FX.co ★ Sensex, Nifty Seen Opening Up As Soft US Data Lifts Rate Cut Bets

Indian markets are poised for a higher open on Wednesday, buoyed by a record-breaking session on Wall Street overnight. Positive investor sentiment is supported by weaker-than-expected U.S. retail sales data, which bolstered expectations of imminent rate cuts by the Federal Reserve.

Attention is now shifting to the upcoming Union Budget 2024, slated for presentation in July. Expectations are high that the Budget will focus on tax structure reforms and tax reductions.

On Tuesday, the benchmark indices Sensex and Nifty both climbed approximately 0.4%, as traders returned to the market after an extended holiday weekend. Meanwhile, the rupee appreciated by 13 paise, closing at 83.42 against the dollar, driven by new foreign fund inflows.

In the global markets, Asian trading presented a mixed picture this morning. Gold prices remained stable, the dollar continued to experience losses, and oil prices hovered near a seven-week high due to escalating geopolitical tensions in Europe and the Middle East.

U.S. markets closed higher on Tuesday as investors digested a mix of economic data and comments from several Federal Reserve officials, who emphasized the need for more evidence of cooling inflation before considering rate cuts. Notably, industrial production and manufacturing output for May exceeded expectations, while retail sales figures showed minimal growth. Additionally, April’s retail sales data saw significant downward revisions, pushing Treasury yields lower and increasing speculation on two potential interest rate hikes this year.

The S&P 500 edged up by 0.3%, and the tech-centric Nasdaq Composite hit new record closing highs with a marginal gain, while the Dow increased by 0.2%.

In Europe, stocks continued to rally for a second consecutive day on Tuesday as bond yields fell in response to easing political concerns in France. The pan-European STOXX 600 index climbed 0.7%, with Germany’s DAX rising 0.4%, France’s CAC 40 increasing by 0.8%, and the U.K.’s FTSE 100 advancing by 0.6%.