Global financial markets ended the week on a positive note with an upward boost from Brazil, Hong Kong and Indian share markets, which were up 5%, 4.1% and 2.1% respectively. While the US markets ended the week marginally lower by 0.2%, major European indices like German Dax and London’s FTSE 100 share markets also ended the week on a positive note.

In the news from global financial markets, Markets participants were closely monitoring Fed Chair Janet Yellen’s testimony to congress this week.

Yellen indicated the Fed would gradually increase interest rates and begin to reduce its US$4 trillion portfolio of treasury bonds and mortgage-backed securities this year. Ms Yellen also said that ‘rates won’t have to rise much further to get to neutral’.

Inflation remains a major concern in the US. It’s still a bit below the Fed’s 2% target.

Meanwhile in eurozone, the ECB policymakers suggested Quantitative easing will continue for another couple of years. This lead to a sharp drop in the euro on Thursday.

Last week, the ECB noted that it might end its easy money policies. But this week, policymakers gave conflicting opinions.

Most of the economic problems we see today have been fueled by the easy money policies that central banks have adopted around the world. However, sooner or later, we hope to see the end of easy money.

On the commodities front Crude oil traded in an uptrend during the week. After witnessing a volatile start to the week, the commodity ended the week on a positive note and was up 5.5%. The traction in the crude was in response to a fall in US fuel inventories and a cut in the US government’s forecast for crude output next year.

Key World Markets During the Week

Back home, Indian stock markets continued their positive momentum and ended the week on a record high level. The BSE Sensex was up 2.10% and the NSE Nifty was up 2.28%.

The data for retail inflation for the month of June came at 1.54% which is lowest in last five years, largely due to falling food prices. The Reserve Bank, which mainly factors in retail inflation to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate. The market rallied on both the positive cues from the global markets and expectation of a rate cut by RBI.

BSE Indices During the Week

Now let us discuss some key economic and industry developments during the week gone by

India’s annual retail inflation eased in June to its slowest pace in more than five years, as food prices fell.

The consumer price index rose 1.54% in the 12 months through June, down from an increase of 2.18% in the previous month.

This is the lowest inflation rate since India started releasing retail inflation data in January 2012 based on a combined CPI index for rural and urban consumers.

Elsewhere in Asia, China’s annual consumer prices remained subdued at 1.5% in June.

The Reserve Bank, which mainly factors in retail inflation to arrive at its monetary policy, is slated to meet in early August to announce the next bi-monthly policy rate.

In its last policy in June, the central bank had kept the key lending rate unchanged citing risk to inflation.