Overnight Developments: US Treasury Yields, Dollar, Gold Rates Impact Indian Stock Market

Indian Stock Market Expected to Open Lower Amid Global Market Weakness

The Indian stock market benchmark indices, Sensex and Nifty 50, are anticipated to open lower on Wednesday, following weakness in global markets, as rising inflation concerns kept bond yields elevated and risk-appetite dampened due to the lack of a US-Iran peace deal.

Asian markets traded lower, while the US stock market declined overnight, with all three Wall Street indices closing in the red as Treasury yields climbed. On Tuesday, the Indian stock market ended lower amid persisting concerns over the US-Iran war, elevated crude oil prices, and the rupee's weakness. The Sensex declined 114.19 points, or 0.15%, to close at 75,200.85, while the Nifty 50 settled 31.95 points, or 0.14%, lower at 23,618.00.

Markets are likely to remain sideways-to-under pressure in the near term, as persistent weakness in the Indian rupee and elevated crude oil prices continue to weigh on overall market sentiment and limit broad-based upside momentum.

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Global Market Cues

Asian markets traded lower on Wednesday amid elevated bond yields and renewed US-Iran tensions. Japan's Nikkei 225 declined 0.88%, while the Topix fell 0.75%. South Korea's Kospi dropped 0.52%, and the Kosdaq plunged 2.15%.

US Stock Market

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The US stock market ended lower on Tuesday as Treasury yields climbed on mounting inflation concerns and cautiousness amid the lack of a peace agreement between the US and Iran. The Dow Jones Industrial Average declined 322.24 points, or 0.65%, to 49,363.88, while the S&P 500 dropped 49.44 points, or 0.67%, to 7,353.61. The Nasdaq Composite closed 220.02 points, or 0.84%, lower at 25,870.71.

US Treasury Yields

Yields on the US Treasury's longest-dated bond rose to the highest level in almost two decades as mounting inflation fears raised hopes of interest rate hikes. The 30-year Treasury bond yield rose as much as seven basis points to 5.20%, a level last seen on the eve of the 2007 global financial crisis.

Japanese Bond Yields

Japanese government bond (JGB) yields held near multi-decade and record highs. The benchmark 10-year JGB yield fell 0.5 bps to 2.795% after hitting a 29-year peak.

China Interest Rates

China left benchmark lending rates unchanged for the 12th consecutive month in May, in line with market expectations. The one-year loan prime rate (LPR) was kept at 3.00%, while the five-year LPR was unchanged at 3.50%.

Dollar and Gold Rate

The US dollar was steady near a six-week high. Against a basket of currencies, the dollar was steady at 99.306. The euro last bought $1.1608, and the British pound was at $1.3398. The Japanese yen was last at 159.03 per US dollar, its weakest level since April 30. Gold prices rose on optimism of a potential US-Iran peace agreement. Spot gold rose 0.4% to $4,499.69 per ounce, while US gold futures for June delivery fell 0.2% to $4,502.30.