Stories
Market Pressure: Foreign Cues Signal Volatile Start for Indian Markets.
- •Indian stock markets are expected to open with pressure and volatility on Thursday, with Gift Nifty down over 75 points.
- •US markets saw sharp declines from higher levels, indicating profit-booking and caution.
- •US PCE inflation data for August was better than expected, weakening the anticipation of the Fed's next interest rate hike.
- •Rising US bond yields remain a concern, with the 30-year Treasury yield reaching its highest level since 2002.
- •Strong signals from the US economy, including revised Q2 GDP growth of 2.2% and better-than-expected private sector employment.
Key Questions Answered
Foreign market signals pointed to volatility and pressure as Gift Nifty registered a decline of over 75 points, indicating that the previous day's domestic market weakness might continue. Meanwhile, US markets experienced sharp declines from higher levels driven by rising bond yields and strong economic data, though better-than-expected inflation metrics tempered expectations for the US Federal Reserve's next interest rate hike.
US PCE inflation data for August showed a 0.3% month-over-month rise, with core PCE up by 0.2% and annual PCE easing to 3.4%. Consumer spending also remained robust with personal spending rising 0.9%, while second-quarter GDP growth was revised upward to 2.2%. Despite this strong economic activity, the probability of a 25 basis point Fed rate hike in October fell to approximately 38.2%.
Selling pressure pushed the 30-year US Treasury yield to 5.63% (its highest since 2002) and the 10-year yield to 5.3%. In the tech sector, Micron posted stronger-than-expected revenue and earnings, though gross margins face pressure from higher employee compensation. Additionally, US-Iran tensions remain under close watch as 125 ships have been rerouted through the Strait of Hormuz by September 30, while crude oil prices stayed relatively stable following recent gains.
