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Rising Crude and West Asia Crisis Pressure Markets; Gold Slides Again
Stock markets closed lower due to selling in IT and FMCG shares as renewed tensions in West Asia triggered a rally in crude oil prices. The 30-share BSE Sensex declined 307.24 points, or 0.40 per cent, to settle at 76,957.27 with 20 of its constituents ending lower and 10 with gains. During the day, it tanked 513.19 points, or 0.66 per cent, to 76,751.32.
Sun Pharma, ICICI Bank, Axis Bank and State Bank of India were among the gainers. Brent crude, the global oil benchmark, jumped 3.63 per cent to $91.30 per barrel.
“Escalating tensions between the US and Iran have kept investors on edge, as fading prospects of a diplomatic breakthrough pushed crude oil prices and global bond yields higher. Rising crude oil prices and bond yields have renewed concerns over energy-led inflation and a higher interest rate environment, which could weigh on the earnings cycle,” Vinod Nair, Head of Research, Geojit Investments Limited, said.
Meanwhile, the Fed chair’s recent comments after the Jackson Hole address have increased expectations of a potential September rate hike, keeping global yields elevated and contributing to near-term volatility in emerging markets, he added.
Gold prices fell for the fourth straight session, declining by Rs 1,500 to Rs 1,60,900 per 10 grams in the national capital on Monday as bearish global cues weighed on traders’ sentiment.
The yellow metal of 99.9 per cent purity closed at Rs 1,62,400 per 10 grams on Friday.
Traders said the decline in domestic gold prices also reflected continued profit-booking after the yellow metal’s strong run in recent weeks, with traders trimming positions as the metal failed to sustain its earlier momentum.
However, silver remained steady at Rs 245,500 per kilogram (inclusive of all taxes), according to local traders.
“Gold prices remained under pressure after Federal Reserve Chair Kevin Warsh’s hawkish speech at the Jackson Hole Symposium increased expectations of an interest rate hike in September meeting,” Gaurav Garg, head of research at Lemonn Markets Desk, said.
