The US has launched fresh attacks on Iran, targeting military installations as well as two Iranian oil tankers. Iran, meanwhile, has attacked US bases in the Gulf. US President Donald Trump said Washington was no longer trying to pursue negotiations. Iran had earlier indicated its willingness to revive the previous agreement.
As the war escalates, crude oil prices have moved closer to $97 a barrel. Markets now expect central banks in Europe to raise interest rates next week and the US Federal Reserve to follow the week after. The expectation of higher rates is pushing bond prices lower and yields higher, putting further pressure on equities.
European and US markets fell on Tuesday, while Asian markets were trading lower this morning. Indian markets are also likely to remain under pressure, tracking global cues.
Gift Nifty, traded at GIFT City, closed at 24,047.50 on Tuesday night and slipped to 24,014 this morning, signalling a weak start for Indian equities.
US markets came under renewed pressure on Tuesday as bond-market volatility, rising crude prices and the intensifying war in Iran weighed on sentiment.
Bond prices are falling across the US, Japan and Europe, pushing yields to levels not seen since before the 2008 global financial crisis. Markets are increasingly pricing in interest-rate hikes. The yield on the US 30-year Treasury rose to 5.28%, while the 10-year yield reached 4.8%.
The renewed conflict with Iran remains limited for now, but the situation could widen at any time. Brent crude rose above $95 a barrel during Tuesday's session before easing slightly by the close.
The Dow Jones Industrial Average fell 419.02 points, or 0.79%, to close at 52,766.88. The S&P 500 declined 54.67 points, or 0.71%, to 7,631.47, while the Nasdaq Composite dropped 271.12 points, or 1.03%, to 26,099.77.
All stocks in the Magnificent Seven except Apple and Meta declined. Apple also saw a leadership transition, with Tim Cook becoming executive chairman and John Ternus taking over as CEO.
US stock futures were marginally lower this morning. Dow futures were down 20 points, or 0.04%, while S&P 500 futures fell four points, or 0.05%. Nasdaq futures were down 10 points, or 0.03%.
In the New York ADR market, HDFC Bank, which had gained 1.10% during regular trading on Tuesday, fell 0.87% in after-hours trading to close at $22.75.
ICICI Bank, which had declined 0.56% during regular trading, was unchanged in after-hours trading at $30.19. Infosys, down 0.50% during regular trading, was unchanged at $12.00. Wipro, which fell 1.08% during regular trading, was unchanged in after-hours trading at $1.83.
European equity markets extended their decline on Tuesday. The war, rising crude prices and fears of higher interest rates remained the key concerns.
German bond yields climbed to a 15-year high, while French bond yields reached their highest level since 2008. With retail inflation remaining above 3%, markets expect the European Central Bank to raise interest rates by 0.25 percentage points next week.
Asian markets were sharply lower this morning. Japan's Nikkei was down 2.7%, while Australia's market fell 1.4%. South Korea's KOSPI declined 2.4%.
Hong Kong's Hang Seng was down 0.60%, Taiwan's benchmark index fell 1.1% and Shanghai declined 0.70%.
Positive economic indicators, including GDP growth and a stronger rupee, were not enough to lift Indian equities. Rising crude prices and concerns over higher interest rates kept investors cautious.
The closing auction session (CAS) helped reduce losses, masking the weakness in the benchmark indices to some extent. Before CAS, the Sensex was down 232 points, the Nifty 99.85 points and Bank Nifty 760.80 points.
The Nifty managed to remain above the 24,000 mark after the closing auction. Chartists say a break below 24,000 could take the index towards 23,800.
Prime Minister Narendra Modi's appeal to people to avoid or reduce foreign travel and gold purchases also added to market concerns. It was the second such appeal in four months.
Foreign investors turned net buyers on Tuesday, making net purchases worth ₹1,143.38 crore in the cash market. Domestic funds were also net buyers, purchasing shares worth ₹1,846.94 crore.
