India’s exports from Special Economic Zones (SEZs) rose by 41.5 per cent on a YoY basis to Rs 2.15 trillion in Q1 FY22. This was led by higher exports of drugs and pharmaceuticals, engineering goods and gems, and jewellery. In FY21, exports from SEZs fell to Rs 7.6tn from Rs 7.97 trillion in FY20 due to Covid-19. As of 30 Jun 2021, 267 out of a total of 427 SEZs approved by the government are operational. Further, about Rs 6.25 trillion has been invested in these SEZs which employ about 2.5 million people.

Japan’s industrial production fell by 1.5 per cent in July 2021 (est.: 2.5 per cent drop) following a 6.5 per cent increase in June 2021, on a MoM basis. This was on account of a decline in the production of autos, including passenger cars and small buses. In a separate print, the jobless rate softened to 2.8 per cent from 2.9 per cent in June 2021. However, with moderation in Covid-19 cases in the region (0.15mn weekly increase versus 0.16 million earlier), macro prints are likely to show improvement in the near term.

China’s official manufacturing PMI moderated to 50.1 in August 2021 from 50.4 in July 2021. Services activity was impacted considerably as PMI print fell to 47.5 from 53.3 in July 2021. Virus concerns coupled with supply chain bottlenecks were attributed to this decline. Both new orders and export orders softened pointing towards weakening demand conditions.

Markets

Bonds: Global yields closed lower. US 10Y yield fell by 3bps (1.28 per cent) as Fed Chair signalled that there is no rush to hike rates soon. Investors also await US jobs reports. Crude prices rose by 1 per cent (US 73/bbl dollars) as concerns over supply disruption persist. India’s 10Y yield fell by 3bps (6.23 per cent) tracking US 10Y yield. It is trading at 6.22 per cent today.

Currency: Global currencies closed mixed. DXY closed flat awaiting US jobs report. EUR was stable despite a decline in Euro Area’s economic sentiment index. The rupee appreciated by 0.6 per cent to a 2-month high despite an increase in oil prices. It is trading further higher today while other Asian currencies are trading mixed.

Equity: Barring Dow, other global indices ended higher supported by dovish comments from Fed’s Powell. DAX rose by 0.2 per cent even as Euro Area’s economic sentiment index fell from a record high in August 2021. Sensex rose sharply by 1.4 per cent, led by gains in metal, power, and banking stocks. Asian stocks are trading lower today weighed down by China’s weak PMI readings. However, Sensex is trading higher.