U.S. stocks take a breather after a two-day surge

U.S. equity markets finished near the flatline Wednesday, with markets taking a breather after gains on Monday and Tuesday that were energised by easing geopolitical tensions in the Middle East. A report released by the Commerce Department showed a substantial pullback in new home sales in the U.S. in May, adding to signs of potentially softening housing market conditions following Tuesday’s weaker-than-expected data on home prices.

Powell wrapped up two days of testifying before the House and the Senate, where he stressed to lawmakers the central bank is “well-positioned” to wait and see how Trump’s tariffs are impacting the economy before reducing rates. Powell’s “wait and see” approach to interest rates has led Trump to consider announcing his pick to succeed the Fed chair in September or October. Powell’s term ends in May 2026. The move would raise questions about the potential erosion of the Fed’s independence and potentially weaken its credibility. It could recalibrate rate expectations and trigger a reassessment of dollar positioning.

Oil prices inched higher, extending gains from the previous day as a larger-than-expected draw in U.S. crude stocks signalled firm demand, while investors remained cautious about the Iran-Israel ceasefire and stability in the Middle East. Asian equities rose early Thursday, bolstered by J apanese stocks.

After opening 106 points higher yesterday, Nifty held its bullish trend and extended its rise throughout the session. The Nifty ended the session above the crucial resistance of 25,200, rising 200 points or 0.80% to close at 25,244, its highest level since October 3, 2024. The Nifty appears to have finally broken out of the consolidation that had held for the last six weeks. Support is now shifted up to 25000, while on the upside, 25,500 could offer resistance. Indian markets are set to open higher on favourable global cues, though today’s monthly derivative expiry may add volatility to trading.

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Source: HDFC Securities Prime Research