Market Cues Today: US Fed Rate Cut, India-EU Partnership, Crude Oil Price, Gold Rate, Bond Yields Likely To Impact D-Street Trade

In the previous session on September 17, domestic equity benchmark indices closed with gains. The 30-share BSE Sensex closed at 82,693.71, up by 313.02 points, or 0.38 per cent. Likewise, the NSE Nifty 50 ended the session higher by 91.15 points, or 0.36 per cent, at 25,330.25.

In the session on September 18, market participants are expected to react to the US Federal Reserve’s Federal Open Market Committee’s (FOMC) decision to cut benchmark interest rates. Market participants will be tracking movements in US bond yields, the dollar index, gold prices, and global equities. Attention will be on foreign inflows into India as well.

US Fed Rate Cut

The FOMC lowered interest rates by 0.25 basis points (bps) to 4.00–4.25 per cent in an 11-1 vote, its first rate cut this year. Governor Stephen Miran dissented in favour for a bigger 50 bps cut. The Fed also indicated that two more rate cuts are likely in October and December this year, as pressure is building up from a weakening labour market, despite inflation remaining above target at 3 per cent.

After the FOMC meeting concluded, Fed Chair Jerome Powell said US President Donald Trump’s tariffs are starting to raise some prices. However, he added that the “overall effects on economic activity and inflation remain to be seen.” He said the bigger issue for jobs is lower immigration, not tariffs. “There’s very little growth, if any, in the supply of workers,” he said. 

India-EU Partnership

The European Union (EU) has announced a new strategic agenda with India, describing it as a “crucial” partner in areas like trade, technology, security, defense and climate. However, the EU also raised concerns that India’s military exercises with Russia and its purchases of Russian oil could create challenges for the partnership.

US Stock Market Close Mixed

Overnight, in the US, stocks closer mixes after a volatile session triggered by US Fed's rate cut announcement. The Dow Jones Industrial Average closed 0.57 per cent higher, while the tech heavy Nasdaq Composite closed 0.33 per cent lower. The broader S&P 500 ended the session flat, with a slight negative bias of 0.01 per cent.

Asian Stock Markets Trade Higher

Asian markets traded mostly higher in early trade today. Japan's Nikkei 225 was up by 1.30 per cent, South Korea's KOSPI traded higher by 1.20 per cent, and China's SSE Composite was up by 0.45 per cent.

On the other hand, the Hong Kong-based kept swinging in positive and negative territories amid a choppy trade, mirroring Wall Street's movements.

Hours after US Fed reduces its benchmark interest rates, China’s central bank kept its key lending rates unchanged. The People’s Bank of China left the seven-day reverse repo rate at 1.40 per cent. The  Hong Kong’s Monetary Authority (HMKA) cut its base rate by 25 basis points to 4.50 per cent, mirroring the US Fed’s decision. It was the HKMA’s first rate cut since December 2024.

Gold Prices Tumble After US Fed Rate Cut

Gold prices, internationally and domestically, dropped in early trade today.

The October Gold futures on the Multi Commodity Exchange (MCX) slipped by as much as Rs 639, or 0.58 per cent, to an intraday low of Rs 1,09,053 per 10 grams.

On COMEX, December Gold futures tumbled up to $31.20, or 0.84 per cent, to touch intraday low of $3,686.60 per ounce.

Gold prices declined due to a increase in the US dollar's value after US Fed's rate cut. The yellow metal and the US dollar typically move inversely, as a stronger dollar raises the cost of gold for buyers using other currencies.

US Dollar Strengthens After US Fed Rate Cut

The US dollar strengthened after US Fed’s rate cut as traders expect lower borrowing costs to support the US economy and attract flows into US assets, making the dollar more appealing.

The US Dollar Index, which tracks the greenback against a basket of six major currencies, rose by around quarter per cent to quote above 96.75. Earlier, the index was on a steady decline, having fallen more than 3.5 per cent since August beginning.

US Bond Yields

US Treasury yields eased in early trade today after ending higher on September 17 after the US Fed’s policy announcement.

On September 17, the benchmark 10-year yield rose 5 bps to 4.07 per cent, however, it eased 1.3 bps to 4.06 per cent.

The 2-year bond yields gained 3.7 bps to 3.54 per cent, before easing by 1.1 bps to 3.53 per cent in today’s session. Meanwhile, the 30-year added 2.4 bps to 4.67 per cent, and eased 1.5 bps to 4.65 per cent.