Markets are under heavy pressure ahead of the Reserve Bank of India’s policy announcement today, with expectations that interest rates will be left unchanged. After a sharp fall in the previous session, global and Indian markets are signalling another weak start on Friday. Asian, European and US markets closed lower overnight. Gold, silver, cryptocurrencies and crude oil also saw sharp swings and steep losses.
Market participants are increasingly worried that this could mark the beginning of a prolonged and deeper correction.
The European Central Bank and the Bank of England announced their monetary policy decisions yesterday, keeping interest rates unchanged, in line with market expectations. RBI Governor Sanjay Malhotra will announce India’s policy today at 10 am.
GIFT Nifty closed at 25,639 in overnight derivatives trading at GIFT City
It slipped to 25,581 early this morning before recovering slightly to 25,618
This points to a weak opening for Indian equities today
In the US ADR market, Infosys and Wipro ended largely unchanged, though both slipped slightly in post-market trade.
Details of the India–US trade agreement are expected within the next days. There are indications that India has yielded to US pressure, including in the agriculture sector. This is seen as the reason why Prime Minister Narendra Modi highlighted job creation for youth while avoiding references to agriculture when speaking about the deal.
The US–Iran talks being held in Oman today are not expected to lead to a quick breakthrough.
After rising for three consecutive sessions, Indian equities slipped back into the red on Thursday. Global concerns and fears over the impact of artificial intelligence on IT companies weighed on sentiment.
All sectors fell except public sector banks and healthcare. Metal stocks were the worst hit.
Gold, which had crossed $5,000 an ounce, and silver, which had surged past $90, suffered sharp corrections. There are growing concerns that prices could fall further after last week’s decline. Analysts believe the steep increase in margins by bullion exchanges also contributed to the crash. The unusually high day-to-day volatility is being seen as a warning signal.
Gold fell from an intraday high of $5,024.80 to as low as $4,759.20
It closed down 3.8 percent at $4,778.50
Silver dropped nearly 20 percent from $90.51 to close at $71.04
In Kerala, 22-carat gold fell by ₹3,680 per sovereign on Thursday to ₹1,13,240. Prices are expected to fall further today.
On the Multi Commodity Exchange, 24-carat gold slipped to ₹1,48,455 per 10 grams before closing at ₹1,52,260. Silver fell to ₹2.30 lakh per kg before ending at ₹2,46,452.
Platinum is trading at $1,890, palladium at $1,585 and rhodium at $9,900 an ounce.
Swiss bank UBS believes gold could slip to $4,500 an ounce in the coming weeks, but may rally to $6,200 by June–July. Canada’s CIBC Capital Markets expects the average price this year to be around $6,000. Bloomberg Intelligence senior market strategist Mike McGlone recently warned that prices could even fall below $4,000 an ounce.
US equities fell sharply amid concerns over the technology sector and growing weakness in the labour market.
Layoffs and unemployment benefit claims rose more than expected
The number of job openings declined sharply
Alphabet’s results were satisfactory, but rising investment in artificial intelligence unnerved investors. The stock ended lower and lost another four percent in futures trading.
Qualcomm shares fell eight percent after the company cut its revenue outlook.
Dow Jones fell 592.58 points, or 1.20 percent, to close at 48,908.72
S&P 500 declined 84.32 points, or 1.23 percent, to 6,798.40
Nasdaq dropped 363.99 points, or 1.59 percent, to 22,540.59
US futures this morning are also pointing to further weakness.
Amazon’s results, announced after market hours, added to the gloom. Although business growth was satisfactory, the company’s plan to continue heavy investment in AI disappointed investors. The stock, which fell four percent in regular trade, later plunged as much as 12 percent.
European markets ended Thursday with heavy losses, with most sectors in the red. Swedish automaker Volvo reported a 68 percent drop in earnings, sending its stock down 22.5 percent.
Asian markets remain weak today.
Japan’s Nikkei is down one percent ahead of Sunday’s parliamentary election
Australian indices are down two percent and South Korea’s index has fallen five percent
Hong Kong opened down two percent, while China slipped one percent
Industrial metals declined on Thursday.
Copper plunged 3.21 percent to $12,821.75 a tonne
Aluminium fell 1.24 percent to close at $3,031.93 a tonne
Nickel, zinc, tin and lead also ended lower
Rubber rose 1.61 percent in international markets to 189.90 cents per kg. Cocoa gained 2.35 percent to $4,182 a tonne. Coffee slipped 0.26 percent, while tea prices were unchanged. Palm oil edged up 0.05 percent.
The dollar index rose to close at 97.82 and climbed further to 97.91 this morning.
Euro slipped to $1.1779
Pound fell to $1.3527
Japanese yen weakened to 156.58 per dollar
Swiss franc moved to 0.7771 per dollar
Chinese yuan remains around 6.94 per dollar
US 10-year bond yields fell to 4.182 percent, with traders increasingly betting that weakness in the labour market will eventually force rate cuts.
After recent losses, the rupee recovered slightly on Thursday. The dollar slipped to ₹90.05 before the rupee closed at ₹90.32.
In offshore markets this morning, the dollar edged up to ₹90.34. The Chinese yuan weakened to ₹13.02.
Crude oil prices continue to slide. Brent crude fell three percent to close at $67.35 a barrel.
This morning, Brent is at $66.98, WTI at $62.71 and Abu Dhabi’s Murban crude at $68.30. Natural gas prices rose to $3.50.
Cryptocurrencies remain highly volatile, with most of the gains seen under the Trump administration now wiped out.
Prices fell between 15 and 30 percent in a single session
Bitcoin dropped to $60,000 and is trading below $64,300 this morning
Ether fell to $1,747 before recovering slightly
Solana slid to $67 and remains below $78
(As on February 5, Thursday)
Sensex 83,313.93 -0.60%
Nifty 50 25,642.80 -0.52%
Bank Nifty 60,063.65 -0.33%
Midcap 100 59,517.10 -0.28%
Smallcap 100 16,983.90 -1.29%
Dow Jones 48,908.40 -1.23%
S&P 500 6,798.72 -0.51%
Nasdaq 22,540.59 -1.59%
Dollar ₹90.32 -0.12
Gold (ounce) $4,778.50
Gold (sovereign) ₹1,13,240
Crude oil (Brent) $67.35