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Breakfast Bites - Indian markets see steep decline

Election results now unclear for PM Modi; US Growth falters as ISM dips; Japan's auto stocks under pressure

Rise and shine everyone.

Yesterday’s ISM data missed expectations (48.7 vs. 49.2 prior) and new orders fell to the lowest level in nearly a year. Not a great sign for growth. Prices paid, however, continue to remain strong setting off stagflation warning bells. But the decline in growth started pricing in Fed cuts, sending treasuries higher, and yields lower. Cutting because there’s a decline in growth is never a good thing.

The worst performer was Energy after oil saw a steep decline. We spoke too soon yesterday morning when we said there wasn’t much of an impact from the OPEC announcement. Interestingly enough, if you look at the data though, it looks like there will still be a supply shortage in the months to come and prices may not actually stay depressed. But for now, momentum looks decidedly bearish and we’d wait to think about positions in XLE or Crude.

NVDA held up quite well after announcing their Rubin AI platform the previous day. It’s giving up some of its

gains in pre-market trading though.

Major news coming out of Asia - PM Modi is not getting the clear win that the exit polls were suggesting yesterday. He is now on track for a narrow win, and some are even speculating a loss. The party may fall short of the majority mark required (272 seats). If that happens, it’s unlikely Modi will stay on as prime minister. Indian markets (stocks and the INR) have both taken a sharp turn lower, while bond yields are surging higher. This will certainly be a major upset for India at this stage.

Meanwhile, Mexico’s stock market hit a 4-year low yesterday, following the election. We were seeing pressure in early trading but, it would seem it’s time to reconsider a bullish stance on the country.

Asian markets are mixed this morning with China higher but Japan and India lower.

Japanese equities are lower this morning after Toyota Honda and Mazda opened down. Exporter shares were already weaker after yesterday’s US PMI and then there are allegations that automakers may be halting shipments on current models due to irregularities in certification applications. Japan's Transport Ministry will conduct on-site inspections at Toyota.

Europe is also trading lower, likely because of the PMIs yesterday and the lingering growth concerns from the US.

Watch out for JOLTs data at 10 am ET today and the UK will have its first TV debate today with polling showing a loss for the ruling conservative party by the widest margin in over 100 years.

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