Nifty, Sensex Stare at Weak Open as Oil Spikes and Global Equities Melt Amid Middle East Mayhem

Mumbai, June 11: Nifty and Sensex are all set for a weak and volatile start on Thursday as a spike in crude oil prices, escalating tensions in the Middle East and broad-based weakness across global markets drag sentiment. 

The risk-off mood worsened after Iran announced the closure of the Strait of Hormuz following fresh U.S. military strikes, raising concerns over global oil supplies and reigniting fears of inflationary pressures worldwide. For India, a major crude importer, the jump in oil prices is likely to keep investors on edge, particularly in fuel-sensitive sectors such as aviation, paints, chemicals and oil marketing companies. 

Oil Spike Reverberates Across Markets 

The closure of the Strait of Hormuz, a critical artery for global energy trade, sent Brent crude prices 1.5% higher above $94 per barrel. The move heightened concerns about supply disruptions and their potential impact on global economic growth. 

Investors fear that persistently high energy prices could complicate the inflation outlook for major economies and reduce the scope for central banks to cut interest rates, prompting a flight from risk assets. 

Asian Markets Lead Regional Declines 

Asian equities traded sharply lower on Thursday as investors reacted to the worsening geopolitical backdrop. South Korea’s Kospi slumped 1.8%, while Japan’s Nikkei fell 1.5%. 

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1%, reflecting a broad retreat from equities as investors sought safety amid mounting uncertainty. Technology and export-oriented stocks were among the biggest losers across the region. 

Wall Street Hit by Tech Selloff 

Overnight, U.S. markets witnessed a sharp decline, with the Dow Jones Industrial Average falling 1.9%, the S&P 500 losing 1.6% and the Nasdaq dropping 2%. 

Technology shares led the selloff even as investors worried that rising oil prices could fuel inflation and keep U.S. interest rates elevated for longer. Semiconductor stocks and other growth names came under pressure as Treasury yields moved higher. 

Market sentiment was further hurt by inflation data that reinforced expectations that the Federal Reserve may remain cautious on monetary easing despite slowing economic momentum. 

European Markets Show Relative Resilience 

European equities fared somewhat better but still ended lower. The pan-European STOXX 600 index slipped marginally as investors weighed the impact of higher energy prices and rising geopolitical risks. 

While energy stocks benefited from stronger crude prices, losses in technology, industrial and mining shares kept broader markets subdued. Investors remained concerned that a prolonged oil rally could weigh on economic activity across the continent. 

Source

• Exchanges