Global financial markets are heading towards a fresh wave of turmoil as the West Asia war intensifies with no sign of an early resolution. Investors are increasingly worried about a combination of surging oil prices, rising inflation and the risk of a global economic slowdown.
Crude oil has surged past $100 a barrel, while equities across the world are under pressure. Surprisingly, gold — which usually benefits from geopolitical crises — has fallen sharply amid strong dollar demand and heavy selling by some central banks.
Oil prices are climbing rapidly as uncertainty grows over shipping through the Strait of Hormuz.
Comments by US President Donald Trump that inflation was “a minor issue” further fuelled market fears of prolonged oil-driven inflation. Washington has also indicated it could remove restrictions on Russian oil exports to increase supply, though the immediate impact remains uncertain.
The situation in Iran has also become more volatile. After the killing of Supreme Leader Ali Khamenei, Iran’s top governing council has reportedly named his son Mojtaba Khamenei as the new Supreme Leader. Trump and Israeli Prime Minister Benjamin Netanyahu have publicly threatened retaliation, raising fears that the conflict could widen.
Iran’s continuing attacks on Gulf targets have heightened the risk of a broader regional war.
Derivative trading at GIFT City indicated a weak start for Indian equities.
Gift Nifty touched 24,300 late Friday but fell to around 23,700 in early trading Monday before recovering slightly above 23,800. The signal points to the Nifty opening with losses of more than 2 percent.
US markets ended sharply lower on Friday. The Dow Jones at one point plunged nearly 950 points before trimming losses by the close.
Dow Jones fell 453.19 points (0.95 percent) to close at 47,501.58
S&P 500 declined 90.69 points (1.33 percent) to 6,740.02
Nasdaq dropped 361.31 points (1.59 percent) to 22,387.68
For the week, the indices recorded their biggest losses in nearly 11 months. The Dow fell 3 percent during the week, the S&P 500 lost about 2 percent and the Nasdaq declined 1.2 percent.
US futures were sharply lower this morning:
Dow futures down 992 points (2.09 percent)
S&P futures down 138 points (2.05 percent)
Nasdaq futures down 600 points (2.45 percent)
European markets also closed more than 1 percent lower on Friday.
Asian equities plunged sharply today amid escalating war fears.
Japan’s Nikkei fell about 6.7 percent
Australia’s benchmark index declined about 4 percent
South Korea’s Kospi plunged around 7 percent
Hong Kong dropped about 3 percent
Mainland Chinese markets fell around 0.75 percent
Indian equities erased Thursday’s relief rally and ended sharply lower on Friday.
The Sensex moved in the 78,812–79,753 range while the Nifty traded between 24,415 and 24,700 before closing near the day’s lows. For the week, both indices lost nearly 3 percent.
Sensex fell 1,097 points (1.37 percent) to 78,918.90
Nifty 50 dropped 315.45 points (1.27 percent) to 24,450.45
Bank Nifty declined 1,272.60 points (2.15 percent) to 57,783.25
Broader markets also weakened:
Nifty Midcap 100 fell 399.20 points (0.69 percent) to 57,393.35
Nifty Smallcap 100 declined 39.90 points (0.24 percent) to 16,498.90
Market breadth remained negative.
On BSE, 1,812 stocks advanced while 2,396 declined
On NSE, 1,308 gained while 1,868 fell
Foreign investors continued selling.
Foreign institutional investors sold equities worth ₹6,030.38 crore
Domestic institutional investors bought ₹6,971.51 crore
Defence stocks were the only strong performers, gaining about 2.77 percent. IT stocks rose marginally by 0.4 percent, while banking, financial and real estate shares declined sharply.
Stocks such as Mazagon Dock, Garden Reach Shipbuilders, Cochin Shipyard, Data Patterns, BEL, BDL, MTAR and HAL gained.
Gold, which had risen strongly on Friday, fell sharply in early Asian trading today.
Gold had climbed $91.70 (1.81 percent) on Friday to close the week at $5,174 per ounce. However, within the first hour of Asian trading today, prices plunged nearly $160 (3.2 percent) to $5,013.90 before recovering to around $5,075.
