Global Rebound Lifts Asian Equities, Signals Positive Start for Indian Markets

Mumbai, July 10: Indian benchmark indices are likely to open higher on Friday, tracking gains across Asian markets after Wall Street and European equities staged a recovery overnight as investors looked beyond escalating tensions in the Middle East. While renewed military exchanges between the US and Iran kept geopolitical risks elevated, easing oil prices and continued enthusiasm for technology stocks helped restore risk appetite, setting the stage for a positive start to trading in India.

Market participants, however, are expected to remain cautious through the session as they continue to monitor developments around the Strait of Hormuz, a critical global oil shipping route, for any signs of supply disruptions. 

Asian markets extend global rally 

Asian equities advanced in early trading on Friday, mirroring overnight gains on Wall Street as investors grew more confident that the latest flare-up between the US and Iran would remain contained and not significantly derail the global economic recovery. 

Technology stocks led gains across the region, buoyed by optimism surrounding artificial intelligence investments and the resilience of global semiconductor demand. Investor sentiment also improved after crude oil prices retreated from recent highs, easing concerns that a sustained energy price spike could stoke inflation and weigh on corporate earnings. 

The broader risk-on mood reflected hopes that policymakers and market participants were looking through near-term geopolitical uncertainty, although traders continued to keep a close watch on developments in the Middle East. Japan’s Nikkei rose 1.8% , South Korea’s Kospi advanced 4.1% and MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.19%. 

Wall Street rebounds on technology boost 

US equities recovered strongly on Thursday after suffering losses in the previous session, with technology shares driving the rally. 

The Nasdaq Composite outperformed major benchmarks, supported by gains in semiconductor stocks stoked by Micron Technology, reinforcing optimism around artificial intelligence-related spending. The S&P 500 and the Dow Jones Industrial Average also finished higher as investors returned to risk assets. 

Micron Technology advanced 4.5% after outlining plans to invest over $250 billion in the US by 2035 as it seeks to tap rising demand for memory chips fuelled by artificial intelligence. 

European shares rise despite Middle East tensions 

European markets also ended Thursday’s session in positive territory, with the pan-European STOXX 600 index snapping recent losses as technology stocks rebounded. 

Chipmakers and other growth-oriented companies led gains, reflecting the positive tone from US technology shares. Investors largely shrugged off geopolitical concerns, instead focusing on improving corporate fundamentals and continued demand for AI-linked businesses. 

The recovery in Europe underscored investors’ willingness to selectively add risk despite lingering concerns over the Middle East. 

Oil slips but supply concerns remain 

Crude oil prices edged lower on Friday after sharp gains earlier in the week, providing some relief to equity markets. 

Brent crude traded near $76 a barrel while US West Texas Intermediate hovered below $73, although both benchmarks remained on course for weekly gains of roughly 5-6%. 

The decline followed signs that immediate supply disruptions had not materialised despite continued tensions involving Iran. However, traders remained cautious as any escalation affecting the Strait of Hormuz could significantly disrupt global oil supplies. 

The narrow waterway handles roughly one-fifth of global oil shipments, making it one of the world’s most strategically important energy corridors. Any threat to shipping through the strait could quickly push oil prices higher, potentially reviving inflation concerns across major economies. 

Positive cues for Dalal Street, but caution persists 

The combination of stronger global equities and slightly softer crude prices is expected to provide a supportive backdrop for Indian markets at the opening bell. 

A moderation in oil prices is particularly encouraging for India, one of the world’s largest crude importers, as lower energy costs ease pressure on inflation and the country’s trade balance. 

However, analysts expect volatility to remain elevated as investors react to geopolitical headlines and monitor movements in oil prices, US Treasury yields and the dollar. 

Foreign institutional investor flows are also likely to remain sensitive to global risk sentiment. Any fresh escalation in the Middle East or a sharp rebound in crude oil prices could temper the positive momentum in equities. 

For now, though, improving global market sentiment, resilient technology stocks and easing concerns over immediate supply disruptions suggest that Indian equities are set to begin Friday’s session on a positive note. 

Source

• Exchanges