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PremiumSensex Today Live Updates : European stocks steadied on Thursday as bonds regained some ground after a sell-off the day before on bets that global interest rates would stay higher for longer due to stickier inflation readings.
The dollar softened slightly as U.S. Treasury yields slipped back while commodity prices came under pressure on renewed expectations that the Federal Reserve is unlikely to cut rates any time soon.
The latest slowdown in the global risk rally has come on the back of data pointing to lingering inflationary pressures across major economies and a flood of bond sales lifting yields.
"There are two forces colliding here," said Ben Laidler, global markets strategist at eToro.
"It's being driven by the very heavy government bond issuance and markets that are still afraid of interest rates staying higher for longer and sticky inflation."
But for now, bond markets have steadied, which has supported equity markets in Europe.
The pan-European STOXX 600 rose just under 0.2%, having fallen over 1% on Wednesday. Germany's DAX, France's CAC and Britain's FTSE 100 eked out gains of 0.1%-0.2%.
Wall Street futures were soft, with S&P and Nasdaq eminis both shedding around 0.5%.
Germany's 10-year bund yield, which earlier touched a six-month high at 2.687%, was down 2 basis points to 2.664%. Bond yields move inversely to prices.
Data on Wednesday showed German inflation rose slightly more than forecast to 2.8% in May, ahead of the closely watched wider euro zone bloc's reading on Friday.
A higher-than-forecast inflation reading on Friday is unlikely to derail the European Central Bank from lowering borrowing costs next week but could have implications for future policy moves.
"The stickiness of services inflation remains a source of concern," eToro's Laidler said.
"It's not enough to stop the ECB from cutting next week but it does call into question how quickly and how far they go after that."
Markets are pricing in around 60 basis points of easing from the ECB this year, implying two quarter-point rate cuts and around a 40% chance of a third.
The main highlight of the week for markets, however, is Friday's U.S. core personal consumption expenditures (PCE) price index report - the Fed's preferred measure of inflation. Expectations are for it to hold steady on a monthly basis.
"If we look at data that has led us to this point, I have a hard time believing a softer-than-expected PCE report will arrive on Friday," said Matt Simpson, senior market analyst at City Index.
"From this perspective, PCE not ticking higher could be a welcome surprise. But should it heat up further from sticky levels, appetite for risk will be taken out the back for a good kicking."
U.S. Treasury yields dipped on Thursday having risen over 8 bps the day before, in part due to a weak debt auction. The benchmark 10-year yield was last at 4.5898%, while the two-year yield stood at 4.9601%.
Japanese government bond (JGB) yields notched fresh multi-year peaks on growing expectations that further rate hikes from the Bank of Japan could be imminent.
The 10-year JGB yield peaked at 1.1% in early Asia trade, its highest since July 2011.
In the currency market, the dollar softened, having earlier knocked the euro to an over two-week low of $1.07885.
The yen last stood at 157.06 per dollar, having slid to a four-week low of 157.715 in the previous session.
The dollar index, which measures the currency against six others including the euro and yen, was down 0.1%, after a 0.5% jump the day before.
Oil prices lost ground on worries over weak U.S. gasoline demand and higher-for-longer interest rates.
Brent fell 0.4% $83.24 per barrel while U.S. crude eased a similar amount to $78.92 a barrel. Spot gold similarly fell 0.2% to $2,333.28 an ounce.
Sensex Today Live : Nifty weekly contract has highest open interest at 23,500 for Calls and 22,000 for Puts while monthly contracts have highest open interest at 23,500 for Calls and 22,000 for Puts. Highest new OI addition was seen at 22,800 for Calls and 22,300 for Puts in weekly and at 22,800 for Calls and 22,300 for Puts in monthly contracts. FIIs decreased their future index long position holdings by -20.33%, decreased future index shorts by -4.74% and in index options by 9.91% decreased in Call longs, 18.43% decreased in Call short, 19.80% decreased in Put longs and 34.91% decreased in Put shorts.
--Anand James, Chief Market Strategist, Geojit Financial Services,
Sensex Today Live : "Our downside threshold level was breached yesterday underscoring the bearish momentum. Ideally this move has room for downside till 22,470, but we will watch out for recovery swings, should we pause near 22,650 or if we manage to push above 22,800 right away."
--Anand James, Chief Market Strategist, Geojit Financial Services,
Sensex Today Live : "A question which most investors/traders are asking now is, what should be the best investment/trading strategy in this volatile time. There is no simple answer to this question. One strategy is to remain calm, watch the event and take a decision after the election outcome. Put options are very expensive now and trying to hedge through put options will have a high price.
There will be heightened volatility on 3rd and 4th June. If the exit polls indicate a clear trend, which is favourable from the market perspective, buying decisions will be easy even after a spike in prices.
A major concern is the spike in US bond yields pushing the 10-year yield above 4.6%. This can trigger continuation of the FII selling which will depress the prices of largecaps further.
The highly valued mid and smallcaps remaining resilient and the fairly valued largecaps turning weak is a short-term aberration. Long-term investors can profit from this temporary aberration."
--Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services
Sensex Today Live : Indian benchmark indices were down at pre-open on Thursday, following weak signals from global markets.
Sensex was down 137.02 points, or 0.18%, at 74,365.88 and Nifty was down 87.25 points, or 0.38%, at 22,617.45 during pre-open.
Sensex Today Live : Tata Steel, Cummins, Lemon Tree Hotels, Heritage Foods, SJVN, RR Kabel, are a few stocks likely to be in focus on Thursday, May 30.
