Nifty Stock Market Surge 5 Overnight Shifts Thanks to a Dovish US Federal Reserve – Gift Nifty Insights

As a result of the US Federal Reserve members’ dovish Nifty comments and diminished expectations of a future hike in interest rates by the central bank, the Asian markets surged overnight while the American stock market closed in the red.

The Topix index jumped 1.9%, while the Nikkei 225 rose 2% in Japan.

The Indian stock market indices, Sensex and Nifty 50, Nifty are anticipated to open on a high note on Tuesday despite conflicting signals from international partners.

While Asian markets exhibited strength, the American stock market finished in the negative overnight as a result of dovish remarks from US Federal Reserve officials and diminished hopes that the central bank will raise interest rates further.

The Israel-Hamas war and its effects on Middle Eastern financial markets are being actively watched by investors.

Due to investor trepidation over the ongoing Israel-Palestine conflict, local equities indices suffered a hefty loss on Monday, snapping a two-day gaining streak. Nifty  ended the day at 19,512.35, down 141 points or 0.72%, while the Sensex ended the day at 65,512.39, down 483 points or 0.73%.

According to Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, “in the near term, we anticipate the market to remain volatile amid geopolitical tensions and currency fluctuations ahead of the CPI data to be released by the US, Europe, and China later this week.””

Tuesday’s Asian stock markets displayed momentum following a successful Wall Street night.

• The Nikkei 225 index of Japan grew by 2%, and the Topix index jumped by 1.9%. The Kosdaq increased by 0.71% and the Kospi increased by 1.64% in South Korea.

• The Hang Seng Index in Hong Kong finished at 17,517.4, while the HSI was trading at 17,658.

• S&P/ASX 200 in Australia saw a 1.1% rise.

• As of the previous closing at 19,522, Gift Nifty was trading at about 19,620 levels, indicating a bullish start for Indian benchmark indices.

Wall Street

• The American stock market recovered on Monday from the earlier dip amid the dovish remarks from American Federal Reserve officials.=

• The S&P 500 grew by 27.16 points or 0.63% to close at 4,335.66 while the Dow Jones Industrial Average increased by 197.07 points or 0.59% to reach 33,604.65. In addition, the Nasdaq Composite rose 52.90 points, or 0.39%, to close at 13,484.24.

• United Airlines, Delta Airlines, and American Airlines all ended the day with a more than 4% decline in their respective stock prices.

• The S&P 500 Aerospace and Defense Index increased by 5.6% as defense stock prices rose. L3Harris Technologies experienced a huge increase of 9.96%, and Northrop Grumman increased by 11.4%.

• The American bond market closed on Monday.

Negative Fed

According to a report by Reuters, remarks by two American Federal Reserve officials overnight turned projections for interest rates on their heads, as recent volatility in the bond market may have eliminated the necessity for additional rate increases.

According to Lori Logan, president of the Dallas Federal Reserve, “If long-term interest rates remain high due to elevated premium for longer maturities, the Fed may not need to increase the fed funds rate” – a marked departure from her earlier, hawkish remarks.

In light of the recent increase in inflation, Fed Vice Chair Philip Jefferson stated that the government may need to “proceed cautiously.” According to futures-implied pricing, the probability of another Fed rate hike this year dropped from 40% just last week to about 26% on Monday.

Country Garden Issues a Warning About Potential Debt Obligation Failure

China’s Country Garden Holdings, the largest real estate developer in the nation, has reportedly said that it may not be able to fulfill all of its outstanding debt commitments, whether due or within the applicable grace periods.

The company acknowledged in a notice posted on the website of the Hong Kong Stock Exchange that it “expects that it may not be able to fulfill all of its outstanding debt obligations, whether due or within the relevant grace periods, including payments falling due in the United States, but not limited to them.”

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Gains in Treasuries and a softer dollar

In response to expectations of lower interest rates and a decline in Treasury yields, investors on Tuesday saw a little softening in the Federal Reserve’s position.

In Tokyo on Tuesday, benchmark 10-year Treasuries experienced their fastest climb in more than a month, Nifty as a result of a mix of softer remarks from the Federal Reserve in response to the recent violence and demand for safe assets.

The 10-year yield dropped 12.5 basis points to 4.66% after starting the day 15 basis points lower. As short-term rate expectations were lowered, the 2-year yield also decreased by more than 13 basis points, hitting a one-month low of 4.926%.