Heavy selling by Russia and Poland, a stronger dollar and trade disruptions in Dubai’s bullion market weighed on prices.
Silver also fell sharply.
Silver dropped about $4 (4.75 percent) to $80.60 per ounce
Other precious metals:
Platinum: $2,040
Palladium: $1,576
Rhodium: $11,250
In Kerala, 22-carat gold fell ₹1,280 on Friday to ₹1,18,160 per sovereign but rebounded ₹1,840 on Saturday to ₹1,20,000.
On MCX, 24-carat gold closed Friday at ₹1,58,030 per 10 grams. Silver, after touching ₹2,70,500, ended at ₹2,68,569 per kg.
Industrial metals traded in mixed directions on Friday.
Copper fell 0.26 percent to $12,807.15 per tonne
Aluminium jumped 3.87 percent to $3,418.73 per tonne
The sharp rise in aluminium was mainly due to supply disruptions from Qatar and Bahrain. Tin and nickel gained while lead and zinc declined.
Rubber prices continued to fall in international markets amid global recession fears.
Natural rubber declined 1.62 percent to 194.20 cents per kg, while synthetic rubber rose 1.31 percent to $14,158.33 per tonne.
Other commodities:
Cocoa surged 5.73 percent to $3,230 per tonne
Coffee rose 1.56 percent
Palm oil climbed to 4,375 Malaysian ringgit per tonne
Tea prices remained unchanged
Prices of petrochemical products such as PVC, polyethylene and polypropylene also rose on Friday following the surge in crude oil.
Urea remained steady at $583.50 per tonne.
The dollar index rose to 99.59 on Friday and edged up to 99.67 this morning.
Euro weakened to $1.1525
Pound fell to $1.3308
Japanese yen dropped to 158.48 per dollar
Chinese yuan remained around 6.90 per dollar
The yield on the US 10-year Treasury rose to 4.191 percent amid fears that higher oil prices could trigger further interest rate hikes.
The Indian rupee weakened further on Friday.
The dollar gained 14 paise to close at ₹91.74.
Rising crude oil prices, export disruptions and continued foreign fund outflows are expected to widen India’s trade deficit and current account deficit, putting further pressure on the rupee.
In the offshore non-deliverable forward market, the dollar was trading near ₹91.94 this morning.
Other currency indications:
Chinese yuan: ₹13.38
Euro: ₹106.86
These movements are likely to influence domestic currency trading today.
There is still no clear progress towards reopening normal shipping through the Strait of Hormuz.
Brent crude, which closed at $92.61 on Friday, surged to around $109.7 per barrel in early trading today.
Just 10 days ago — before the Iranian attacks began — the price was around $72.87. That means crude has surged roughly 50 percent in about 10 days.
Such rapid price increases have previously been seen only during the 1973 OPEC oil embargo and the 1979–80 Iran revolution and Iran-Iraq war.
WTI crude jumped about 20 percent to around $109 per barrel today, while UAE’s Murban crude rose about 9 percent to $112.5.
Natural gas climbed to $3.423.
Cryptocurrencies are also under pressure.
Bitcoin, which had approached $74,000 last week, has fallen below $66,400.
Ether fell below $1,950
Solana slipped below $82
Sensex: 78,918.90 (−1.37%)
Nifty 50: 24,450.45 (−1.27%)
Bank Nifty: 57,783.25 (−2.15%)
Nifty Midcap 100: 57,393.35 (−0.69%)
Nifty Smallcap 100: 16,498.90 (−0.24%)
Dow Jones: 47,501.55 (−0.95%)
S&P 500: 6,740.02 (−1.33%)
Nasdaq: 22,387.68 (−1.59%)
Dollar: ₹91.74 (+₹0.14)
Gold (ounce): $5,174 (+$91.70)
Gold (Kerala, sovereign): ₹1,18,160 (−₹1,280)
Saturday: ₹1,20,000 (+₹1,840)
Brent crude: $92.69 (+$8.34)
