Indian shares are expected to open significantly lower on Thursday, reflecting unfavorable global market trends triggered by the U.S. Federal Reserve's indication of fewer interest rate cuts in the upcoming year.
On Wednesday, the benchmark indexes Sensex and Nifty both declined by approximately 0.6%, while the Indian rupee plummeted to a new record low for the third straight day, influenced by ongoing foreign fund withdrawals and President Trump's tariff threats.
Provisional data from the National Stock Exchange indicated that foreign investors sold shares worth Rs 1,316.81 crore on a net basis on Wednesday, while domestic institutional investors acquired shares valued at Rs 4,084.08 crore.
This morning, Asian markets were substantially in the negative, with the yield on benchmark U.S. Treasury bonds reaching a seven-month peak. The dollar index surged to a two-year high, and gold remained below $2,600 per ounce following the Fed's warnings of upward inflation risks.
Analysts have expressed concerns that the policies proposed by the U.S. President-elect, Donald Trump, which include tax cuts and broad import tariffs, might elevate prices and sustain higher interest rates for an extended period.
Oil prices declined in Asian trading as the dollar strengthened in response to the Fed's altered policy guidance.
Investor concerns over tariffs persisted after reports suggested that U.S. authorities might ban China's TP-Link Technology Co. over potential national security issues.
The Japanese yen traded close to a one-month low against the dollar, as investors remained cautious ahead of the Bank of Japan's interest-rate decision and BOJ Governor Kazuo Ueda's remarks.
Expectations for a rate hike remain low, with investors seeking insights into the timing and tempo of rate increases in the next year.
U.S. stocks faced significant selling pressure overnight after the Fed executed a 25-basis-point rate cut, as anticipated, but revised its outlook to suggest merely two interest rate cuts next year, down from the previous four, due to persistently high inflation.
The Dow plunged 2.6%, extending its losing streak to ten consecutive sessions and reaching its lowest closing level in over a month. The S&P 500 dropped 3% to a one-month low, while the tech-dominated Nasdaq Composite sank 3.6%.
Conversely, European stocks closed mostly higher on Wednesday following the release of U.K. and Eurozone inflation data and in advance of the Fed's final rate decision of the year. The pan-European STOXX 600 increased by 0.2%, achieving its first gain in four days. Germany's DAX ended slightly down, while France's CAC 40 rose by 0.3% and the U.K.'s FTSE 100 saw a marginal increase.
