Asian Market Slide, Oil Jump Point To Weak Start For Dalal Street

Mumbai, May 8: Asian equities fell sharply on Friday while oil prices surged after renewed geopolitical tensions involving Iran triggered a wave of risk aversion across global markets, setting the stage for a lower opening for Indian benchmark indices.

Asia Drops

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped over 1%, with investors fleeing risk assets amid fears that escalating tensions in the Middle East could disrupt global crude supply chains and reignite inflationary pressures. Japan’s Nikkei, South Korea’s Kospi and Hong Kong markets all traded lower in early deals as traders turned defensive after a volatile overnight session on Wall Street.

Crude Climbs

Crude oil prices climbed after reports of fresh military exchanges involving Iran rattled markets and clouded hopes of a lasting ceasefire agreement in the region. The climb in crude is likely to weigh on Indian oil marketing companies, aviation firms, paint makers and other sectors sensitive to rising energy costs. Investors may also turn cautious on rate-sensitive pockets of the market if higher oil prices threaten to complicate the inflation outlook globally.

America Declines

U.S. markets ended lower overnight, snapping a recent rally driven by artificial intelligence optimism and easing trade concerns. The Dow Jones Industrial Average fell over 0.6%, while the S&P 500 and Nasdaq also ended in the red as investors booked profits in technology and semiconductor names.

Despite the broader weakness, AI-linked counters continued to show resilience. Nvidia and Microsoft gained ground, while cloud monitoring firm Datadog surged after raising its annual forecast, reinforcing the narrative that investor appetite for artificial intelligence plays remains intact even amid geopolitical uncertainty.

Markets are now awaiting key U.S. non-farm payroll data later in the day, which could influence expectations around the Federal Reserve’s policy path. Stronger-than-expected labour data may reduce the urgency for interest rate cuts, while softer readings could revive hopes of monetary easing later this year.

Europe Slips

European markets too turned cautious after a strong rally in the previous session. The pan-European STOXX 600 index slipped as investors tracked developments in the Middle East and digested another batch of corporate earnings. Energy, industrial and defence shares led declines, reflecting growing unease around geopolitical risks and commodity volatility.

Back Home

Back home, Gift Nifty signalled a weak start for domestic equities, with global uncertainty likely to dominate sentiment in early trade. While IT stocks could find some support from the continued strength in global AI-driven themes, broader market direction may remain tethered to crude oil movements and headlines emerging from the Middle East.

After a strong run in recent sessions, Indian markets could also see some profit-booking, particularly in sectors that are vulnerable to higher input costs and risk-off global flows.

Source:

• Exchanges