Global Markets Today: Asian Stocks Edge Higher, Oil Gains on Hormuz Uncertainty; Indian Markets Seen Getting Cautious Open

Mumbai, August 10: Indian equity markets are likely to witness a cautious start on Monday as gains across Asian markets offer some support, while a rise in crude oil prices and weaker U.S. and European futures could limit the upside. Investors will also keep a close watch on geopolitical developments around the Strait of Hormuz, alongside upcoming U.S. inflation data that could influence expectations for the Federal Reserve’s interest-rate path. 

Asian stocks traded higher, tracking gains on Wall Street after softer-than-expected U.S. jobs data eased concerns over an imminent rise in borrowing costs. Japan’s Nikkei and South Korea’s Kospi advanced 2% and 0.13% respectively.  

The positive Asian cues could lend some support to domestic equities at the opening bell, particularly after the strong performance of U.S. markets. However, the rise in crude prices and weakness in U.S. and European futures suggest that gains could remain capped. For the Nifty and Sensex, the setup therefore points to a flat-to-mildly positive opening, with traders likely to remain selective ahead of key global macroeconomic cues. 

Wall Street cues 

U.S. equities ended last week on a firm footing, with the softer jobs report reducing expectations of an immediate rate hike and supporting risk appetite. Investors now turn their attention to the U.S. July consumer price index, due later this week, which could provide fresh clues on the Federal Reserve’s policy trajectory.  

The S&P 500’s strong earnings season has also provided support to sentiment. However, U.S. stock futures were muted on Monday, pointing to some consolidation after the recent record-setting run. Nasdaq futures were up 0.19%, S&P 500 Futures were up 0.035%, and Dow Jones futures were down 0.13%. 

European markets 

European equity futures also pointed to a slightly weaker opening. EUROSTOXX 50 futures were down 0.09%, DAX futures were down 0.10%, and FTSE futures were down 0.32%.   

The mixed global setup reflects a combination of easing rate-hike fears and renewed concerns over energy prices. 

The direction of European equities could remain closely linked to developments in the Middle East and the trajectory of crude oil, particularly given the region’s exposure to energy costs. Any sustained rise in oil could revive inflation concerns and complicate expectations around monetary policy. 

Oil prices in focus 

Crude oil prices moved higher as uncertainty persisted over the reopening of the Strait of Hormuz, a critical conduit for global energy shipments. Brent crude rose 1% to $84.4 a barrel, while U.S. West Texas Intermediate crude gained 0.7% to $78.7.  

The increase came after Iran said it was nearing a deal with Oman to establish new shipping lanes but continued to keep the strait closed pending the fulfilment of U.S. conditions. The uncertainty has prevented markets from fully pricing in a normalisation of energy flows.  

For India, elevated crude prices remain a key risk because the country is a major importer of oil. Higher energy costs can pressure corporate margins, widen the import bill and put pressure on the rupee, while also complicating the inflation outlook. 

What it means for Indian markets 

The combination of advancing Asian equities, recent strength on Wall Street and expectations of a relatively benign U.S. rate environment provides a supportive backdrop for Indian stocks. However, higher crude prices, softer U.S. and European futures and geopolitical uncertainty could restrict gains. 

Investors are likely to track oil-sensitive sectors, banks, IT stocks and heavyweight index constituents for direction. The rupee’s response to higher crude prices will also remain important. 

Overall, Indian benchmarks are likely to open flat to mildly higher on Monday, taking cues from the positive Asian trend, but the opening gains could remain measured as investors weigh rising oil prices against easing global rate concerns. The focus is likely to shift quickly from the opening move to geopolitical developments and upcoming U.S. inflation data, which could determine the broader direction of global risk assets through the week.  

Source

•  Exchanges