Sensex, Nifty May See Cautious Start As Yields Climb On Strong US Jobs Data

Indian shares are seen opening flat to slightly lower on Monday, tracking mixed cues from other Asian markets as Treasury yields skewed higher on concerns that continued strength in the U.S. labor market could lead the Federal Reserve to postpone cutting interest rates.

U.S. stock futures were little changed after Wall Street notched a sixth straight weekly gain.

Energy stocks could be in focus today as crude prices extended Friday’s rally following calls from Saudi Arabia and Russia for OPEC+ members to joint output cuts. U.S. efforts to replenish strategic reserves also boosted oil prices.

The latest readings on retail inflation, industrial output, trade balance, foreign exchange reserves, bank loan growth and deposit growth may sway domestic markets as the week progresses.

Asian stocks traded mixed this morning, with Chinese and Hong Kong markets falling sharply on signs that China’s deflation situation is deepening.

China’s consumer prices fell the fastest in three years in November and producer price inflation fell further into negative territory, underscoring the challenges facing the world’s second-largest economy.

Japan’s Nikkei was up 1.7 percent as the yen ticked lower on reports that BoJ Governor Kazuo Ueda’s comments last week were taken out of context.

Gold edged lower in Asian trade as the dollar inched higher and Treasury yields extended gains from Friday ahead of key U.S. inflation data and a slew of central bank meetings due this week, including the Federal Reserve’s final policy meeting of the year.

U.S. stocks hit a new high for 2023 on Friday as solid economic data fueled hopes for a soft landing of the economy.

While November’s nonfarm payrolls report showed stronger-than-expected job growth and an unexpected drop in the unemployment rate to 3.7 percent, a University of Michigan report showed a pullback in consumers’ inflation expectations in December.

The Dow and the S&P 500 both edged up around 0.4 percent, while the tech-heavy Nasdaq Composite gained half a percent.

European stocks advanced on Friday to briefly hit their highest level since February 2022 on growing bets that central banks have finished raising rates and will start cutting rates early next year.

The pan European STOXX 600 rose 0.7 percent. The German DAX surged 0.8 percent, France’s CAC 40 rallied 1.3 percent and the U.K.’s FTSE 100 added half a percent.