Stock market seen volatile; crude oil prices cool off slightly

Mumbai: Indian equities are likely to be volatile on Tuesday, tracking developments in global peers even as oil prices have cooled off slightly. Asian stocks drifted on Tuesday as investors assessed heightened geopolitical risks in the aftermath of the strike on Saudi Arabia’s crude facilities that sent oil prices soaring. Treasuries extended gains.

Benchmarks rose in Japan, fell in Australia and fluctuated in South Korea. S&P 500 futures were little changed after US stocks slipped on Monday.

Oil pulled back slightly after soaring 15% in the previous session. The dollar maintained gains against peers while treasury yields declined.

Saudi Aramco now faces weeks or months before the majority of output is restored at the giant Abqaiq processing plant, adding a fresh headwind for the global economy.

The developments in the Middle East will test sentiment for global equities and other riskier assets after a bullish start to the month.

President Donald Trump promised to help allies following the weekend attack in oil kingdom, saying the US is “locked and loaded.” Saudi Arabia said preliminary findings show Iranian weapons were used in the attack on one of its key oil installations, but stopped short of directly blaming the Islamic Republic for the strikes.

The events have also overshadowed concern about the trade war. American and Chinese senior trade negotiators are expected to resume negotiations in the next week and a half. Meanwhile, Trump said the US and Japan have reached an initial trade accord over tariffs.

Elsewhere, the pound held on to a retreat after no signs of progress in Prime Minister Boris Johnson’s first face-to-face meeting on Brexit with European Commission President Jean-Claude Juncker.

Back home, shares of state-run NHPC Ltd, hydro power producer, will be in focus following the company’s plans to leverage infrastructure investment trusts or InvITs to monetize 10 of its 22 projects, according to a Mint report.

Stocks of companies in the business of paints, aviation, and oil refinery and distribution may continue to be in focus as geopolitical tension has hit global crude prices.

Air India Assets Holding Ltd (AIAHL), a special purpose vehicle created by the government to park a part of the national carrier’s debt, has raised ₹7,000 crore through a bond sale to refinance its debt, according to a Mint report.

(Bloomberg contributed to the story)