Markets

US bond yield spike impacts equity markets more than Israel-Hamas conflict

Equity markets globally are being impacted more by the spike in US bond yields rather than the Israel-Hamas conflict

November 1, 2023

War worries, high US bond yields keep markets jittery

With the ground war in Gaza intensifying, uncertainty surrounding the West Asian crisis is at its peak. It’s not known how and when this war will end and what the consequences will be. Therefore, investors should continue with a cautious strategy, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

It is important to understand that equity markets globally are being impacted more by the spike in US bond yields rather than the Israel-Hamas conflict, he said.

The US 10-year bond yield above 4.9 percent will continue to be a major headwind for stock markets, particularly for those in emerging markets. Sustained selling by FIIs is likely to continue weighing on markets, he added.

The crash in Brent crude to $85 is a big positive for India. Aviation, paints, and tyre stocks will respond positively to this news.

Investors may watch the trends in high-quality large-caps like Maruti, ICICI Bank, HDFC Bank, RIL, ITC, and L&T, which have come out with good Q2 results. These companies have good earnings visibility and, therefore, will witness substantial institutional buying when normalcy returns, he said.

BSE Sensex is down 132 points at 63,742 points on Wednesday. Laggards include Asian Paints, Nestle, Maruti, and Kotak Mahindra Bank down by more than 1 percent.

[With Inputs from IANS]

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