Sensex Today Live : Following global market losses, the Indian stock market indices, Sensex and Nifty 50, are projected to start on a lower note on Thursday. The Gift Nifty trends also suggest a negative opening for the Indian benchmark index, trading around the 22,660 level, nearly 70 points below the previous close of Nifty futures.
On Wednesday, the domestic equity indices marked their fourth consecutive session of losses, with the Nifty 50 maintaining above the 22,700 level. The Sensex fell by 667.55 points (0.89%) to close at 74,502.90, while the Nifty 50 dropped by 183.45 points (0.8%) to settle at 22,704.70.
The Nifty 50 formed a bearish candlestick pattern on the daily charts, indicating a potential downtrend. Subash Gangadharan, Senior Technical/Derivative Analyst at HDFC Securities, noted that the uptrend has weakened with Wednesday’s negative closing leading to the Nifty closing below the previous swing high of 22,795. Despite this, the Nifty continues to hold above the 20 and 50-day Simple Moving Average (SMA). The 14-day Relative Strength Index (RSI) at 56.57 is falling and has moved below its 9-day Exponential Moving Average (EMA), indicating weakening momentum. (Read the full story here.)
Sensex Today Live : Amid weak global market cues, the domestic equity market benchmark indices, Sensex and Nifty 50, are anticipated to start lower on Thursday. Asian markets saw a downturn, and US stocks closed in the red, influenced by higher Treasury yields and concerns about potential US Federal Reserve interest rate cuts.
On Wednesday, the Indian stock market benchmark indices ended notably lower, marking their fourth consecutive session of losses. The Sensex fell by 667.55 points (0.89%) to close at 74,502.90, while the Nifty 50 dropped by 183.45 points (0.8%) to settle at 22,704.70.
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd, noted that although the intensity of FII selling has lessened, caution is rising as a significant event outcome approaches, leading to profit booking. He advised traders to remain cautious due to expected volatility in upcoming sessions and not to be overly aggressive. The weak global cues are adding to the market’s nervousness, suggesting that the markets are likely to stay weak in the near future. (Read the full story here.)
Sensex Today Live : Indian markets were likely to open on a negative note, tracking US and Asian peers down, as a higher Treasury yields in the US and expectations of higher-for-longer interest rates weighed on market sentiment across the globe.
India's Gift Nifty futures indicated this wider muted sentiment; they were trading at 22,656, down from Wednesday's Nifty 50 close of 22,704.
A global equities gauge fell on Wednesday while U.S. Treasury yields rose after a third weak government debt auction in a row, and investors worried about higher interest rates while they waited for a key U.S. inflation report due on Friday.
The dollar index gained as it was bolstered by higher bond yields across the board and the greenback rose to a four-week high against the Japanese yen.
With Wall Street indexes losing ground after European stocks closed lower, MSCI's gauge of stocks in 47 countries fell 8.58 points, or 1.08%, to 783.87. The last time it had a bigger one-day percentage drop was April 30.
"On the equity market side we're getting close to month-end" so people may be taking profit, said Charlie Ripley, senior investment strategist for Alliance Investment Management, also citing a weak 7-year U.S. Treasuries note auction following similar results for Tuesday's 2-year and 5-year note auctions.
"With the seven-year auction selling notes at a higher rate than the pre-auction level, that's three auctions in a row where yields came in higher. Higher rates are less attractive from an equity valuation standpoint," said Ripley.
He noted that investors focused on the Treasury auctions as they were waiting for key economic data releases.
The U.S. Core Personal Consumption Expenditures (PCE) price index report - the Federal Reserve's preferred measure of inflation - is not due out until Friday and the May labor report is not due until a week later.
In late afternoon, a U.S. Federal Reserve survey known as the Beige Book showed economic activity continued to expand from early April through mid-May but firms grew more downbeat about the future amid weakening consumer demand while inflation continued to increase at a modest pace.
The Dow Jones Industrial Average closed down 411.32 points, or 1.06%, at 38,441.54, the S&P 500 finished off 39.09 points, or 0.74%, at 5,266.95 and the Nasdaq Composite fell 99.30 points, or 0.58%, to close at 16,920.58.
Earlier Europe's STOXX 600 index closed down 1.08% for its biggest one-day percentage decline since mid-April, as bond yields rose on worries interest rates will stay elevated for longer globally with fresh evidence of persistently high inflation in the region's biggest economy exacerbating concerns.
The U.S. 10-year Treasury yield hit a four-week high and was last up 7.2 basis points at 4.614%. The 2-year note yield, which typically moves in step with interest rate expectations, rose 1.8 basis points to 4.9747%.
A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, narrowed to negative 36.3 basis points.
The seven-year yield rose to 4.64% from 4.56%. An auction on Wednesday of $44 billion in U.S. seven-year debt resulted in a high yield of 4.65%, above the expected rate. This raised concerns about demand for government debt after lackluster auctions of U.S. two-year and five-year notes on Tuesday.
In currencies, the dollar index, which measures the greenback against a basket of currencies, gained 0.44% to 105.12, with the euro down 0.51% at $1.08.
Against the Japanese yen, the dollar strengthened 0.34% to 157.69, after hitting its highest level since May 1.
Oil prices eased on worries over weak U.S. gasoline demand and concerns the Fed will keep interest rates higher for longer.
U.S. crude settled down 0.75% at $79.23 a barrel and Brent fell 0.74% at $83.60 per barrel.
Spot gold lost 1.01% to $2,337.07 an ounce as a stronger dollar, higher bond yields and hawkish comments from a Fed official on Tuesday still weighed on sentiment.
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