Indian shares look set to open higher on Tuesday as signs of goodwill between China and the United States fueled optimism about trade and global growth.
The upside, however, may remain limited after official data showed India’s retail inflation spiked to a five-year high in December, breaching the upper end of the RBI’s 2-6 percent target for the first time since July 2016.
Inflation increased notably to 7.35 percent from 5.54 percent in November, driven by higher food prices. In the same period last year, inflation was 2.11 percent.
Benchmark indexes jumped around 0.6 percent on Monday to hit record highs, with positive IIP data, optimism surrounding the imminent signing of a phase one U.S.-China deal and better-than-expected Infosys’ Q3 results helping underpin investor sentiment. The rupee rose by 8 paise to close at 70.86 against the U.S. dollar.
Asian markets inched higher and China’s offshore yuan extended gains to hover near a 5-1/2-month high against the dollar as a high-level Chinese delegation arrived in Washington ahead of the signing of a preliminary trade deal.
U.S. Trade Representative Robert Lighthizer told Fox Business that the Chinese translation of the deal’s text was almost done.
Oil nursed losses on receding Middle East tensions, while gold prices fell on improved risk appetite. China is set to release trade data later today.
U.S. stocks rose overnight after the Treasury Department said it would remove China’s designation as a currency manipulator ahead of the signing of the phase one U.S.-China trade deal.
The Dow Jones Industrial Average inched up 0.3 percent, while the Nasdaq Composite index climbed 1 percent and the S&P 500 added 0.7 percent to reach fresh record closing highs.
European markets gave up early gains to end lower on Monday as investors awaited quarterly earnings reports from major U.S. banks.