QUICK SNAPSHOT
Global Sentiment: Risk-on
Factors:  Nvidia's quarterly results, Court Vs Trump tariffs 

TODAY’S WATCHLIST
 - India 2024-25 GDP data
 - India 2024-25 Fiscal deficit data
 - Vodafone Idea earnings

THE BIG STORY
Federal Reserve Bank of Dallas President Lorie Logan underscored the central bank’s cautious stance Thursday, emphasizing that short-term interest rates may need to remain unchanged for an extended period. Speaking from Waco, Texas, Logan highlighted the Fed’s delicate balancing function as it assesses the impact of President Donald Trump’s trade tariffs, tax policies, and regulatory changes on inflation and employment.

“With the labour market holding strong and inflation gradually trending toward the target, monetary policy is currently well positioned,” she said. Yet, Logan acknowledged that it may take “quite some time” to determine whether risks will tilt inflation upward or dampen employment.

Echoing this cautious approach, San Francisco Fed President Mary Daly earlier on Thursday suggested interest rates might remain steady for now, despite projections for potential cuts later this year, citing the need to ensure inflation returns to the Fed’s 2% goal. As inflation remains above target, the Fed’s focus stays fixed on maintaining price stability without jeopardizing the robust labour market.

DATA
Signs of strain are emerging in the US economy, as the latest data shows a cooling labour market and slowing growth. Initial jobless claims rose by 14,000 to 240,000 for the week ended May 24 — the highest in four weeks — with Michigan, the auto industry hub, leading the increase. Continuing claims also reached a 3-1/2 year high, indicating persistent job market weakness. The GDP for the first quarter was adjusted to a 0.2% annualized contraction, from the initial estimate of a 0.3% decline, influenced by a significant trade deficit as businesses increased imports in advance. The growth rate of consumer spending was revised from 1.8% to 1.2%. This follows a 2.4% growth rate in the fourth quarter, reflecting a sharp deceleration in momentum.

WHAT HAPPENED OVERNIGHT
US stocks ended higher on Thursday, led by Nvidia's 3.2% gain after strong quarterly results driven by AI chip demand, while investors digested mixed developments on trade. A US trade court blocked most of President Donald Trump's tariffs on Wednesday, ruling that the president had overstepped his authority by imposing broad duties on imports from US trading partners. However, a late-afternoon appeals court decision reinstated the tariffs, sparking fresh uncertainty. Boeing rose 3.3% after CEO Kelly Ortberg outlined production growth plans for the 737 MAX. Salesforce fell 3.3% despite raising annual forecasts.

US Treasury yields which have been under pressure as investors digest Trump’s hefty tax and spend bill, fell on Thursday as GDP and jobless claims data indicated the economy is cooling, but not too fast, supporting the Fed’s wait-and-see stance. Yields also eased ahead of upcoming inflation data. The yield on benchmark 10-year notes dropped 4.7 basis points to 4.432%, while the 30-year bond yield slipped 5.2 basis points to 4.9264%.

The US dollar fell on Thursday as investors braced for President Donald Trump’s battle against a US trade court ruling that blocked most of his proposed tariffs. The greenback has been pressured by concerns that tariffs could slow the economy and fuel inflation, while the erratic implementation of Trump’s policies dampens the appeal of US assets for foreign investors. The dollar weakened 0.48% to 144.13 against the Japanese yen. The euro rose 0.64% to $1.1364. The dollar index slid 1.03% to 99.36.

Brent crude oil prices fell over 1% on Thursday, retreating from earlier gains, as investors weighed the potential effects of a US court ruling that blocked the most sweeping of President Donald Trump's tariffs. The market also kept a close eye on potential new US sanctions curbing Russian crude flows and an OPEC+ decision on hiking output in July. Brent crude futures settled down 75 cents, or 1.2%, at $64.15 a barrel, while US West Texas Intermediate crude fell 90 cents, or 1.5%, to $60.94 a barrel.

Day’s Ledger

Economic Data:

• India Jan–Mar and 2024-25 provisional GDP data
• India April and 2024-25 government finance data
• US personal income and outlays for April
• US weekly export sales
• Canada GDP for March quarter

Corporate Actions:

• Jan-Mar earnings: Apollo Hospitals Enterprises, AstraZeneca Pharma, Bajaj Holdings & Investment, FSN E-Commerce Ventures Nykaa, Inox Wind, PNC Infratech, PTC Industries, Ramkrishna Forgings, Sun TV Network, Swan Energy, Titagarh Rail Systems, Valor Estate, Vodafone Idea.
• Dalmia Bharat to consider raising funds
• Vedanta to consider raising funds
• Alkosign to consider bonus share
• Indo Thai to consider stock split
• Kati Patang to consider raising of fund
• Muthoot Capital to consider issuance of non-convertible debentures
• Ramkrishna Forgings to consider raising of fund

Policy Events

• Fed Lorie Logan speaks

Tickers

• Alkem Labs March quarter profit up 4% YoY, misses estimates; domestic sales drive topline
• Amara Raja March quarter net profit drops 27% YoY, misses estimates; FY25 earnings rise 6%
• Bajaj Auto March quarter net profit up 6% on year to ₹20.5 bln; revenue rises nearly 6%
• Engineers India March quarter profit more than doubles on strong revenue growth
• ICRA revises Indus Towers’ outlook to 'positive' on improved collections, liquidity
• CRISIL keeps IndusInd Bank’s long-term debt rating on watch with negative implications
• KNR Constructions’ March quarter net profit falls 62% despite lower expenses
• Lemon Tree Hotels’ March quarter net profit rises 26% to ₹846 million on higher revenue
• Mazagon Dock Shipbuilders’ March quarter net profit plunges 51% on higher expenses
• Motherson March quarter profit falls 23% YoY on higher costs, lower other income.  Motherson Sumi to issue 1:2 bonus shares.
• NBCC March quarter net profit rises over 29% to ₹1.76 billion on higher revenue
• NCLAT stays NCLT order rejecting Talwandi Sabo Power's demerger plan
• Ola Electric's March quarter loss widens to ₹8.70 bln as revenue slumps 62% YoY
• Piramal Enterprises’ GST tax demand cut to ₹92.2 million from ₹15 billion
• SJVN Ltd.’s March quarter net profit plunges 50% to eight-quarter low
• Sobha March quarter net profit surges nearly sixfold, revenue jumps 63%
• Welspun Living March quarter profit slips nearly 10% despite higher revenue
• Wockhardt narrows March quarter loss as revenue rises and costs ease

Must Reads

• US court terms Trump tariffs illegal, India says trade deal on track
• India's defence budget may near ₹32 trillion by 2047: CII-KPMG report
• SEBI probing delayed disclosures on accounting lapses at IndusInd Bank
• Tata Sons board accepts internal panel report on company secretary
• Net household financial savings rebound, India to lead growth in FY26: RBI
• RBI asks lenders to closely monitor gold loan portfolio practices
• Trust, deregulate, and reciprocate to escape middle-income trap: CEA
• SEBI tightens derivatives rules to protect investors
• LIC picks up Adani Ports’ entire ₹50 billion debt issue