Indian shares may succumb to heavy sell-off on Monday after the Nasdaq Composite slipped into a technical correction on Friday amid concerns that the U.S. Federal Reserve has made a serious error in keeping rates too high for too long and could lead the U.S. economy into a recession.
On the positive side, media reports suggest that the Finance Ministry is considering providing relief to homeowners by finetuning the new long-term capital gains (LTCG) provisions announced in this year’s Budget that seek to remove indexation benefits for unlisted assets, including property and gold.
The release of HSBC PMI for the services sector, upcoming RBI interest rate decision, FII trading activity and the last batch of Q1 earnings announcements may influence trading sentiment as the week progresses.
Asian markets were deep in the red this morning, with Japan’s Nikkei and South Korea’s Kospi average falling over 5 percent each.
The Japanese yen surged past 145 per dollar for the first time since January and bonds rallied, with two-year Treasury yields falling 11 basis points on expectations of deeper interest-rate cuts by the Fed.
Gold eased slightly due to profit-taking activities while oil prices hovered near eight-month lows despite escalating Middle East tensions.
U.S. stocks tumbled on Friday as a weak July jobs report as well as disappointing earnings from the likes of Intel and Amazon ignited worries that the economy could be falling into a recession under the weight of the Federal Reserve’s policy of high interest rates.
The 10-year Treasury yield fell to its lowest since December as data showed nonfarm payrolls grew by just 114,000 last month, down from a downwardly revised 179,000 jobs in June and below the 185,000 expected by economists. The unemployment rate increased to 4.3 percent, the highest since October 2021.
The tech-heavy Nasdaq Composite plunged 2.4 percent to its lowest closing level in two months, the S&P 500 shed 1.8 percent to hit a nearly two-month closing low and the Dow dipped 1.5 percent to snap a four-week winning streak.
European stocks fell on Friday to extend losses from the previous session as worries about weakening U.S. growth exacerbated a rout in tech shares.
The pan-European STOXX 600 plummeted 2.7 percent, hitting an over three-month low.
The German DAX lost 2.3 percent, France’s CAC 40 gave up 1.6 percent and the U.K.’s FTSE 100 declined 1.3 percent.
Market Analysis
Sensex, Nifty May See Gap-down Opening As US Recession Fears Mount
2024-08-05 02:35:45
