Asian Markets Advance On Tech Optimism; Indian Stocks Seen Opening Higher But Oil Surge May Cap Gains

Mumbai, July 23: Indian benchmark indices are likely to open on a positive note on Thursday, taking cues from a rise across Asian markets and optimism around strong capital spending by U.S. technology companies. However, gains could be tempered by a sharp rise in crude oil prices, elevated bond yields and persistent geopolitical tensions in the Middle East. 

Asian Markets Rise On Tech Optimism 

Asian equities advanced in early trade, with technology and semiconductor stocks leading gains after major U.S. technology companies signalled robust spending plans that reinforced expectations of sustained demand for artificial intelligence infrastructure. 

South Korea’s KOSPI jumped 2.3%, while Japan’s Nikkei gained 0.5%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose about 1%. 

The upbeat mood in Asia followed a relatively subdued session on Wall Street, where investors remained cautious ahead of a fresh batch of Big Tech earnings. The technology-heavy Nasdaq Composite fell 0.57%, while the S&P 500 slipped 0.14% on Wednesday. The Dow Jones Industrial Average ended nearly flat. 

Wall Street Ends Lower Ahead Of Big Tech Earnings 

U.S. equities struggled to gain momentum as investors turned cautious ahead of earnings from major technology companies, whose results are expected to provide fresh clues on whether the massive investment in artificial intelligence can continue to support elevated valuations. 

The weakness in U.S. technology stocks weighed on the broader market, although optimism over corporate spending on AI infrastructure remained intact. 

Expectations of continued AI and cloud infrastructure spending by global technology majors are likely to support sentiment towards Indian AI stocks having AI themes. 

European Shares Rise As Energy, Defence Stocks Gain 

European equities, meanwhile, ended higher on Wednesday, with the STOXX 600 gaining 0.6% to hit a two-week high. Gains were led by energy, aerospace and defence stocks, which benefited from the rise in crude oil prices and heightened geopolitical tensions in the Middle East. 

Technology stocks were a drag on the broader European market, slipping ahead of major U.S. technology earnings, but the weakness in the sector was more than offset by gains elsewhere. 

Oil Surge Raises Inflation, Rate Concerns 

The biggest risk to the domestic market’s opening comes from the sharp rise in crude oil prices. 

Brent crude climbed about 2% to around $96 a barrel, hitting a six-week high, as escalating U.S.-Iran tensions and disruptions to energy shipping routes heightened fears of tighter global supplies. 

Higher crude prices are particularly relevant for India, one of the world’s largest oil importers. A sustained rise in oil prices could put pressure on inflation, the country’s trade deficit and the rupee, while also raising concerns about corporate margins in oil-sensitive sectors. 

The oil rally has also revived concerns about global inflation and the future path of interest rates. Short-term U.S. Treasury yields rose to multi-month highs, reflecting expectations that persistent energy price pressures could complicate the outlook for monetary easing. 

Indian Markets Seen Opening Higher On Positive Asian Cues 

For Indian equities, stronger Asian markets could offer an initial boost. 

However, the sharp increase in crude prices and elevated global bond yields could limit the upside and encourage investors to remain selective. 

The domestic market is also likely to track developments in the rupee and foreign fund flows. A stronger dollar and higher U.S. yields typically create headwinds for emerging-market equities by making dollar-denominated assets more attractive and raising concerns over capital outflows. 

Crude Prices A Key Risk 

The immediate setup, therefore, points to a positive start for the Sensex and Nifty, with Asian equities providing the primary support. 

Investors are likely to remain cautious, however, as the market weighs two opposing global forces: optimism over the AI-led technology investment cycle on one side and rising geopolitical and inflation risks on the other. 

Source

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