Indian Shares Seen Little Changed At Open After Fed Rate Hike

(RTTNews) - Indian shares are seen opening little changed on Thursday as investors weigh a Federal Reserve's hawkish rate hike against falling oil prices.

As Fed officials shift focus to broader and more persistent inflation pressures, traders have increased bets the Fed will keep raising rates, with at least one more increase predicted this year.

Investor attention is now heavily focused on upcoming U.S. inflation and labor-market data ahead of the October meeting.

Benchmark indexes Sensex and Nifty ended Wednesday's session around half a percent higher as oil prices and bond yields pulled back from recent highs.

The rupee settled 7 paise lower at 95.95 against the dollar, tracking a stronger dollar in international markets and amid foreign fund outflows.

Foreign institutional investors (FIIs) remained net sellers of Indian equities and net sold shares worth Rs 2,032.61 crore on Wednesday, while domestic institutional investors (DIIs) net bought shares to the extent of Rs 3,908.23 crore, according to provisional exchange data.

Asian markets were modestly higher this morning. The U.S. dollar index held on to Wednesday's gains while Treasuries pared losses, with the yield on two-year U.S. note falling two basis points to 4.72 percent after climbing to the highest since 2024.

Brent crude futures slipped below $106 a barrel in early Asian trade, extending losses from the previous session as concerns over Middle East supply eased.

Both Brent and WTI contracts fell about $3 a barrel on Wednesday after reports emerged that Saudi Arabia is offering more crude oil to Asian refiners through ship-to-ship transfer off Oman's Sohar port.

Gold traded higher at $4,292 an ounce after touching a six-week low.

U.S. stocks fell overnight, with the all three major indexes closing lower for the seventh time in the past eight sessions, after the Fed delivered its first interest-rate hike since July 2023 and suggested rates may need to go still higher to get inflation under control.

According to forecasts published after the meeting, Fed officials expect the federal funds rate to end this year at 4.1 percent, up from the current range of 3.75 percent to 4 percent following the latest 25-bps increase.

According to data from CME Group, investors currently bet on a 38 percent probability the Fed could hike the federal funds rate to a range of 4.25 percent to 4.40 percent by the end of the year.

At his press conference, Fed Kevin Warsh struck a decidedly hawkish tone, saying that inflation is too high and has been too long.

Pointing to solid hiring trends, corporate profits and investments by businesses, Warsh said the economy has strengthened since policymakers last met in June.

The Dow fell 1.2 percent to hit a three-month closing low and the S&P 500 declined half a percent to reach its lowest closing level in well over a month, while the tech-heavy Nasdaq Composite finished marginally lower.

European stocks recovered from three-month lows on Wednesday as a rally in oil prices paused following reports that Saudi Arabia was offering additional crude cargoes via Oman.

The pan-European STOXX 600 gained half a percent. The German DAX rose half a percent, France's CAC 40 added 0.6 percent and the U.K.'s FTSE 100 inched up 0.3 percent.