The Sensex fell 12.99 points, or 0.02%, to close at 76,944.28. The Nifty declined 24.60 points, or 0.10%, to 24,055.80. Bank Nifty fell 615.35 points, or 1.06%, to 57,409.60.
The Nifty Midcap 100 declined 890.25 points, or 1.39%, to 63,334.50, while the Nifty Smallcap 100 fell 45.40 points, or 0.23%, to 19,886.25.
Market breadth remained weak. On the BSE, 1,700 stocks advanced while 2,645 declined. On the NSE, 1,336 stocks gained and 2,180 fell.
Sugar stocks fell as much as 6.5% after the stock limit for sugar was reduced again.
Reliance Consumer Products has entered the ice cream market with a brand called Bombay Creamery.
Tata Motors said it has received all necessary approvals to acquire Italian commercial vehicle maker Iveco.
The probability of the US Federal Reserve raising interest rates on September 16 has risen to around 70%, putting renewed pressure on gold prices.
Gold fell $119.40 on Tuesday to close at $4,329.70 an ounce. Prices continued to decline this morning, touching $4,290. Analysts expect gold to potentially fall towards $4,200-$4,100.
In Keralam, 22-carat gold prices fell ₹1,240 per sovereign on Tuesday to ₹1,13,720.
Silver closed at $64.07 an ounce on Tuesday and edged higher this morning.
Platinum was at $1,726, palladium at $1,286 and rhodium at $8,725.
International rubber prices declined again, while prices in Keralam remained unchanged.
In Bangkok, RSS 1 fell to $280.20 per quintal and RSS 3 to $276.70. In Keralam, the price remained at ₹27,500 per quintal.
The Association of Natural Rubber Producing Countries expects global rubber production at 15.28 million tonnes in 2026, against consumption of 15.36 million tonnes.
Industrial metals, except aluminium and zinc, declined on Tuesday.
Copper fell 0.96% to $14,395.35 a tonne. Aluminium gained 0.62% to $3,260.30. Nickel, lead and tin declined, while zinc advanced.
Cocoa prices fell 3.87% to close at $6,509 a tonne, after rising sharply the previous day.
The decline in expected cocoa availability during the 2026-27 season is supporting prices. Production is estimated to fall by 20% in Ivory Coast and 13% in Ghana.
Arabica coffee fell 1.01% to $3.08 a pound.
Palm oil surged 7.45% to 4,973 Malaysian ringgit a tonne.
The US Dollar Index rose on Tuesday to close at 99.68 and climbed further to 99.73 this morning.
The euro fell to $1.1581 and the pound to $1.3504. The Japanese yen weakened to 160.30 per dollar, while the Chinese yuan moved to 6.72 per dollar.
The yield on US 10-year Treasury bonds rose to 4.808%, reflecting expectations of higher interest rates.
The rupee strengthened on Tuesday, with the dollar falling 21 paise to close at ₹94.95.
In the overseas forward market, the dollar was trading at ₹95.03 this morning.
The Chinese yuan fell to ₹14.13, while the euro stood at ₹109.99.
Crude oil prices are moving towards $97 a barrel.
Brent crude surged $4.16 on Tuesday to close at $94.65 a barrel and rose further this morning to $96.75. WTI crude was trading at $91.87.
Cryptocurrencies continued to trade lower. Bitcoin remained below $77,350, while Ether fell below $2,420 and Solana below $100.
Sensex: 76,944.28 (-0.02%)
Nifty 50: 24,055.80 (-0.10%)
Bank Nifty: 57,409.60 (-1.06%)
Midcap 100: 63,334.50 (-1.39%)
Smallcap 100: 19,886.25 (-0.23%)
Dow Jones: 52,766.88 (-0.79%)
S&P 500: 7,631.47 (-0.71%)
Nasdaq: 26,099.74 (-1.03%)
Dollar: ₹94.95 (-₹0.21)
Gold (ounce): $4,329.70 (-$119.40)
Gold (sovereign): ₹1,13,720 (-₹1,240)
Brent crude: $94.65 (+$4.16)