Indian stock market: 8 key things that changed for market overnight – Gift Nifty, China’s trading curbs to bond yields

Asian markets traded lower while the US stock market ended in the red overnight on reduced hopes that the US Federal Reserve will begin rate cuts as soon as in March policy.

Investors will keep an eye on the Reserve Bank of India (RBI) monetary policy meeting which will start today and it is expected to maintain the status quo in line with the US Fed. 

On Monday, the Indian stock market indices succumbed to last-hour selling and ended nearly half a percent lower each.

The Sensex fell 354.21 points, or 0.49%, to close at 71,731.42, while the Nifty 50 ended 82.10 points, or 0.38%, lower at 21,771.70.

“Overall markets are consolidating at higher levels. With two key events behind, markets are taking cues from ongoing results which is leading to a lot more stock-specific action which is likely to continue,” said  Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

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Here are key global market cues for Sensex today:

Asian Markets

Asian markets traded lower on Tuesday following overnight losses on Wall Street and as investors tracked key economic data in the region.

Japan’s Nikkei 225 fell 0.25% and the Topix dropped 0.37%. South Korea’s Kospi gained 0.23%, while the Kosdaq declined 0.16%. Hong Kong’s Hang Seng index futures indicated a stronger open.

Gift Nifty

Gift Nifty was trading around 21,803 level, as compared with Nifty futures’ previous close of 21,787, indicating a mildly positive start for the Indian stock market indices.

Wall Street

US stock market indices ended lower on Monday after US Federal Reserve Chair Jerome Powell pushed back against expectations of early interest rate cuts, while investors assessed a mixed bag of US earnings.

The Dow Jones Industrial Average declined 274.30 points, or 0.71%, to 38,380.12, while the S&P 500 dropped 15.80 points, or 0.32%, to 4,942.81. The Nasdaq Composite ended 31.28 points, or 0.20%, lower at 15,597.68.

Among stocks, Caterpillar shares gained 2%, while Estee Lauder shares surged 12%. Boeing shares fell 1.3%, while Tesla shares declined 3.7% after touching its lowest level since May during the session. Nvidia stock price hit a fresh record high and closed 4.8% higher.

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US Services sector PMI

The US services sector picked up in November amid an increase in business activity. The Institute for Supply Management (ISM) said that its non-manufacturing PMI rose to 52.7 in November from 51.8, which was a 5-month low. Economists polled by Reuters had forecast the index edging up to 52.0.

China tightens trading restrictions

China is tightening trading restrictions on domestic institutional investors as well as some offshore units as authorities fight to stem a deepening stock rout, Bloomberg News reported quoting people familiar with the matter. 

Officials this week imposed caps on some brokerages’ cross-border total return swaps with clients, limiting a channel that can be used by China-based investors to short Hong Kong stocks, the report added. At the same time, some Chinese brokers that use the channel to buy mainland shares for their offshore units were told not to reduce their positions.

Read here: China tightens some trading restrictions for domestic and offshore investors

Fed has time to study data before rate cuts: Kashkari

A resilient economy and a possibly higher neutral rate of interest means the U.S. Federal Reserve can take time, with less risk to an ongoing economic recovery, before deciding to reduce the benchmark interest rate, Minneapolis Federal Reserve president Neel Kashkari wrote in an essay published Monday, Reuters reported.

Japan’s real wages, household spending fall

Japan’s real wages fell for a 21st straight month though at a slower pace, while household spending dropped for a tenth consecutive month. Inflation-adjusted real wages, a barometer of consumer purchasing power, fell 1.9% in December.

Japanese household spending in December fell 2.5% from a year earlier, government data showed on Tuesday.

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Dollar at 11-week high, bond yields spike

The US dollar climbed to its highest in almost three months, while Treasury yields spiked amid strong economic data and on growing expectations that the Federal Reserve is unlikely to cut interest rates aggressively this year.

The dollar index, which measures the U.S. currency against six rivals, was at 104.42, having touched 104.60 on Monday, its highest since November 14. The index is up 3% for the year so far after dropping 2% in 2023.

The US 10-year Treasury yields rose 14 basis points to 4.16% and the yields on two-year notes approached 4.5%.

(With inputs from Reuters)

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Published: 06 Feb 2024, 07:19 AM IST