Wall Street Slips as Hormuz Tensions Drive Oil, Yields Higher
Indian markets are set to open lower today on the back of higher crude oil prices.
AHMEDABAD, 18 AUGUST: The S&P 500, Dow, and Nasdaq all closed lower Monday, retreating roughly 0.5% from last week’s record highs as surging oil prices reignited inflation concerns. Mega-caps including Meta and Microsoft sold off, but semiconductors bucked the trend. The Philadelphia Semiconductor Index entered a new bull market, up more than 20% from its late-July low, led by SanDisk and Micron amid stronger revenue guidance and continued optimism about AI capex.
Brent crude climbed toward $91/barrel, and WTI topped $85 after President Trump said he would not extend the expiring US-Iran memorandum and threatened military action against Oman over alleged interference in the Strait of Hormuz. Tanker traffic through the Strait has fallen to a fraction of pre-war levels. A senior Iranian official told media that Tehran has shifted its posture from defensive to “fully offensive” amid a deadlock in talks to end its war with the US.
Oil prices and stalled Middle East peace talks have also heightened inflation concerns.
US Treasury yields extended their advance alongside oil prices. The 10-year yield rose to roughly 4.73%, while the 30-year yield climbed to 5.31% — its highest level since mid-2007, or a 19-year high — on war-risk and oil-driven inflation premiums.
In Japan, the 10-year JGB yield rose 2.5 bps to 2.945%, its highest level since September 1996, amid rising global yields and expectations of a BOJ rate hike in September.
The dollar index broke out of its range, dropping toward 99.25-99.50 after soft jobs, CPI, and PPI data and a surprise 0.6% decline in retail sales tempered expectations of Fed hawkishness. Markets now price in roughly a 70% chance the Fed holds rates steady in September. EUR/USD traded near 1.16, and sterling touched three-month highs against the weaker greenback.
Gold jumped over 1% to near $4,422, rebounding from a low of $4,367, as dollar weakness and falling real yields lifted demand.
The Government of India approved 31 projects worth ₹7,877 crore under the Electronics Component Manufacturing Scheme. The projects are expected to generate ₹82,243 crore in production and nearly 10,000 jobs across 10 states.
Nifty declined for the fifth consecutive session yesterday, losing 78 points to close at 24,287 — its lowest level since 29 July.
The Indian rupee weakened by 17 paise yesterday to close at 95.60 per dollar, hitting a two-week low as the Reserve Bank of India shortened the deadline for its discounted forex swap facility for non-resident deposits, raising concerns about future dollar inflows.
The short-term trend for Nifty remains weak, with the index trading below its short-term averages. Immediate support is placed around 24,200, near its 50-day EMA. On the upside, 24,430 and 24,600 are likely to act as key resistance zones. Indian markets are set to open lower today on the back of higher crude oil prices.
Morning Commentary from Mr. Devarsh Vakil, Head of Prime Research at HDFC 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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