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The Indian stock market is expected to open on a weak note Wednesday following losses in global peers amid lower risk appetite.
Asian markets fell while US stocks indices ended lower overnight as investors awaited clarity on the US Federal Reserve monetary policy outlook from Fed chair Jerome Powell’s speech at a meeting in Jackson Hole on Friday.
On the domestic front, the Indian equity indices, Sensex and Nifty, ended flat on Tuesday despite positive trends in global markets.
“Despite the support of positive international markets, Indian equities struggled to maintain their upward momentum due to lingering apprehensions over ongoing global uncertainties. Sectors closely tied to the Western economy, such as IT and pharma, faced challenges, while domestic-oriented sectors, alongside mid- and small-caps, exhibited resilience and gained traction,” said Vinod Nair, Head of Research at Geojit Financial Services.
Moreover, the influence of higher bond yields and concerns about potential rate hikes in the US is prompting FIIs to withdraw funds from the domestic market, contributing to the market’s volatility, he added.
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Here are 5 key global market cues for Sensex today:
Asian Markets
Asian shares declined on Wednesday after the release of key economic data in the region.
Japan’s factory activity shrank in August, a private survey showed, while Australia’s business activity contracted at the fastest pace in 19 months
Australia’s S&P/ASX 200 traded lower marginally. According to Juno Bank, the composite purchasing managers index came in at 47.1 for August.
Japan’s Nikkei 225 fell 0.3%, while the Topix declined 0.36%. South Korea’s Kospi lost 0.27% and the Kosdaq slipped 0.32%.
Hong Kong’s Hang Seng index futures were lower at 17,655, as compared to the HSI’s close of 17,791.01.
Gift Nifty was trading at 19,350 as against Nifty futures previous close of 19,388.75, indicating a negative start for the Indian benchmark indices.
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Wall Street
US stock indices ended mostly lower on Tuesday amid worries over interest rate hike by the Federal Reserve.
The Dow Jones Industrial Average fell 174.86 points, or 0.51%, to 34,288.83, while the S&P 500 declined 12.22 points, or 0.28%, to 4,387.55. The Nasdaq Composite gained 8.28 points, or 0.06%, to 13,505.87.
Banking stocks dragged after S&P downgraded credit ratings of multiple regional US lenders. The KBW regional banking index slipped 2.7% and the S&P 500 banks index lost 2.4%.
Among stocks, Nvidia shares fell 2.8%. Macy’s plunged 14.1%, Kohl’s Corp. tanked 10.3% while Nordstrom Inc shed 9.8%.
Japan’s PMI shrinks in August
Japan’s factory activity shrank for a third straight month in August amid higher oil prices and uncertainty over the global economic outlook. However, the pace of decline slowed, Reuters reported.
The au Jibun Bank flash Japan manufacturing purchasing managers’ index (PMI) edged up to a seasonally adjusted 49.7 in August from 49.6 in July. The index remained below the 50.0 index point threshold, which separates contraction from expansion.
Treasury Yields
The US benchmark Treasury yields hit a near 16-year high amid concerns that interest rates could stay higher for longer after upbeat US economic data.
The benchmark 10-year yields rose to 4.366%, their highest level since 2007. The 10-year yields have risen almost 40 bps month-to-date.
US Dollar
The US dollar edged higher against a basket of currencies on Tuesday, nearing a two-month peak touched last week, as traders awaited the Jackson Hole Symposium later in the week, Reuters reported.
The US dollar index – which measures the currency against six major counterparts – rose 0.2% at 103.57, sitting just shy of the two-month high of 103.68.
(With inputs from Reuters)
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