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The Indian stock market is anticipated to commence trading on a lower note, mirroring the prevailing weakness in global market sentiment. This downturn is largely attributed to the recent imposition of steep tariffs by former US President Donald Trump on a multitude of countries. The ripple effects of these tariffs have reverberated across Asian and US markets, prompting a cautious response from investors who are closely monitoring the evolving economic landscape. On Thursday, the Indian stock market experienced a decline amidst heightened volatility, primarily fueled by the dampening effect of US tariffs on Indian goods, further eroding investor confidence. The Sensex witnessed a decrease of 296.28 points, equivalent to 0.36%, ultimately settling at 81,185.58. Concurrently, the Nifty 50 experienced a decline of 86.70 points, or 0.35%, concluding the session at 24,768.35. This downward trend underscores the sensitivity of the Indian market to global trade policies and geopolitical developments. According to Ajit Mishra, SVP, Research, Religare Broking Ltd., the market is poised for consolidation as a new series commences, however, global developments and corporate earnings will continue to be significant drivers of market volatility. Mishra advocates for a cautious stance, recommending a stock-specific approach due to mixed trends across various sectors. He advises traders to refrain from averaging down on loss-making positions, emphasizing the need for strategic decision-making in the current market environment. The Asian markets have exhibited a general decline following the imposition of tariffs by the United States on numerous trading partners. MSCI’s broadest index of Asia-Pacific shares, excluding Japan, experienced a decrease of 0.4%, resulting in a cumulative loss of 1.5% for the week. Japan’s Nikkei 225 fell by 0.71%, while the Topix index remained relatively flat. South Korea’s Kospi index experienced a significant plunge of 3.45%, and the Kosdaq declined by 2%. Futures trading for Hong Kong’s Hang Seng index suggested a weaker opening. The Gift Nifty was trading around the 24,725 level, reflecting a discount of approximately 146 points from the Nifty futures’ previous close. This suggests a potential gap-down start for the Indian stock market indices, further emphasizing the bearish sentiment.
Wall Street concluded Thursday’s trading session on a lower note, influenced by recent corporate earnings reports and economic data releases. The Dow Jones Industrial Average experienced a drop of 330.30 points, equivalent to 0.74%, reaching 44,130.98. The S&P 500 declined by 23.51 points, or 0.37%, closing at 6,339.39. The Nasdaq Composite witnessed a slight decrease of 7.23 points, or 0.03%, settling at 21,122.45. Despite this downturn, the S&P 500 gained 2.17% for the month, the Nasdaq rose by 3.7%, and the Dow climbed by 0.08%. Several notable movements were observed among individual stocks. Microsoft’s share price rallied by 3.5%, and Meta Platforms shares surged by 11.3% to reach a record high. Conversely, Broadcom stock declined by 2.9%, and Nvidia’s stock price fell by 0.78%. In extended trade, Apple’s share price increased by 2.4%, while Amazon shares shed 2.6%. These fluctuations reflect the dynamic nature of the market and the diverse performance of different companies. Former US President Donald Trump signed an executive order imposing reciprocal tariffs ranging from 10% to 41% on American imports from various countries. These tariffs include a 35% duty on many goods from Canada, 50% for Brazil, 25% for India, 20% for Taiwan, and 39% for Switzerland. These tariffs represent a significant shift in US trade policy and have the potential to disrupt global trade flows. US inflation increased in June as tariffs boosted prices for imported goods. The personal consumption expenditures (PCE) price index rose by 0.3% last month after an upwardly revised 0.2% gain in May. Economists had anticipated a 0.3% increase, following a previously reported 0.1% rise in May. Over the 12 months through June, the PCE price index advanced by 2.6% after increasing by 2.4% in May, indicating a continued upward trend in inflation.
The number of Americans filing new applications for unemployment benefits increased marginally last week. Initial claims for state unemployment benefits rose by 1,000 to a seasonally adjusted 218,000 for the week ended July 26. Economists had projected 224,000 claims for the latest week. This indicates a slight softening in the labor market, though overall employment remains relatively strong. Apple reported $94.04 billion in revenue for its fiscal third quarter ended on June 28, representing a nearly 10% increase from the previous year and exceeding analyst expectations of $89.54 billion. The company’s earnings per share of $1.57 also surpassed expectations of $1.43 per share. Sales of iPhones were up by 13.5% to $44.58 billion, exceeding analyst expectations of $40.22 billion. Apple has forecasted revenue for the current quarter ending in September in the “mid to high single digits,” surpassing the 3.27% growth to $98.04 billion that analysts had anticipated. Apple’s share price increased by 2.4% in after-hours trading, reflecting positive investor sentiment. Japan’s manufacturing activity contracted in July after a brief period of stabilization in the previous month. The S&P Global Japan manufacturing purchasing managers’ index (PMI) fell to 48.9 in July from 50.1 in June, dropping below the 50.0 threshold that separates growth from contraction. The PMI was little changed from the flash reading of 48.8. This indicates a weakening of the manufacturing sector in Japan.
Crude oil prices were relatively unchanged after falling by more than 1% in the previous session as traders assessed the impact of the new higher US tariffs. Brent crude futures rose by 0.06% to $71.74 a barrel, while US West Texas Intermediate crude rose by 0.01% to $69.27. The oil market is sensitive to geopolitical events and trade policies, and the imposition of tariffs has added to the uncertainty surrounding future demand. The US dollar is heading towards its best week in almost three years against its major peers. The US dollar index, which measures the currency against a basket of six major peers, including the euro, yen, Swiss franc, and Canada’s loonie, pushed as high as 100.10 overnight, exceeding 100 for the first time since May 29. The yen changed hands at 150.64 per dollar, and the euro hovered around $1.1420. The strengthening dollar reflects the relative strength of the US economy and the expectation of further interest rate hikes by the Federal Reserve. The confluence of global market cues, including the impact of Trump's tariffs, US inflation data, jobless claims, corporate earnings, and manufacturing activity, paints a complex picture for the Indian stock market. Investors and traders must carefully monitor these developments to make informed decisions and navigate the evolving market landscape. The Indian market's susceptibility to global events underscores the need for a diversified investment approach and a keen awareness of macroeconomic trends. The global economy continues to face uncertainties, and the Indian stock market is not immune to these challenges.