{LONGTERMINVESTORS} Fwd: Morning Market Starter- July 7, 2016

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From: <research@icicibank.com>
Date: Thu, Jul 7, 2016 at 11:15 AM
Subject: Morning Market Starter- July 7, 2016
To: stockdesai@gmail.com

On the radar: Markets await ECB's June policy minutes and US ADP employment data, due later today. Key developments today: The Pound Sterling briefly dropped to 1.27 levels yesterday. S&P Global Ratings cut the outlook on Australia's AAA credit rating to negative from stable. Central Bank watch: Minutes of FOMC's June policy meeting showed that members conceded to delaying a rate hike and to wait and see whether the sudden drop in jobs data was a one-off case. The members also agreed that May payrolls data increased uncertainty in the markets. Further, the report highlighted risks to US economy on possibilities of a Brexit. o Federal Reserve Governor Daniel Tarullo commented that BoE's decision to reduce UK bank capital buffer could prove advantageous. He also added that the Fed is not considering deploying the tool of negative interest rates. o San Francisco Fed President John Williams said that a rate hike in 2016 is justified if data prints match expectations, and that Brexit poses "relatively modest" risk to US economic outlook. o New York Fed President William Dudley said that it is too early to point out the consequences of Brexit. European Central Bank Governing Council member Francois Villeroy said that UK's vote to leave the EU will have impacts on the Euro-area. He also added that UK cannot "cherry pick" single market access. Bank of Japan Governor Haruhiko Kuroda commented that Japan has continued its trend of moderate recovery. He also that he will constantly monitor risks and will add further stimulus, if needed. Bank of England Governor Mark Carney remarked that there could be a prolonged period of risk-aversion in the markets and there could be "material slowing" of the UK economy. However, he added that BoE has a wide scope of tools if it needs to add further stimulus in the economy. Chart: The Pound Sterling continues its decline amid Brexit concerns Global market developments: Macroeconomic Data: o US: Trade deficit in May widened to USD 41.1 bn vs. USD 37.4 earlier. Durable goods orders in Mar (final print) diminished further, coming in at (-) 2.3% as against (-) 2.2% previously. Meanwhile, ISM non-manufacturing composite index in June showed a sharp rise to 56.5 (prior print: 52.9). o EZ: Services PMI in June (final reading) came in higher at 52.8 from, 52.4 previously. Retail sales in May came in upbeat, with the reading at 0.4% MoM as against 0.2% MoM in the previous month. US markets ended in the green yesterday. Dow Jones and S&P ended 0.4% and 0.5% up respectively. Asian equities are trading largely in the green today, tracking upbeat cues from their US peers. Hang Seng (0.8%), Kospi (1.0%) and Australia's ASX (0.4%) are [posting gains. Meanwhile, Nikkei (-0.4%) and Shanghai Composite (-0.2%) are trading lower. US Treasuries are trading flat this morning, albeit holding on to the bulk of its recent gains. Overnight, yields slightly trimmed some of its recent losses, rising ~7 bps, retracing thereafter. The 10Y benchmark index is presently trading at 1.37%, same as yesterday's close. Global market snapshot Domestic market developments: Services PMI came in lower in June, with the reading at 50.3 as against 51.0 earlier. Regards, ICICI Bank Contact: Sonal Surana (+91-22) 2653-1414 (extn: 7243) sonal.surana@icicibank.com Radhika Wadhwa (+91-22) 2653-1414 (extn: 7206) radhika.wadhwa@icicibank.com ​

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CA. Rajesh Desai

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