(RTTNews) - Indian shares may drift lower on Wednesday as a recovery in global chipmaking stocks fizzled out, hopes for a U.S.-Iran peace deal faded and investors shifted focus to upcoming U.S. CPI data for valuable insights into market expectations for future interest rates.
Global markets are experiencing volatility as investors rotate out of tech and into more defensive plays.
The U.S. military has launched fresh strikes against Iran in a very strong, powerful response to the downing of a U.S. Army Apache helicopter off the Oman coast.
It was said that U.S. fighter jets struck Iranian air defense systems and radar sites near the Strait of Hormuz.
Iran also launched missiles and drones toward U.S. targets in the region and warned that "heavier and broader" attacks would follow if the United States continued aggression against Iran.
Iranian Foreign Minister Abbas Araghchi said that no attack or threat from the United States will be left unanswered. "Despite its defeats on the battlefield, the U.S. opted to test our determination," Araghchi wrote on X and also asked foreign forces to leave the region.
Benchmark indexes Sensex and Nifty rose around half a percent each on Tuesday to rebound from two-month lows on the back of easing geopolitical tensions and a U.S. federal court ruling that the fee of 1 lakh U.S. dollars for H-1B applications imposed by President Donald Trump was unlawful.
The rupee gained 20 paise to close at 95.41 against the dollar, drawing support from softer U.S. Treasury yields and likely intervention by the Reserve Bank of India.
Foreign investors net sold shares worth Rs 4,566 crore on Tuesday, while domestic institutional investors net bought shares to the extent of Rs 6,159 crore, according to provisional exchange data.
Asian markets were broadly lower this morning as Middle East tensions flared, and data showed factory prices in China gained at the fastest pace in almost four years in May.
The dollar was steady while gold fell nearly 2 percent to $4,178 an ounce ahead of the release of key U.S. inflation reading.
Brent crude futures were little changed above $92 a barrel after tumbling as much as 4.9 percent on Tuesday.
Overnight, U.S. stocks fluctuated before closing mostly lower as a rebound in technology stocks tied to the artificial intelligence boom ran out of steam. That said, the downside in the broader market remained capped by falling crude prices and stronger-than-expected housing data.
On the geopolitical front, President Trump claimed the U.S. and Iran could reach a peace deal within "two or three days" and that the Strait of Hormuz would open "immediately" after such a deal.
However, raising doubts about prospects for a truce in the Middle East, Trump later vowed to respond to Iran's shooting down of a U.S. helicopter that was patrolling the Strait of Hormuz.
The tech-heavy Nasdaq Composite lost 1 percent and the S&P 500 gave up 0.3 percent while the narrower Dow gained 0.2 percent.
European stocks ended mostly lower on Tuesday, reversing early gains amid losses in U.S. peers.
The pan-European STOXX 600 dropped half a percent. The German DAX dipped 0.7 percent and the U.K.'s FTSE 100 tumbled 1.4 percent while France's CAC 40 finished marginally higher.
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