A new trade deal signed by President Donald Trump with Indonesia has rattled Asian markets. The agreement, which mandates duty-free access for US goods while imposing a 19 percent tariff on Indonesian products, has raised concerns about future trade talks with other Asian economies. As part of the deal, Indonesia is required to purchase a fixed volume of US goods.
The message is clear: Trump’s focus is solely on boosting American trade. India, meanwhile, has not disclosed the status of its own negotiations with the US.
US futures were trading lower on Wednesday morning, indicating a weak opening for Indian markets as well. Corporate earnings continue to disappoint — among 60 companies that reported results, profit growth was just 0.8 per cent, compared to over 12 per cent growth a year earlier.
In derivatives, Gift Nifty closed at 25,167.50 on Tuesday night and briefly dipped to 25,155 before inching up. This suggests a likely lower start for the markets today.
European markets closed lower for a third straight day, dragged down by tariff concerns and rising US retail inflation. Renault appointed its CFO Duncan Minto as interim CEO, following the resignation of Luca de Meo last month.
US markets closed mixed overnight. Retail inflation in June exceeded expectations, reducing the likelihood of an imminent rate cut. Disappointing corporate earnings dragged the Dow down by one per cent. However, comments by Nvidia CEO Jensen Huang that exports of its H20 GPUs to China may resume lifted Nvidia shares by four per cent, helping the Nasdaq to edge up while the S&P pared losses.
The Dow Jones closed 436.36 points (0.98 per cent) lower at 44,023.29. The S&P 500 fell 24.80 points (0.40 per cent) to 6,243.76, while the Nasdaq Composite rose 37.47 points (0.18 per cent) to end at 20,677.80 — its 52-week high.
US futures continued to fall on Wednesday, with the Dow, S&P and Nasdaq trading 0.15, 0.16 and 0.18 per cent lower respectively.
US retail inflation in June rose to 2.7 per cent from 2.4 per cent in May. Core inflation, excluding food and fuel, rose to 2.9 per cent. Analysts believe this reflects the impact of earlier tariff hikes and expect prices to rise further if more tariffs come into effect on August 1. The rise supports Fed Chair Jerome Powell’s hawkish stance, suggesting that interest rate cuts may only be considered in October or later. Just two days ago, markets assigned only a 20 per cent probability to a rate hike.
JP Morgan Chase and Wells Fargo declined post-results, while Citigroup shares rose on better-than-expected earnings.
Meanwhile, the US House of Representatives voted down digital asset bills intended to bring cryptocurrencies into the mainstream — a blow to crypto exchanges and related firms.
Asian markets slipped on Wednesday after the US-Indonesia trade deal dampened sentiment. Japan’s Nikkei, which opened higher, reversed gains. Hong Kong’s Hang Seng index rose one per cent, but Chinese markets opened in the red. China's second-quarter GDP grew by 5.2 per cent, slower than in the first quarter.
After four straight days of losses, Indian equities bounced back strongly on Tuesday, buoyed by easing retail inflation. With consumer inflation falling below two per cent, analysts see scope for the Reserve Bank of India (RBI) to cut rates — either in August or later in the year. Falling wholesale inflation also supports this view. Industry groups are calling for further rate cuts to support growth, pointing to the sluggish rise in passenger vehicle sales as a warning sign.
No new details have emerged from the government on the ongoing US-India trade talks. India is reportedly pushing to reduce tariffs on apparel, jewellery and other items to below 20 per cent. The US, meanwhile, has cut duties on Indonesian goods from 32 to 19 per cent in exchange for a pledge to buy 50 Boeing aircraft, $15 billion worth of fuel and $4.5 billion worth of agricultural goods. The deal also bars tariffs on US exports — a move India may have to consider mirroring.
Foreign investors were marginal net buyers in Tuesday’s cash market, although selling persisted in IT stocks and select others.
All major sectors ended higher, with healthcare and pharmaceuticals leading the gains. Metal stocks lagged, tracking global cues.
Markets rebounded sharply after a weak open. The Nifty climbed from 25,088 to 25,245, while the Sensex rose from 82,221 to 84,746. Midcap and smallcap indices posted even stronger gains.
The Nifty ended Tuesday 113.50 points (0.45 per cent) higher at 25,195.80. The Sensex rose 317.45 points (0.39 per cent) to 82,570.91. Bank Nifty gained 241.30 points (0.43 per cent) to close at 57,006.65. The Nifty Midcap 100 index surged 560.10 points (0.95 per cent) to 59,612.65, while the Smallcap 100 rose 180.30 points (0.95 per cent) to 19,135.25.
Market breadth turned positive after several sessions — on the BSE, 2,504 stocks advanced while 1,558 declined. On the NSE, 1,966 stocks rose and 963 fell.
On the NSE, 85 stocks hit 52-week highs, while 21 touched 52-week lows. As many as 96 stocks hit the upper circuit and 47 hit the lower circuit.
Foreign investors were net buyers to the tune of ₹120.47 crore in the cash segment on Tuesday. Domestic mutual funds purchased shares worth ₹1,555.03 crore.
After briefly breaching 25,200, the Nifty closed slightly lower, but investor sentiment remains positive. A breakout above 25,300 could trigger further upside, while 25,000 is seen as strong support. For Wednesday, support levels are at 25,110 and 25,015, with resistance at 25,240 and 25,330.
India’s merchandise exports in June fell marginally to $35.14 billion, while imports dropped 3.71 per cent to $53.92 billion, narrowing the trade deficit to $18.78 billion. Falling crude oil prices helped contain import costs.
Uncertainty over tariffs caused fluctuations in gold prices. Spot gold rose to $3,365 per ounce before settling at $3,324.60, down $19.50. In early Asian trade, it rebounded to $3,332.
In Kerala, the price of gold rose ₹80 on Monday to ₹73,160 per sovereign. Silver prices dipped to $37.82 per ounce.
Rubber prices in the global market fell 0.24 per cent to 165.20 cents/kg. Cocoa tumbled 6.07 per cent to $7,784/tonne, coffee fell 1.34 per cent, and palm oil dropped 0.92 per cent.
The US dollar index rose to close at 98.62, before slipping slightly to 98.55 in early Wednesday trade.
On the currency market, the euro fell to $1.1613, the pound to $1.3396, and the yen to 148.75 per dollar. US 10-year bond yields rose to 4.477 per cent.
The Indian rupee strengthened on Tuesday, gaining 17 paise to close at 85.81 against the dollar. The Chinese yuan remained steady at 7.17 to the dollar.
Crude prices remained volatile. Brent crude, which had fallen to $68.71, rebounded to $69.03. WTI crude was at $66.91, and Murban crude at $70.37. Natural gas prices edged up.
Cryptocurrencies declined after the failure of key digital asset bills in the US legislature. Bitcoin dropped to around ₹1,17,700, while Ethereum traded at $3,140.