Sensex, Nifty Likely To Drift Lower On Trade War Fears

(RTTNews) - Indian shares may drift lower on Tuesday against the backdrop of persistent FII selling, continuing uncertainty around tariffs and ongoing geopolitical tensions between Russia and Ukraine.

It is feared that U.S. President Donald Trump's "tariffs on steroids" agenda may keep inflation higher and could tip the global economy into recession.

Benchmark indexes Sensex and Nifty ended marginally lower on Monday despite positive signals from global markets and solid Q3 GDP data. The rupee closed slightly stronger at 87.37 per U.S. dollar.

Foreign institutional investors remained net sellers and offloaded shares worth Rs 4,788 crore on Monday while domestic institutional investors were net buyers of shares to the extent of Rs 8,790 crore, as per provisional data.

Asian markets were lower this morning amid concerns that an intensifying trade war will hit global growth.

The Canadian dollar and the Mexican peso hovered near their lowest in a month and gold held below $2,900 per ounce while oil extended losses and hovered near the lowest in almost three months as OPEC+ said it will proceed with plans to revive halted production.

U.S. stocks tumbled overnight, the dollar rallied, and bond yields slumped as President Trump confirmed that 25 percent tariffs on goods from Mexico and Canada would come into effect on Tuesday and that he plans 20 percent tariffs on Chinese imports over fentanyl issues.

Further, Trump said reciprocal tariffs would take effect on April 2 on countries that impose duties on U.S. products, stoking fears of a global trade war. He also flagged new U.S. tariffs for imported farm products.

Recent disappointing data showing weaker housing, cooling manufacturing, rising unemployment claims and a drop in personal spending also spurred fears of an economic slowdown and higher inflation.

The tech-heavy Nasdaq Composite plunged 2.6 percent to a four-month closing low while the S&P 500 shed 1.8 percent and the Dow dipped 1.5 percent.

European markets closed at a record high on Monday as expectations of higher military spending in the region and the prospect of a Ukraine peace proposal lifted defense-related stocks.

The pan European STOXX 600 gained 1.1 percent. The German DAX jumped 2.6 percent, France's CAC 40 climbed 1.1 percent and the U.K.'s FTSE 100 added 0.7 percent.