growth forecast at the same time," Kelly said at the conference.While Democrats and Republican presidents have leaned on tariffs in the past, it's former President Donald Trump who's <a target="_blank" href="https://thehill.com/business/4945577-trump-tariffs-economy-trade/">promising to implement substantial tariffs</a> in this election cycle.While some say the threat of aggressive tariffs would help the US secure better trade terms, others are skeptical — if not outright scared.Such tariffs <a target="_blank" href="https://www.businessinsider.com/election-trump-harris-economy-inflation-stock-market-volatility-risk-orlik-2024-10">would cause "seismic shocks to the US economy,"</a> Tom Orlik, the chief economist at Bloomberg Economics, said earlier this month. Charles Schwab global investment strategy chief Jeffrey Kleintop <a target="_blank" href="https://www.businessinsider.com/how-to-invest-stock-market-international-investing-strategy-charles-schwab-2024-6">cited tariffs as a top risk</a> back in June. The nonpartisan Peterson Institute <a target="_blank" href="https://www.piie.com/blogs/realtime-economics/2024/trumps-proposed-blanket-tariffs-would-risk-global-trade-war">spoke out against Trump's tariff proposals</a>, as did the right-leaning <a target="_blank" href="https://www.wsj.com/opinion/donald-trump-tariffs-economy-2024-election-kamala-harris-robert-lighthizer-29c07e94">Wall Street Journal editorial board</a>.Although investors may want to take the possibility of tariffs more seriously, Kelly noted that even if they're a major headache, stocks and the economy should still be fine in the long term."I could have said 'pandemic' five years ago, if I'd been incredibly prescient," Kelly said at the conference. "But oddly enough, the global economy bounced back anyway. And so it wouldn't actually have been a very good thing to worry about."

The economy seems to be firing on all cylinders — but a veteran JPMorgan strategy chief says one underappreciated risk could cause a serious global slowdown

You Searched For "economic slowdown" and got 12 results

All eyes on China: Rush of foreign investors can do little to stave off a slowdown, says World Bank

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RBI may shift monetary stance to 'Neutral', rate cuts likely by December 2024: Nuvama

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Asian markets decline amid economic slowdown fears, experts say limited impact on India

ANI

Investors are pouring into this defensive corner of the stock market amid fears of an economic slowdown

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China's Communist Party begins key meet to stem economic slowdown, following 4.7% dip in GDP

PTI

The IMF just raised its growth forecast for the US economy this year — but expects a slowdown in 2025

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The US economy may be barrelling towards stagflation, an outcome worse than recession

Filip De Mott

SBI economists see Q2 GDP growth slowing down to 6.5%; FY25 growth to be closer to 7%

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ICRA forecasts slowdown in India's economy: GDP growth expected to hit six-quarter low in Q1 FY2025

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China's EVs are fueling a big oil demand slowdown

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The economy seems to be firing on all cylinders — but a veteran JPMorgan strategy chief says one underappreciated risk could cause a serious global slowdown

James Faris

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