The Asian markets saw positive trading on Thursday, while the US stock market ended in the green overnight. This comes as the dollar eased and treasury yields retreated from multi-year higher highs. However, despite these gains, sentiment in the markets still remains weak due to sustained foreign capital outflow, concerns over inflation, a potential hike in interest rates, and global growth worries.
In India, domestic benchmark indices extended their losses for a second consecutive session, with the Nifty 50 closing below the 19,500 level. Investors are now turning their attention to the Reserve Bank of India (RBI) monetary policy decision, which will be announced on Friday, as well as the upcoming corporate earnings season. Analysts expect the Q2 earnings season to maintain the growth momentum seen in previous quarters.
According to Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services Ltd, the market is likely to see weakness in the coming weeks until these headwinds recede. The direction of the market will depend on a combination of global and local macros, earnings delivery, and management outlook.
In Asian markets, Japan’s Nikkei 225 gained 0.53% and the Topix rose 0.67%. South Korea’s Kospi added 0.78%, while the Kosdaq rallied 1.41%. Hong Kong’s Hang Seng index futures were also higher. However, China’s markets remained closed for the weeklong holiday. Australia’s S&P/ASX 200 was up 0.19%.
Meanwhile, in the US, the stock market indices ended higher as traders trimmed bets on higher interest rates, and treasury yields eased off of 16-year highs. The Dow Jones Industrial Average rose 0.39%, the S&P 500 gained 0.81%, and the Nasdaq Composite ended 1.35% higher.
The US dollar fell as US Treasury yields pulled back, following a mixed set of data that diminished the odds of another interest rate hike by the US Federal Reserve. The dollar index, which tracks the greenback against six peers, was down at 106.78. However, it remained within striking distance of a nearly 11-month high reached in the previous session.
Crude oil prices declined by more than $5 as fuel demand destruction and a bleaker macroeconomic picture weighed on sentiment. Brent crude oil futures settled down 5.6% to $85.81 a barrel, while US West Texas Intermediate crude (WTI) fell 5.6% to $84.22.
Overall, the markets continue to be influenced by a combination of global and local factors, including inflation concerns, interest rate hikes, and macroeconomic data. Investors will be closely watching the RBI’s monetary policy decision and upcoming corporate earnings reports for further guidance.