Global Relief Rally, Oil Fall Signal Sharply Higher Start for Indian Markets

Mumbai, June 12:Indian equities are likely to open sharply higher on Friday, tracking a powerful risk-on rally across Asian markets after signs of de-escalation in the Middle East eased concerns over a prolonged conflict and its impact on global growth.

Asian shares advanced across the board, with Japan’s Nikkei climbing more than 3%, South Korea’s KOSPI soaring 8% and MSCI’s broadest index of Asia-Pacific shares outside Japan jumping 3.7%. Investors rushed back into equities after U.S. President Donald Trump said planned military action against Iran had been cancelled and suggested a potential peace agreement could be reached over the weekend.

The improvement in sentiment also triggered a broad selloff in safe-haven assets such as gold and government bonds, while risk-sensitive currencies and equities rallied. The prospect of easing geopolitical tensions further weighed on crude oil prices, offering relief to inflation-hit economies and boosting confidence in global growth prospects.

Wall Street Rebounds Led by Technology Stocks

The positive momentum in Asia followed a strong overnight session on Wall Street, where major U.S. indices posted their biggest gains in weeks.

The Dow Jones Industrial Average rose 1.9%, while the S&P 500 gained 1.8%. The technology-heavy Nasdaq Composite outperformed, surging 2.5% as investors returned to growth stocks.

Semiconductor companies led the advance, with the Philadelphia Semiconductor Index jumping nearly 8%, marking its strongest single-day gain in more than a year. Market participants took advantage of recent declines in technology shares, while optimism surrounding artificial intelligence-linked businesses also supported the sector.

The rally was aided by hopes that easing tensions in the Gulf region would reduce the risk of a fresh inflation shock from energy markets, allowing central banks greater flexibility on monetary policy in the months ahead.

European Markets End Higher Despite ECB Rate Hike

European shares also closed higher on Thursday, snapping a four-session losing streak despite the European Central Bank’s decision to raise interest rates by 25 basis points.

The pan-European STOXX 600 index gained 0.5%, supported by strength in technology stocks and improved risk appetite globally. Investors largely looked past the ECB’s rate increase, focusing instead on the possibility of reduced geopolitical risks and lower energy prices.

While technology and growth-oriented sectors outperformed, rate-sensitive segments such as real estate and financial services remained under pressure amid expectations that borrowing costs could stay elevated for longer.

Lower Oil Prices Add to Domestic Tailwinds

For Indian markets, the sharp decline in crude oil prices may prove to be one of the most significant positive triggers.

Brent crude slipped below the $90-per-barrel mark, easing concerns over imported inflation, fuel costs and India’s current account deficit. Lower oil prices are generally supportive for sectors such as paints, aviation, chemicals, oil marketing companies and consumer-facing businesses that benefit from lower input costs.

Combined with the strong rally across U.S., European and Asian equities, the fall in crude prices points to a firm opening for benchmark indices. Investors, however, are likely to remain cautious and closely monitor developments in the Middle East, as any setback in diplomatic efforts could quickly reignite volatility across global financial markets.

Source:

• Exchanges