Happy New Year! This is your daily morning update from NDTV Profit and I'm Alex Mathew. Here's everything you need to know at the start of 2025 to make sure you get a headstart.
Global stocks declined on Tuesday amidst lower volumes on the last trading day of the year and also as the pressure of higher U.S. bond yields sets in. Overnight, the Dow ended largely unchanged, while the S&P 500 and the Nasdaq dropped 0.4% and 0.9%, respectively. Most equity markets globally are shut for the New Year's holiday today, so you won't get too much in the way of cues from the Asia Pacific region.
The benchmark U.S. 10-year note yield rose 2.8 basis points to 4.573%, reversing an earlier decline but staying above the 4.5% mark that many analysts see as problematic for equities. The yield has risen about 69 basis points this year, including a surge of more than 74 bps in the fourth quarter.
The higher bond yields in the U.S. – in other words, the higher risk free return – has put pressure on risk assets, like equity, in the past few weeks. Remember, the climb in bond yields has been despite a 100 basis point cut by the Federal Reserve.
The interest rate differential between the U.S. and several other economies has made the dollar more attractive. The dollar index climbed another 0.4% on Tuesday and has surged 7.3% in the fourth quarter. That's the biggest quarterly jump since the first quarter of 2015, according to Reuters.
In news back home, the Union government's fiscal deficit has reached 52.5% of the budgetary target at the end of the first eight months of the financial year ending in March 2025.
The government has set a fiscal deficit target of 4.9% of GDP for the financial year ending in March 2025, as part of its strategy to continue on the path of fiscal consolidation. This followed an improvement over the previous year's deficit target, which was set at 5.6% of GDP.
There's also a high frequency indicator in the form of the output of eight core industries which saw a growth of 4.3% in November, led by rise in cement and coal output. It is an improvement over the previous month, which saw a growth of 3.1%.
In other news, the National Payments Corporation of India has removed the limit on onboarding UPI users for WhatsApp Pay, allowing Meta's messaging app to offer payment services to its entire user base in India with immediate effect. Earlier, NPCI had authorised WhatsApp Pay to expand its UPI user base in a phased manner. There was a cap of 10 crore users, which has now been lifted by NPCI.
And finally, the central government has maintained the status quo on the interest rate for all small saving schemes, leaving them unchanged for the January-March quarter, according to an official notification issued on Tuesday. For deposits made under the Sukanya Samriddhi Yojana, the interest rate has been retained at 8.2%, whereas savings under the Public Provident Fund will continue to draw interest at the rate of 7.1%.
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