Indian Shares Seen Lower As Oil Prices, Yields Rise On Mideast Concerns

(RTTNews) - Indian shares look set to open on a sluggish note on Tuesday as oil prices continued to rise amid concerns over the prospects of a diplomatic resolution to reopen the Strait of Hormuz, a key route for global energy supplies, and end the U.S.-Iran conflict.

U.S. President Donald Trump said that informal talks are taking place with Iran's Revolutionary Guard, but he is "not in a hurry" to make a deal. Iran has announced reaching an understanding with Oman over the route for maritime traffic in the Strait of Hormuz.

Global bond yields are on the rise on concerns that renewed energy inflation could keep interest rates elevated.

Benchmark indexes Sensex and Nifty fell 0.4 percent and 0.3 percent, respectively on Monday, with information technology stocks pacing the decliners.

The rupee settled 19 paise lower at 95.61 against the U.S. dollar, reaching a two-week low amid the RBI's decision to pull the plug on the limited period concessional swap facility it is offering banks to attract inflows into FCNR-B deposits a month ahead of its scheduled closure.

Foreign institutional investors (FIIs) returned to selling and net sold shares worth Rs. 2,535.10 crore on Monday while domestic institutional investors (DIIs) stepped up their buying activity and net bought shares worth Rs. 5,101.46 crore, according to provisional data on exchanges.

Asian markets were mixed this morning, and the U.S. dollar hovered near multi-month lows against most major currencies, while gold slipped to 4,404 an ounce after rising for two straight sessions.

Brent crude futures climbed above $91 a barrel after settling at their highest level since late July on Monday.

Overnight, U.S. stocks ended lower as rising oil prices and bond yields amid an apparent impasse in Middle East peace talks rekindled inflation and interest-rate worries.

International oil benchmark Brent jumped above $91 a barrel, and the 30-year yield reached its highest level since 2007 as the 60-day ceasefire framework between Washinton and Tehran expired without an extension and President Trump threatened to bomb Oman if it "gets in the way" of his administration's own talks with Iran.

Trump emphasized the effectiveness of the U.S. naval blockade on Iran, declaring the Strait of Hormuz a "U.S. territory" and asserting Washinton DC has total control over the region.

However, data showed shipping traffic in the Strait of Hormuz sank to a new low over the weekend following attacks on oil tankers.

The Dow and the S&P 500 both fell around half a percent while the tech-heavy Nasdaq Composite declined 0.3 percent.

European stocks declined on Monay amid concerns over rising energy prices and government bond yields.

The pan-European STOXX 600 fell 0.2 percent. The German DAX dipped 0.4 percent, France's CAC 40 shed 0.7 percent and the U.K.'s FTSE 100 eased 0.3 percent.