Stock markets tank amid harvest of fear factors

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Middle East tension spooks global equity markets

By S Jha

New Delhi, April 13: The April month is turning out to be a playground for bears in the global equity markets. Dow Jones has shed almost two and a half percentage points in the last five days. Nifty is now back to the zone from where it had sharply taken off on April 5. Nifty is precariously close to the base of the new range at 22500.

The global equity markets are now battling the emergence of a battery of negative cues. Inflation numbers in the US spooked the investors’ sentiments. Bytes from the US Federal Reserve Number also point to a long summer of high interest rates.

The results of the banking giants in the US have also dented the zeal of the market participants.

In addition, the Middle East tension has added to the weight of the negative cues. The US will directly be impacted in the Middle East tension. The US President, Joe Biden, has vowed an iron-clad defence of Israel in the event of Iran attacks.

Also read: Israel braces for Iran attacks; Hezbollah rains rockets as precursor

The prospects of the Iran-Israel conflict may stoke the prices of crude oil. The impact on inflation may be cascading. The global supply chains had already been impacted by the Houthi attacks in the Red Sea.

The risk-off sentiment is likely to return to the street. The market participants claim that the bull will come into action if the companies deliver a good set of numbers in their quarterly results.

TCS kicked off the earning seasons in India for the IT firms. TCS ADR is not listed in the US markets. The IT major came out with the result in off-market hours. But its peers, Infosys and Wipro, traded lower in the US equity markets on Friday.

Also read: US draws red line for China, notes Chinese disinflation export surge

The selloff in the Friday session in the Indian equity market space was attributed to the foreign institutional investors dumping the equities. This has been attributed to the tax treaty with Mauritius.

The fear factor in the global equity market is stated to have gone to the level last seen in October last year. On October 7, Hamas had launched attacks into Israel. There is a rush for bonds and safe investment options.

Precious metals are shining with a rally in their prices. Gold and Silver are at record high in their prices. However, the bond yield in the US slightly cooled off yesterday.