Opening Bell - Morning Commentary

US stocks rose on a trade deal with the UK - Our markets fell as geopolitical tensions escalated.

U.S. equity markets closed higher on Thursday, following a trade agreement between the U.S. and U.K., Which is expected to lower U.S. tariffs on products such as autos, steel, aluminium and aerospace engines imported from the U.K.

This is the first trade agreement with a significant trading partner since the U.S. unveiled its tariff plans on April 2. Although the impact of this agreement will be limited, markets reacted favourably, hoping that it could help provide a framework for further negotiations with other trading partners in the weeks ahead.

The U.K. was responsible for roughly 2% of U.S. goods imports in 2024, and was the destination for approximately 4% of U.S. goods exports.

The Russell 2000 small-cap index rose 1.9% to close at its highest level since April 2, when the tariffs were initially announced.

On the economic front, weekly initial jobless claims fell more than expected last week, suggesting that the labour market remains stable. However, a separate report showed worker productivity dropped in the first quarter for the first time in nearly three years.

Oil prices were little changed early on Friday after rising more than 3% in the previous session, as trade tensions between the top oil consumers, the U.S. and China, showed signs of easing.

Japanese stocks jumped, supported by the dollar's surge against the yen, after a U.S. trade deal with Britain fuelled hopes of progress in tariff talks with other countries. Bitcoin soared to its highest level since January.

Our markets fell yesterday as India-Pakistan border tensions escalated. As we have been alerting our readers, it is prudent to prepare rather than panic. We advise traders to keep leveraged and speculative positions light and use derivatives to hedge short-term exposures.

The Nifty mid- and small-cap indices fell sharply along with the Benchmark indices. The Nifty Midcap 100 Index plunged by 1.95%, while the Nifty Smallcap 100 Index plummeted by 1.43%. Market breadth turned decisively negative, with declining shares significantly outnumbering advancing ones.

The Nifty's short-term trend turned weak as it closed below its 5-day EMA, which was placed at 24340 levels. On the higher side, the 24340-24500 band is likely to act as immediate resistance, while the 23978-23800 could provide immediate support on the downside as markets digest the unfolding geopolitical situation.