Sensex, Nifty Likely To See Gap-down Opening As Trade War Worries Mount

(RTTNews) - Indian shares look set for extreme volatility on Monday as investors fret about the possible impact of U.S. tariffs on global growth.

Soon after U.S. President Donald Trump on Saturday followed through with his threats to impose stiff tariffs on Mexico, Canada and China, Mexican President Claudia Sheinbaum said her country would impose retaliatory tariffs.

Outgoing Canadian Prime Minister Justin Trudeau announced "far-reaching" retaliatory levies and China said it would "take corresponding countermeasures," instigating a trade war that's set to reshape global supply chains.

Closer home, benchmark indexes Sensex and Nifty ended flat amid high volatility on Saturday after Finance Minister Nirmala Sitharaman's Budget speech.

The Budget walked the talk on fiscal consolidation without losing sight of the much-needed consumption boost needed to stimulate economic growth.

Asian markets were deep in the red this morning, with benchmark indexes in Australia, New Zealand, South Korea, Hong Kong and Japan all falling around 2 percent.

The dollar index surged on risk-off sentiment and yields on the short-dated bonds rose amid worries over inflation risks.

Gold slipped after breaking record levels above $2800 per ounce due to economic uncertainty.

Oil prices climbed in Asian trade, with WTI crude futures rising nearly 2 percent on concerns about potential disruptions in oil supply chains, particularly from Canada and Mexico, which are significant crude suppliers to the U.S.

U.S. stocks gave up early gains to end lower on Friday after the White House confirmed that tariffs of 25 percent on Canadian and Mexican imports and an additional 10 percent tax on Chinese goods would come into force on Tuesday - fueling concerns about higher inflation and elevated interest rates.

Trump also said he expects his administration to impose tariffs related to oil and gas around Feb. 18 without specifying any more details about the plan.

Upbeat earnings news from Apple and reports showing strong U.S. consumer spending and a moderate increase in inflation in December helped limit the overall downside to some extent.

The Dow shed 0.8 percent, the S&P 500 dipped half a percent and the tech-heavy Nasdaq Composite eased 0.3 percent.

European stocks closed broadly higher on Friday despite some profit taking in late afternoon trades as investors reacted to a slew of earnings releases.

The pan European STOXX 600 rose 0.1 percent. The German DAX finished marginally higher, France's CAC 40 edged up by 0.1 percent and the U.K.'s FTSE 100 added 0.3 percent.