Asian markets opened mixed on Tuesday as investors absorbed geopolitical uncertainty in the Middle East, rising oil prices, and awaited key monetary policy decisions from central banks in the US and UK. The mood was tentative across the region, with Indian markets initially slipping before recovering mid-morning, while Chinese and Hong Kong stocks remained under pressure. Japan bucked the broader trend with moderate gains.
India’s benchmark Sensex index fell in early trade, dragged down by volatility in global oil markets and concerns over regional conflict involving Israel and Iran. However, buyers returned later in the session, lifting both the Sensex and Nifty 50 into slightly positive territory. Gains were led by financials and automakers, with investor sentiment supported by hopes of robust domestic earnings and policy continuity.
Japan’s Nikkei 225 advanced by around 0.7%, supported by a weaker yen and firming demand for export-linked shares. Meanwhile, markets in China and Hong Kong struggled to gain traction, with the Hang Seng falling over 1% and the Shanghai Composite edging lower. Analysts cited subdued investor confidence in mainland growth and weak foreign inflows.
Oil prices continued to hover near five-month highs, with Brent crude around $86 per barrel, adding to global inflation concerns. Investors are closely watching developments in the Middle East, where tensions between Iran and Israel remain unresolved. Energy markets have become increasingly sensitive to headlines in the region.
In Europe, stock futures point to a muted open. The FTSE 100 is expected to open slightly lower after finishing near a record high on Monday. Market participants are focused on UK inflation data due tomorrow, which will be a key input into the Bank of England’s monetary policy decision. The BoE is widely expected to keep rates unchanged, but investors are looking for signals about potential easing later this year as economic growth slows and wage pressures ease.
Across continental Europe, indices are expected to follow a cautious path. While recent data from Germany and France has shown signs of stabilisation, the overall market mood remains fragile. Traders are closely watching developments in energy prices and global risk sentiment as they prepare for a critical few days of policy updates.
US stock futures were slightly lower in early trade as markets look ahead to today’s Federal Reserve policy meeting. The Fed is expected to hold interest rates steady, but attention will be on Chair Jerome Powell’s tone and the updated economic projections, especially the so-called dot plot, which outlines future rate expectations. Traders have pared back expectations for a July rate cut but still see a more than 60% chance of a cut by September.
Adding to the uncertainty was a weaker-than-expected reading on US retail sales released on Monday, which showed a 0.9% drop in May. The data contributed to a dip in Treasury yields, as investors reassessed the strength of the American consumer and the overall pace of economic activity.
The backdrop to today’s market activity remains dominated by three themes: the trajectory of central bank policy, energy market volatility, and geopolitical risk. With the Fed’s decision looming and global headlines driving sentiment, traders are likely to remain cautious throughout the day. The next 24 hours could offer significant clues on the path ahead for global equities and currencies.
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