Asian Slide Signals Cautious Start For Dalal Street; Stable Oil May Aid Opening

Mumbai, July 7: Indian benchmark indices stare at a cautious start on Tuesday, tracking slide across Asian equities even as relatively stable crude oil prices ease concerns over inflation and global growth.

Asian shares decline

Asian equities declined despite a strong earnings outlook from Samsung Electronics, highlighting investor caution after a sharp run-up in global equities. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.4%, while Japan’s Nikkei dropped 1.3% and South Korea’s benchmark index Kospi plunged 6%, weighed down by profit booking in technology stocks.

The muted mood comes even as artificial intelligence-related optimism continues to underpin markets. Investors remain wary of stretched valuations in semiconductor stocks and are also keeping a close watch on geopolitical developments and the outlook for global monetary policy. The Japanese yen remained near multi-decade lows against the dollar, adding another layer of uncertainty to regional markets.

Wall Street rises on chip rally

All three major U.S. stock indices closed higher overnight, led by technology shares, as optimism that artificial intelligence-driven demand will underpin a strong second-quarter earnings season boosted investor sentiment. The Nasdaq Composite rose 1.12%, while the S&P 500 gained 0.72% and the Dow Jones Industrial Average added 0.29%.

However, traders may remain cautious ahead of upcoming economic data and commentary from Federal Reserve officials for clues on the timing of future interest-rate moves.

European shares slip

European shares retreated on Monday after touching a record high earlier in the session, as investors booked profits following last week’s strong rally. The pan-European STOXX 600 index slipped 0.35% to close at 650.5, after hitting an intraday all-time high of 654.44. The decline came despite a sharp jump in easyJet shares after reports of a $7.34 billion take-private approach boosted sentiment around the airline.

Oil steadies as focus shifts to supply

Crude oil prices edged higher in Asian trade after falling sharply over the past two weeks. Brent crude traded above $72 a barrel as traders shifted their attention from geopolitical tensions to expectations of higher OPEC+ production and the outlook for global demand.

The relatively moderate level of crude prices is seen as a positive for India, one of the world’s largest oil importers, as it helps ease concerns over imported inflation and the country’s current account deficit.
Overall, the rise in U.S. equities, weakness across Asian markets and the absence of a sharp spike in crude oil prices point to cautious start for Indian markets. While investors are likely to remain watchful of geopolitical developments and macroeconomic data, the global backdrop currently signals a cautious opening for Dalal Street.

Source: Exchanges