Brent crude fell 3% to $85.6 after the US paused strikes on Iran and Tehran signaled restraint. Gold edged lower, Asian chip stocks plunged on China competition fears. Fed decision and GDP data this week.
Brent crude fell 3% to $85.6 a barrel on Tuesday, its lowest in over a week, after the United States paused its bombing campaign against Iran and Tehran signaled it would not retaliate as long as the halt held. The move erased much of the geopolitical risk premium that had briefly pushed oil toward $100 last week.
President Donald Trump halted the strikes late Friday following 13 consecutive nights of U.S. attacks on Iranian targets. An Iranian official told Reuters the country would suspend retaliatory actions while the U.S. maintained its pause. Both sides cautioned they remain prepared to resume military action if negotiations fail.
Shipping through the Strait of Hormuz remains well below normal levels, traders said. The cautious tone kept the market from pricing a full return to pre-conflict supplies.
Gold, Silver, and the Dollar
Spot gold fell 0.5% to $4,056 an ounce by 0110 GMT, pressured by a stronger dollar. U.S. gold futures for August delivery lost 0.5% to $4,056.70. Comex silver settled flat around $58.3 an ounce, struggling to hold above $61. Copper futures held above $6.3 per pound after sharp volatility last week, supported by the easing of Middle East tensions.
On MCX, gold for August delivery traded at Rs 1,41,850 per 10 grams, down 0.85%. Silver for September delivery fell 1.62% to Rs 2,17,597 per kg.
Equities and the Chip Rout
The risk-on mood from the ceasefire was offset by a brutal selloff in global chip stocks. Nvidia fell 5% in New York. In Asia, South Korea's KOSPI tumbled more than 7%, triggering “sidecar” trading curbs. SK Hynix plunged 10%, Samsung Electronics fell over 9%. Japan's Nikkei slid 3.6% as Advantest and Tokyo Electron took heavy losses.
The trigger was ChangXin Memory Technologies' blockbuster Shanghai debut. Shares surged roughly 500%, valuing China's largest DRAM maker at $540 billion. The rally stoked fears that Chinese memory chips could reach top-tier customers like Apple sooner than expected, traders said.
Indian IT stocks bucked the trend. TCS added 5%, Infosys rose 3.2%, Coforge surged 9% after a 49% profit jump. The Nifty IT index gained 2.5% in early trade. Domestic institutional investors remained net buyers, cushioning the impact of continued foreign selling.
Rupee and Domestic Markets
The rupee strengthened to 95.85 per dollar, its strongest in two weeks, helped by the oil drop and likely central bank intervention. The local currency had hit a record low of 96.96 in May.
The Nifty 50 held above 24,000, closing at 23,963, down 0.14%. The Sensex slipped 0.15% to 76,718. Devarsh Vakil of HDFC Securities said a decisive close above 24,200 is essential for momentum to strengthen, with immediate support at 23,800.
HUL fell 5.1% after standalone profit dipped 3.6% to Rs 2,631 crore. Coal India dropped 3% despite Jefferies maintaining a buy rating with a Rs 500 target.
What’s Next
The Federal Reserve's July 29 policy decision is the next major catalyst. Futures markets overwhelmingly expect rates to remain unchanged. Chair Jerome Powell's guidance on the timing of potential rate cuts will be scrutinized. U.S. GDP, inflation, and jobs data due this week could shift expectations.
On the geopolitical front, talks between the U.S. and Iran are expected to continue. Both sides have warned that a breakdown in negotiations could bring a swift return to military action.
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