International and domestic crude oil futures ended weaker reversing early gains.  Limiting downside, gasoline futures hit a 10-day high on Thursday after the U.S. EIA said stockpiles of the product fell last week by the most since September 2021.  U.S. NYMEX Gas and domestic futures extended losses on Thursday on a rise in U.S. output so far this month and afternoon forecasts for less cold weather and lower heating demand over the next two weeks than previously expected.  Worries that Freeport LNG export plant in Texas was cancelling cargoes and could take longer than previously expected to return to full service weighed on prices.  The price move came after data from EIA showed an expected storage withdrawal which was bigger than usual.  Utilities pulled 72 billion cubic feet of gas from storage during the week ended March 17, compared to a 75-bcf withdrawal projected in a poll. 


International and domestic gold & silver futures rallied on Thursday session continued to be supported by the recent Fed’s dovish shift on future rate hike.  The benchmark U.S. bond yields ended lower and lent support, but a recovery in the Dollar capped further upside.  The outlook still remains positive if the Fed pauses or the banking crisis carries on.


COMEX, ShFE and MCX Copper prices rose on Thursday’s session as investors bet on a pause in U.S. interest rates hikes by the Federal Reserve and stronger demand in top consumer China.  Helping copper are worries about supplies on the LME market, which have resurfaced due to cancelled warrants rising to 45% of the total at 73,475 tonnes, compared with 29% a week ago.


The Indian Rupee appreciated against the dollar on Thursday tracking gains in the Asian currencies on expectation that the U.S. Fed was near the end of its rate hiking cycle.  The Rupee settled at 82.2625 per dollar, compared with its previous close of 82.6550.  In the overseas markets, the U.S. Dollar Index pared losses and settled flat on Thursday amid some covering of shorts.  The Sterling gained on Thursday after the Bank of England raised borrowing costs by 25 bps on Thursday, in line with expectations, and said further tightening would be required if there were evidence of more persistent price pressures.  Meanwhile, the Swiss National Bank also raised its policy rate by 50-bps as the central bank sought to balance tackling inflation with concerns about financial market turmoil.  The SNB said measures announced by authorities at the weekend regarding Credit Suisse had put a halt to the crisis.


Indian bond yields were off their day’s low but still ended weaker on Thursday as traders shifted focus to the government borrowing calendar for April-September and the Reserve Bank of India’s monetary policy decision.  The 10-year benchmark 7.26% 2032 bond yield ended at 7.345%, after closing at 7.354% on Tuesday.  Fed funds futures traders are pricing in a 27% chance that the Fed will hike rates by an additional 25-bps in May, and 73% odds that they leave the rate unchanged.  They also see the Fed cutting rates by 100-bps by December.  

(Sriram Iyer, Senior Research Analyst at Reliance Securities)

 (Disclaimer: The information provided here is investment advice only. Investing in the markets is subject to risks and please consult your advisor before investing.)

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