Indian shares are expected to open cautiously on Tuesday, reflecting subdued signals from global markets. Focus may shift to banks as the weekly expiry of the Nifty Financial Services index approaches.
On Monday, the benchmark indices Sensex and Nifty experienced a narrow trading range, ultimately ending with a gain of approximately 0.2% each. Meanwhile, the rupee depreciated by 7 paise, closing at 83.92 against the dollar, influenced by weaker regional currencies and disappointing domestic macroeconomic indicators.
Asian markets faced difficulties this morning, burdened by concerns regarding China's economy and the impending U.S. jobs report, which could provide further clarity on the Federal Reserve's future rate decisions. Current expectations in the money markets suggest a 25 basis points (bps) rate cut by the Fed in September, with diminishing likelihood for a 50-bps reduction following last week's data.
The dollar remained near a two-week high against the euro and yen, while spot gold continued to decline after reaching a more than one-week low in the previous session. Crude oil prices displayed mixed movement, balancing concerns over China's economic outlook and anticipated increases in OPEC+ production from October against supply disruptions in Libya due to recent political unrest.
Tensions escalated significantly on Monday as two crude oil tankers, the Saudi-flagged Amjad and the Panama-flagged Blue Lagoon I, were attacked in the Red Sea by Yemen's Iran-backed Houthi rebels.
In observance of Labor Day, U.S. markets were closed on Monday. European stocks concluded the day with mixed results, amid data indicating ongoing contraction in eurozone manufacturing activity for August. The pan-European STOXX 600 remained mostly flat with a slight negative bias. Germany's DAX rose 0.1%, setting a new record close despite uncertainties from populist victories in state elections. France's CAC 40 increased by 0.2%, while the U.K.'s FTSE 100 decreased by 0.2%.
