Global Markets Retreat on Rate Uncertainty and Carry Trade Concerns, Indian Markets Cautious Ahead of MPC

US stocks weakened on Monday as investors rotated out of risk assets, with US indices and the FTSE 100 closed lower despite historically supportive seasonality for December.

U.S. stocks were weighed down by a jump in Treasury yields and by economic data showing that tariffs remained a drag on the manufacturing sector, as investors looked toward the Federal Reserve’s policy announcement next week.

Stocks have recently benefited from renewed optimism about the outlook for interest rates following dovish comments from leading Federal Reserve officials.

Markets have largely priced in a Fed rate cut at the conclusion of its two day policy meeting on December 10. They are pricing in an 87% chance of a 25 basis-point cut.

Hawkish hints from the Bank of Japan about a possible rate hike have stoked worries about an unwind of yen-funded carry trades, amplifying selling across crypto and growth stocks.

Bitcoin slumped on Monday, with the world’s largest cryptocurrency down about 6%, as risk aversion drove investors out of digital and other assets.

Coinbase, which ended down 4.8%, and U.S.-listed shares of Bitfarms, off 5.7%, were among the crypto stocks that showed significant weakness, as bitcoin stumbled nearly 6% and at one point dropped below $85,000. The crypto market has lost more than $1 trillion in value since hitting a record of around $4.3 trillion.

Oil prices climbed in early trade on Tuesday for a second consecutive session as market participants assessed risks stemming from Ukrainian drone strikes on Russian energy sites and mounting U.S.-Venezuela tensions.

Gold pushed back toward recent highs above $4,200/oz, and silver hit fresh records near $58 amid aggressive December rate-cut pricing and tight physical supply.

Nifty consolidated for the third straight session yesterday, ending with a marginal loss of 27 points at 26,175.

The Indian Rupee extended its losing streak to a fourth consecutive session, hitting a fresh record low against the US Dollar amid strong dollar demand and tight supply. A wider trade deficit is driving the persistent weakness, delays in the India–US trade agreement and relatively limited central bank intervention, with the rupee closing about 10 paise lower at 89.56 against the greenback.

The RBI’s MPC meets December 3–5 amid expectations of a possible 25-bps rate cut due to low inflation, though some economists anticipate no change.

The Nifty’s positional trend remains bullish, with strong support at the 26000-26050 zone. On the higher side, 26300 could offer resistance on a closing basis.

Markets are expected to open on a muted note, as traders may exercise caution ahead of the Reserve Bank of India’s monetary policy meeting.