FX.co ★ Sensex, Nifty Set To Follow Global Peers Higher As US Inflation Cools

Indian equities appear poised to mirror the upward trajectory of global markets on Thursday, driven by investor optimism in response to lower-than-forecast U.S. core inflation figures for December and robust earnings from key American banks.

Despite this favorable outlook, potential market volatility looms due to rising oil prices, indications of decelerating corporate earnings growth, ongoing foreign fund withdrawals, and the unpredictability surrounding President-elect Trump’s proposed tariff measures.

On Wednesday, India's benchmark indices, the Sensex and the Nifty, posted slight gains, while the rupee strengthened by 28 paise, closing at 86.36 against the U.S. dollar following a five-day losing streak. This gain represents the largest single-day advance since June 3, 2024, for the Indian currency.

Asian markets opened higher today, following Wall Street, as the softer U.S. producer price and consumer inflation data sustained hopes for potential Federal Reserve rate cuts this year.

Treasury securities and the dollar remained stable amid comments from several Federal Reserve officials expressing optimism about the continuing decline in U.S. inflation.

Gold maintained its position near $2,700 per ounce, while oil prices exhibited mixed movements after a more than 2 percent increase on Wednesday. This rise was underpinned by a significant reduction in U.S. crude inventories and the possibility of supply disruptions stemming from new U.S. sanctions on Russia.

U.S. equities surged in the previous session, with the dollar dipping and bond yields falling, as investors celebrated a subdued inflation report alongside positive earnings from financial powerhouses such as JPMorgan Chase, BlackRock, Goldman Sachs, and Citigroup.

Economic data revealed that the Consumer Price Index (CPI) rose in line with expectations, at an annual rate of 2.9 percent in December, up from 2.7 percent in November—aligning with market predictions.

Unexpectedly, the annual growth rate of core consumer prices decelerated to 3.2 percent from 3.3 percent, increasing the likelihood that the Federal Reserve might further reduce interest rates.

The technology-centric Nasdaq Composite surged by 2.5 percent, the Dow Jones Industrial Average climbed 1.7 percent, and the S&P 500 advanced by 1.8 percent, each marking their largest daily gains in over two months.

European stocks experienced a significant rise on Wednesday, buoyed by encouraging consumer price inflation data from both the United Kingdom and the United States.

The pan-European STOXX 600 climbed 1.3 percent, breaking a three-day losing streak and recording its best performance since August 2024.

Germany's DAX index increased by 1.5 percent, France's CAC 40 inched up by 0.7 percent, and the U.K.'s FTSE 100 rose 1.2 percent.