Global market update: SGX Nifty, Asia follow weak cues from Wall Street
US market saw the worst day of 2023 on Tuesday as macro data points at higher rate scenario. The markets around the globe are keenly eyeing the US fed meeting minutes for hints on further monetary policy tightening. US Stocks extended last week’s fall on fears of higher rates for longer duration. Indices witnessed biggest daily fall on Wall Street since December 15. 10-year bond yield soared 10 bps to 3.95% and US Dollar Index went above 104.
US Markets
Wall Street and world stocks had their worst day this year after purchasing managers index data showed that the U.S. services sector is roaring back to life. Not one of the 18 economists polled by Reuters expected the services PMI to bounce back above the 50.0 threshold between contraction and expansion, and the shockwaves were felt across all asset classes.
Stocks slumped, volatility and the dollar rose, the two-year Treasury yield neared November’s post-2007 peak, the implied U.S. terminal rate rose to a new high of 5.36%, and a potential 50 basis point rate hike next month is coming on traders’ radar, reported Reuters.
Dow Jones Industrial Average, Nasdaq Composite Index and S&P 500 Index were all down about 2-2.5% each. Big tech stocks took a hit in widespread decline.
Asian Market
The Asian market indices also started the day muted on weak cues from Wall Street. Nikkei is trading lower by 1.40% while Hang Seng is down by 0.79%.
SGX Nifty
SGX Nifty trading with a discount of nearly 60 points from Nifty Futures Tuesday close, indicates a gap-down start for the Indian market.
US Bond Yield
Yields on government bonds hit fresh three-month high, with the yield on the benchmark 10-year U.S. Treasury note jumped to 3.956%, from 3.842%.
Crude Oil price
Oil extended its longest run of losses this year ahead of the release of minutes from the Federal Reserve that may provide further clues on the path forward for monetary tightening in the US.
West Texas Intermediate dipped toward $76 a barrel after falling for a fifth session on Tuesday. The prospect of more aggressive interest-rate hikes from the Fed to combat inflation have kept a lid on prices, despite increasing evidence of a robust recovery in China following the end of Covid Zero, reported Bloomberg.
Geopolitical factors
President Vladimir Putin said Russia will suspend its observation of the New START treaty with the US, dealing a blow to the last accord limiting their nuclear arsenals, as he vowed to press on with his faltering invasion of Ukraine.
Russia is fighting for its “historic lands” in Ukraine and “will fulfill the tasks set step-by-step, carefully and consistently,” Putin told lawmakers and top officials in Moscow on Tuesday. Russia won’t be the first to resume testing of nuclear weapons as a result of its suspension of New START, though it will do so in response to any US test, he said.
(With inputs from agencies)
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