Markets across the world reacted sharply to the US Federal Reserve's latest policy decision, which signalled a more hawkish stance on interest rates. US equities fell more than 1 percent overnight, gold tumbled and the dollar strengthened. However, sentiment improved later as US futures turned sharply higher, while most Asian markets traded in positive territory on Thursday.
Meanwhile, Brent crude slipped below $79 a barrel after the US and Iran formally signed a peace agreement, easing concerns over Middle East supply disruptions.
US futures are trading strongly higher after an initial negative reaction to the Fed decision.
Asian markets are largely in the green, led by Japan and South Korea.
Brent crude has fallen below $79 a barrel.
Gold has recovered after a sharp overnight decline.
Dollar index has climbed above the 100 mark.
Monsoon rainfall remains a concern, with India recording a significant deficit so far this season.
The India Meteorological Department said southwest monsoon rainfall remains 38 percent below normal after the first 17 days of the season.
More than two-thirds of the country has received rainfall that is at least 20 percent below average. Several major agricultural regions have reported deficits ranging from 27 percent to 84 percent.
Meteorologists also warn that a strengthening El Niño pattern could worsen rainfall shortages and affect agricultural output in the coming months.
The US Federal Reserve kept interest rates unchanged but surprised markets by indicating that another rate increase remains possible this year.
The Fed's latest projections suggest the federal funds rate could end 2026 at 3.8 percent, compared with an earlier estimate of 3.4 percent. The central bank also raised its forecast for Personal Consumption Expenditure (PCE) inflation to 3.6 percent by December from 2.7 percent in March.
Investors had expected the Fed to acknowledge easing geopolitical risks and falling oil prices. Instead, policymakers focused on inflation concerns, triggering a sell-off in equities, bonds and gold while boosting the dollar.
The new Fed chair, Kevin Warsh, also signalled a departure from traditional forward guidance, releasing a much shorter policy statement and indicating less emphasis on long-term rate projections.
Wall Street closed lower after the Fed announcement.
Dow Jones fell 507 points (0.98%) to 51,492.55
S&P 500 dropped 91 points (1.21%) to 7,420.10
Nasdaq Composite declined 355 points (1.35%) to 26,021.66
SpaceX shares, which had risen for three consecutive sessions, fell 5 percent to close at $191.80.
Investors appeared to reassess the Fed's message after the initial reaction.
Early Thursday:
Dow futures gained 315 points (0.61%)
S&P 500 futures rose 0.87%
Nasdaq futures advanced 1.38%
Indian ADRs recovered some losses in after-hours trading.
HDFC Bank ended at $24.80 after recovering from an earlier decline.
ICICI Bank closed at $27.98.
Infosys rose in after-hours trading to finish at $11.85.
Wipro ended at $2.47.
Asian equities opened on a strong note.
Japan's Nikkei surged more than 2 percent to a record above 71,000.
South Korea's Kospi climbed 1.25 percent to fresh highs.
Australia's market slipped 0.30 percent.
Hong Kong declined 1.3 percent.
Shanghai lost 0.45 percent.
Indian equities have recovered strongly following the Middle East ceasefire and have regained a total market capitalisation of more than $5 trillion.
Market value now stands at about $5.003 trillion (₹475.1 lakh-crore), helping India reclaim its position as the world's sixth-largest equity market, ahead of South Korea.
Over the past four sessions, Indian market capitalisation has risen by 4.5 percent.
Expectations of stronger India-US defence cooperation and higher defence spending boosted the sector.
Major gainers included:
Paras Defence (+18.88%)
MTAR Technologies
Garden Reach Shipbuilders
Cochin Shipyard
Bharat Dynamics
HAL
Astra Microwave
Consumer durables, metals and IT stocks also performed well.
Foreign portfolio investors remained net buyers, purchasing equities worth ₹101.59 crore.
Domestic institutions added another ₹1,561.40 crore. Broader market sentiment remained positive, with advancing stocks outnumbering decliners on both NSE and BSE.
Federal Bank hit a record ₹323.60 before closing at ₹322.20, up 0.50 percent.
South Indian Bank touched a record ₹48.80 and ended at ₹48.40, up 2.54 percent.
CSB Bank slipped 0.64 percent to ₹367.00.
Dhanlaxmi Bank gained 0.86 percent to ₹32.70.
Gold initially plunged 1.75 percent after the Fed decision before staging a recovery.
Spot gold closed at $4,257.90 per ounce.
Early Thursday, it rebounded to around $4,325.
In Kerala, 22-carat gold fell by ₹200 per sovereign to ₹1,10,800.
Most industrial metals gained.
Copper rose 0.39 percent to $13,735.85 a tonne.
Aluminium climbed 1.31 percent to $3,419.16.
Zinc, nickel and tin also advanced.
The stronger dollar and the US-Iran peace agreement weighed on oil prices.
Brent crude fell from $79.55 to $78.28 a barrel.
WTI crude traded near $75.51.
The dollar index crossed the psychologically important 100 mark.
Dollar Index: 100.28
Euro: $1.1519
Pound: $1.3315
Japanese yen: 160.65 per dollar
The yield on the US 10-year Treasury rose to 4.463 percent.
The rupee ended Wednesday stronger at ₹94.53 per dollar, gaining three paise.
However, the Fed's hawkish stance could put pressure on the Indian currency in Thursday's trade. Non-deliverable forward markets indicate the dollar may open around ₹94.78.
Sensex: 77,155.62 (+0.45%)
Nifty 50: 24,085.70 (+0.40%)
Bank Nifty: 57,585.05 (+0.50%)
Mid cap 100: 62,123.35 (+0.52%)
Small cap 100: 18,623.20 (+0.79%)
Dow Jones: 51,492.55 (-0.98%)
S&P 500: 7,420.10 (-1.21%)
Nasdaq: 26,021.66 (-1.35%)
Dollar/₹: ₹94.53 (-₹0.03)
Gold (ounce): $4,257.90 (-$74.10)
Gold (sovereign): ₹1,10,800 (-₹200)
Brent crude: $79.55 (+$0.59)
