Indian equities are poised for a subdued start on Thursday following the Gandhi Jayanti holiday on Wednesday, which saw markets closed.
On Tuesday, the benchmark indices, Sensex and Nifty, experienced volatility before closing slightly lower, while the rupee depreciated by 3 paise, settling at 83.82 against the US dollar.
Heightened geopolitical tensions are likely to keep investors cautious. The Israeli military reported conducting a "precise strike" in Beirut, and Iran's President has warned of a "stronger response" if Israel retaliates, adding to the unease.
Investors are also expected to respond to the Indian government's decision to induct three new external members into the Reserve Bank of India's monetary policy committee. Additionally, new regulations by the Securities and Exchange Board of India (SEBI) aimed at curbing speculative trading in derivatives may influence market sentiment.
Across Asia, markets showed mixed results. The Hang Seng index in Hong Kong dropped over 3% due to profit-taking, while Japan's Nikkei surged more than 2%, buoyed by a weaker yen following the new prime minister's signaling against a further interest-rate hike.
The yen tumbled nearly 2% against the dollar, marking its steepest decline since June 2022, after Prime Minister Shigeru Ishiba's dovish remarks.
Meanwhile, the dollar climbed to a near two-week high, U.S. Treasury yields dipped, and gold prices remained stable as investors anticipated Friday’s nonfarm payroll data for guidance on the Federal Reserve's next move. Amid increasing Middle East tensions, oil prices edged higher in early Asian trading.
In the U.S., stock markets closed slightly higher on Wednesday, despite rising geopolitical tensions in the Middle East countering stronger-than-expected private sector job growth data from ADP for September.
The Dow Jones, the tech-centric Nasdaq Composite, and the S&P 500 all finished with slight gains.
European markets had a mixed close on Wednesday as concerns over a potential broader conflict in the Middle East persisted. The pan-European STOXX 600 ended flat but with a positive inclination. Germany's DAX declined by 0.3%, while France's CAC 40 saw slight gains and the U.K.'s FTSE 100 increased by 0.2%.
