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Business News/ Markets / Stock Markets/  6 things that changed for the stock market overnight - Gift Nifty to hawkish US Federal Reserve
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6 things that changed for the stock market overnight - Gift Nifty to hawkish US Federal Reserve

Asian markets traded lower on Tuesday following a mixed trend on Wall Street overnight, while US treasury yields and the dollar soared.

Japan’s Nikkei 225 fell 0.63% and the Topix declined 0.6%. (Image: Reuters)Premium
Japan’s Nikkei 225 fell 0.63% and the Topix declined 0.6%. (Image: Reuters)

The Indian stock market indices, Sensex and Nifty 50, are likely to open lower Tuesday following weak global cues amid worries that interest rates will stay higher for longer, while the US dollar and treasury yields surge.

Asian markets traded lower, while the US stock market ended mixed overnight after hawkish signals from the US Federal Reserve officials.

Indian markets were closed for a holiday on Monday. The domestic equity markets witnessed decent gains on Friday with both the benchmark indices ending around half a percent higher.

The Nifty 50 ended the month of September with a gain of 2% while the Sensex rose 1.5%. 

Investors will now focus on the Reserve Bank of India’s (RBI) monetary policy outcome this week and the upcoming quarterly earnings.

Also Read: 'Valuations of smallcaps ahead of fundamentals; tough to predict RBI rate cut'

“Volatility is expected to remain elevated in the short term, given the upside risk of domestic inflation on account of higher crude prices. Investors will closely monitor upcoming releases of domestic, US, and Chinese PMI data, among other indicators, as they are expected to shape future market trends," said Vinod Nair, Head of Research at Geojit Financial Services.

Here are key domestic and global market cues for Sensex today:

Asian Markets

Asian markets traded lower on Tuesday following a mixed trend on Wall Street overnight, while US treasury yields and the dollar soared.

Japan’s Nikkei 225 fell 0.63% and the Topix declined 0.6%.

Hong Kong’s Hang Seng index futures were lower at 17,768 compared to the HSI’s Friday close of 17,809.66.

Australia’s S&P/ASX 200 dropped 1.1% ahead of the Reserve Bank of Australia’s meeting.

South Korean and Chinese markets are closed for holidays.

Meanwhile, Gift Nifty was trading at 19,586 as against Nifty futures’ Friday close of 19,714, indicating a gap-down start for the Indian benchmark equity indices.

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Wall Street

The US stock market indices ended mixed on Monday as hawkish signals from the US Federal Reserve officials weighed on sentiments.

The Dow Jones Industrial Average declined 74.15 points, or 0.22%, to 33,433.35, while the S&P 500 gained 0.34 points, or 0.01%, to 4,288.39. The Nasdaq Composite ended 88.45 points, or 0.67%, higher at 13,307.77.

Among stocks, Tesla share price closed 0.6% higher even as the electric vehicle maker missed market estimates for third-quarter deliveries.

Nvidia shares gained 2.9% after Goldman Sachs added the chipmaker to its conviction list of top stock picks.

Also Read: Tesla Q3 sales up 27% YoY, down sequentially due to factory downtime

Hawkish US Federal Reserve

US Federal Reserve officials say that monetary policy will need to stay restrictive for “some time" to bring inflation back down to the Fed’s 2% target.

“I remain willing to support raising the federal funds rate at a future meeting if the incoming data indicates that progress on inflation has stalled or is too slow to bring inflation to 2% in a timely way," Fed Governor Michelle Bowman said.

Speaking at a separate event, Fed Vice Chair for Supervision Michael Barr said he believes rates are now “at or very near" a sufficiently restrictive level, Reuters reported.

Cleveland Fed leader Loretta Mester also said the Fed’s work is likely not done.

“I suspect we may well need to raise the fed funds rate once more this year and then hold it there for some time as we accumulate more information on economic developments and assess the effects of the tightening in financial conditions that has already occurred," Mester said in a speech to a group in Cleveland.

US manufacturing sector eyes recovery

US manufacturing took a step further towards recovery in September as production picked up and employment rebounded, according to a survey on Monday.

The Institute for Supply Management (ISM) said on Monday that its manufacturing PMI increased to 49.0 last month, the highest reading since November 2022, from 47.6 in August, Reuters reported. Still, September marked the 11th straight month that the PMI remained below 50, which indicates contraction in manufacturing.

US Dollar rises

The dollar index rose after the US government avoided a shutdown and economic data again supported the view that the Federal Reserve will keep interest rates higher for a longer period of time.

The dollar index rose 0.62% to 106.89, with the euro down 0.75% to $1.0491.

The Japanese yen weakened 0.31% versus the greenback at 149.77, after falling to 149.90, Reuters reported.

Also Read: Rocky rupee drives NSE volumes to record high

Crude oil falls

Crude oil prices dropped to a three-week low on a strengthening US dollar and as traders opted for profit taking after last quarter’s hefty gains.

Brent futures fell 0.56% to $90.20 a barrel, while US West Texas Intermediate crude (WTI) declined 0.56% to $88.32 per barrel.

(With inputs from Reuters)

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Updated: 03 Oct 2023, 07:07 AM IST
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