Indian Shares Likely To Drift Lower As Oil And Bond Yields Rise

(RTTNews) - Indian shares are seen opening lower on Thursday after oil prices rose sharply overnight and U.S. bond yields jumped to their highest levels in nearly two decades, raising the possibility of another interest-rate hike from the Federal Reserve this year.

Elsewhere, Japanese 10-year government bond yield rose to a 30-year high as a weaker yen and surging U.S. yields added to inflationary pressures.

Investors also await the outcome of a crucial U.S.-China summit later today for direction. After an unscheduled meeting with Chinese Vice Premier He Lifeng, U.S. Treasury Secretary Scott Bessent announced the extension of Busan trade truce from November 10 to January 10, easing the immediate risk of a renewed escalation in tariffs between the world's two largest economies.

Benchmark indexes Sensex and Nifty rose around half a percent each on Wednesday while the rupee fell 0.1 percent to close at 95.74 per dollar on expectations of further Federal Reserve rate hikes this year.

Citing strong GDP growth, shrinking current account deficit and more favorable capital account, RBI Deputy Governor Poonam Gupta noted in her address at SBI's annual banking and economic conclave that there is a fair case for the rupee to not just stabilize but perhaps even appreciate from the current levels.

Foreign institutional investors (FIIs) turned net buyers in Indian equities on Wednesday and bought shares worth Rs 1,617.45 crore, while domestic institutional investors (DIIs) net bought shares to the extent of Rs 2,341.46 crore, according to provisional exchange data.

Asian markets were mixed this morning, with Japan's Nikkei rising sharply as Tokyo markets reopened after a three-day holiday.

The dollar index clung to a two-month high while the U.S. 10-year Treasury yield was little changed after reaching the highest since 2007 overnight.

Gold was subdued at $4,285 an ounce due to inflation and rate-hike fears. Brent crude prices fell toward $102 a barrel, paring gains from the previous session amid heightened uncertainty surrounding U.S.-Iran negotiations.

U.S. stocks ended lower overnight while oil and bond yields rose, rekindling inflation and interest-rate concerns.

Oil prices jumped around 4 percent to snap a five-day losing streak after U.S. President Trump threatened to 'annihilate' Iran and Iranian President Masoud Pezeshkian condemned what he called "signs of a bullying mentality" from the U.S. and said that Iran would never surrender but believes in diplomacy.

Earlier in the day, Iran's security chief Mohsen Rezaei said the Strait of Hormuz would not be reopened while Iran's conditions are not met.

The 10-year Treasury yield jumped 0.17 percentage point to 5.13 percent, its highest level since July 2007 and marking its biggest single-day rise since May, driven by a weak Treasury auction and a surprisingly strong report showing rising private-sector business activity and price pressures.

The Dow dropped 0.7 percent, the tech-heavy Nasdaq Composite declined 1.1 percent and the S&P 500 gave up 0.8 percent.

European stocks declined on Wednesday amid concerns about fuel prices hitting record highs across Europe due to wars in Iran and Ukraine.

The pan-European STOXX 600 dropped 0.4 percent. The German DAX fell 0.7 percent, France's CAC 40 dipped 0.4 percent and the U.K.'s FTSE 100 finished marginally lower.