On Wednesday, Indian shares might edge lower as investors respond to a substantial rise in oil prices overnight and U.S. Treasury yields climbing to multi-week highs.
Investor caution ahead of next week's general election results could also lead to subdued market activity. The Lok Sabha exit poll results are scheduled for release after all seven phases conclude on June 1, with the final election results to be declared on June 4.
The Sensex and Nifty indexes experienced a modestly volatile session on Tuesday, closing slightly down. Meanwhile, the rupee dropped by 5 paise, settling at 83.18 against the dollar.
In morning trade, Asian markets predominantly declined, the dollar strengthened, and U.S. Treasury yields reached their highest levels in four weeks.
Gold prices fell as traders reduced their expectations for Federal Reserve rate cuts. Minneapolis Federal Reserve President Neel Kashkari emphasized in an interview that he requires "many more months of positive inflation data" before considering interest rate cuts.
Oil prices remained relatively stable in Asian trading following a significant rally in the previous session, spurred by another ship attack in the Red Sea, escalating geopolitical tensions in the Middle East.
U.S. stocks delivered mixed results overnight; Nvidia shares surged, injecting some dynamism into otherwise tepid trading. The Nasdaq Composite, heavily weighted with tech stocks, rose by 0.6 percent to a new record closing high, while the S&P 500 made marginal gains. Conversely, the Dow fell by 0.6 percent after hawkish remarks from Neel Kashkari and a surge in the 10-year Treasury yield above 4.5 percent, following relatively weak 2-year and 5-year bond auctions.
Economic data revealed an unexpected improvement in U.S. consumer confidence in May, reversing a three-month downward trend.
In Europe, stocks closed lower on Tuesday as investors reevaluated potential shifts in interest rate policies by the Federal Reserve, the European Central Bank (ECB), and the Bank of England (BOE). The pan-European STOXX 600 declined by 0.6 percent, the German DAX fell by 0.5 percent, France's CAC 40 decreased by 0.9 percent, and the U.K.'s FTSE 100 recorded a 0.8 percent drop.
