As per FADA, India’s auto sales rose at a much slower pace of 14.5% in Aug’21 from 34.1% in Jul’21

Macro developments

As per FADA, India’s auto sales rose at a much slower pace of 14.5% in Aug’21 from 34.1% in Jul’21. Even PV and two-wheeler sales moderated by 38.7% (63% in Jul’21) and 6.6% (28% in Jul’21) respectively in Aug’21. Auto retail sales declined over a 2-year horizon to 14.7% in Aug’21, signalling subdued demand. Further, shortage of semi-conductors has added to supply side challenges. This is likely to pose additional risk in the upcoming festive season.

China’s exports surprised positively, rising by 25.6% in Aug’21 (est.: 17.3%) from 19.3% in Jul’21. The rebound was driven by higher exports of electronics, furniture and recreational products. In addition, clearing of congestion at some ports, which had earlier been shut down for 2 weeks due to surge in Covid-19 cases also helped. Imports too improved in Aug’21, rising by 33.1% (est.: 26.9%) from 28.1% in Jul’21. While semi-conductor imports continued to decline, that of agriculture commodities, industrial metals, and oil rose sharply.

Germany’s factory orders rose unexpectedly by 3.4% in Jul’21 versus an estimated decline of 0.7% on a MoM basis. In Jun’21, factory orders had risen by 4.6%. The level of new orders inched up to a record high in Jul’21, led by a surge in foreign orders (8% increase MoM). Orders from the shipbuilding sector rose steeply. Orders for consumer goods (7.5%) and capital goods (5.4%) also increased.

Markets

Bonds: Global yields closed mixed. Germany’s 10Y yield fell by 1bps (-0.37%) ahead of ECB policy decision. US 10Y yield closed flat at 1.32% as investors remain cautious after dismal jobs data. Crude prices fell by 0.5% (US$ 72/bbl) as Saudi Arabia slashed crude prices for Asia. India’s 10Y yield rose a tad by 1bps (6.17%). It is trading higher at 6.19% today.

Currency: Except CNY (flat), other global currencies closed lower against the dollar. DXY remained subdued after dismal jobs report. AUD fell the most by 0.3%. INR depreciated by 0.1% despite lower oil prices. It is trading further lower today while other Asian currencies are trading mixed.

Equity: Barring Dow, other global indices ended higher amidst expectations of delay in Fed’s tapering process. Amongst other indices, Nikkei (1.8%) surged the most followed by Shanghai Comp (1.1%). Sensex (0.3%) too ended in green led by real estate and consumer durable stocks. However, it is trading lower today while other Asian stocks are trading mixed.