Marketbites: India Emerging as an Economic Heavyweight
Portfolio Manager Commentary:
U.S. stocks fell sharply Friday, wrapping up their worst week of 2023, after the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, showed a stronger-than-expected increase in prices last month. The core PCE index rose 0.6% in January and 4.7% from the prior year, coming above economists’ expectations. Thus, the report added to worries that the Fed may have to keep rates higher for longer to quell inflationary pressures.
Liz Ann Sonders, chief investment strategist at Charles Schwab, believes there is more to the market’s downturn besides the PCE numbers adding, “this market has been pretty jittery this week, so any disappointing data is going to have an outsized impact as we’re seeing in the early movements.”
In other news, Boeing shares slipped more than 4% after the company temporarily halted delivery of its 787 Dreamliners over a fuselage issue. Shares of Microsoft and Home Depot fell 2.2% and 0.9%, respectively.
Chart of the Day:
For a long time, India was a story of unfulfilled potential consisting of abundant labor and entrepreneurial energy strained by lousy infrastructure, a meddlesome state, stifling regulation, and a deep uncertainty about engagement with the broader world. Now, it appears that 2023 may finally be the year India emerges as an economic heavyweight. Thanks to economic growth, microeconomic reform, and a changed geopolitical environment that has the West more eager than ever to draw India into its orbit. To add to this, India is expected to officially surpass China as the world's most populous country, one much younger than China and most of the West. The IMF says India's annual economic growth will average 6.5% this year and next, the fastest among 30 major economies. Just last year India displaced the U.K. as the world's fifth-largest economy in current dollar terms.