Indian Shares Likely To Drift Lower On Bond Market Jitters

(RTTNews) - Indian shares are seen opening lower on Wednesday after U.S. Treasury yields hit multi-year highs on growing concerns about inflation and the outlook for interest rates and economic growth.

Oil prices remain elevated above $110 a barrel, raising concerns that the U.S. Federal Reserve will raise borrowing costs later this year.

Traders also await cues from Nvidia Corp.'s earnings and guidance later in the day for additional cues on whether the long-term AI story remains intact.

Benchmark indexes Sensex and Nifty gave up early gains to end marginally lower on Tuesday despite IT stocks surging for a third consecutive session as sector valuations neared 2008 levels.

The rupee closed at a record low of 96.53 against the dollar on concerns over India's rising import bill, potential inflation and the fiscal deficit.

Foreign investors net sold shares worth Rs 2,457 crore on Tuesday while domestic institutional investors net bought shares to the extent of Rs 3,802 crore, according to provisional exchange data.

Asian markets were deep in the red this morning and the dollar held near a six-week high while gold was subdued at $4,479 an ounce.

Brent crude futures were little changed at $111 a barrel amid persisting uncertainty surrounding the Middle East conflict, which has now entered its 12th week and has effectively kept the strategic Strait of Hormuz closed to shipping traffic.

Meanwhile, NATO is not drawing up any plans for a potential mission in the Strait of Hormuz and would need a political decision to do so, U.S. Air Force General Alexus ?Grynkewich, NATO's Supreme Allied Commander for Europe, said.

Earlier, media reports suggested that the alliance may consider escorting commercial vessels through the waterway if the route remains blocked beyond early July.

Overnight, U.S. stocks fell notably as rising inflation risks and geopolitical tensions lifted the 30-year U.S. Treasury bond yield to its highest in nearly two decades and the 10-year yield to its highest level in more than a year.

Traders remained worried about a re-escalation of the Middle East conflict after President Trump claimed the United States was just an hour away from launching a fresh military strike on Iran before postponing it at the request of Gulf leaders.

Vice President JD Vance said that peace talks are making good progress, but Washington was "locked and loaded" to restart military operations if negotiations collapse.

While the tech-heavy Nasdaq Composite fell 0.8 percent, both the Dow and the S&P 500 shed around 0.7 percent.

European stocks ended mixed on Tuesday, failing to hold early gains as bond market jitters spread to equities.

The pan-European STOXX 00 gained 0.2 percent. The German DAX edged up by 0.4 percent and the U.K.'s FTSE 100 finished marginally higher while France's CAC 40 closed flat with a negative bias.