Global Mood: Cautiously Risk-Off
Drivers: Russia-Ukraine peace talks, Nvidia succession uncertainty

Asian markets were mixed on Thursday as renewed selling in Nvidia weighed on technology stocks. Japan’s Nikkei 225 edged higher, while the Topix gained 0.62%. South Korea’s Kospi fell 0.35%, the Kosdaq declined 0.66%, and Australia’s S&P/ASX 200 slipped 0.31%. US equity futures fell, with Nasdaq-100 futures down 0.8% and S&P 500 futures lower by 0.4%.

Nvidia shares dropped around 8% in extended trading following reports concerning CEO Jensen Huang’s personal life and the possibility of his removal, adding to uncertainty around the AI trade. The decline came after Wall Street rallied on Wednesday, with the S&P 500 gaining 1.3% and the Nasdaq Composite advancing 1.6%. Strong results and an upgraded revenue outlook from CoreWeave supported AI sentiment. The GIFT Nifty was trading at 25,235, up 9.5 points or 0.04%, pointing to a flat opening for Indian equities.

THE BIG STORY
Russia and Ukraine agreed in principle to a major prisoner-of-war exchange following two days of US-brokered talks in Abu Dhabi, with the number of prisoners to be finalised on Thursday. US envoy Jared Kushner described the proposed swap as the biggest humanitarian release of the war, while both sides said negotiations had made progress. Major differences remain over territory, particularly Russia's demand for Ukraine to surrender the entire Donbas region. 

US envoys plan to meet Russian President Vladimir Putin in Moscow before holding further discussions with Ukrainian President Volodymyr Zelenskiy. Continued attacks on Ukrainian energy infrastructure and Russian territory underline the gap between diplomatic efforts and conditions on the ground. European involvement in future negotiations also remains unresolved.

Nvidia's board is meeting to consider the future of CEO Jensen Huang following reports of two extramarital relationships, including one involving a company executive. The reports have intensified scrutiny of the company's leadership.

Huang's potential departure could create a leadership vacuum at the roughly $4 trillion chipmaker, which has no obvious successor. Nvidia shares fell about 8% in after-hours trading, taking the week's decline in market value to around $600 billion. Rival chipmakers AMD and Broadcom gained in after-hours trading as investors considered whether they could capture market share.

Saudi air defences intercepted three cruise missiles aimed at Riyadh, two drones targeting Mecca and southern regions, and two missiles headed toward western areas, according to the Saudi-led coalition. The Houthis denied targeting Mecca but claimed responsibility for an attack on a pumping station in Yanbu, a key Saudi oil hub. Saudi Arabia has not confirmed the reported strike.

The latest interceptions follow repeated Houthi attacks on Saudi cities and energy infrastructure, including damage to an Aramco building in Riyadh over the weekend.

The escalation has intensified since September, with the Houthis expanding attacks on Saudi ports, airports and oil facilities as Saudi Arabia steps up air strikes in Yemen.

Data Spotlight
The average US 30-year fixed mortgage rate fell by 9 basis points to 7.21% in the week ended November 6, marking a fourth consecutive weekly decline.  Borrowing costs have eased nearly 30 basis points from an almost two-year high of 7.5% reached early last month. 

Lower rates supported a 7.5% weekly increase in mortgage applications for home purchases, the strongest gain since mid-April, while refinancing applications rose 4.5% for a third consecutive week. 

However, mortgage costs remain elevated and continue to weigh on housing demand.

US crude inventories surged by 9 million barrels in the week ended November 6, against expectations for a 1-million-barrel decline, reversing the previous week's 5.267-million-barrel draw and marking the first increase in six weeks.  Crude stocks at Cushing rose by 182,000 barrels. The Strategic Petroleum Reserve released 2.7 million barrels, bringing total reserves to 279.5 million barrels. US crude production reached a record 14.003 million barrels per day.

Japan's producer price inflation accelerated to 7.1% year-on-year in October from 6.8% in September, exceeding expectations of 6.5% and reaching its highest level since the previous month. 

The increase was led by higher prices for petroleum and coal, chemicals, iron and steel, and electrical machinery, reflecting renewed upstream cost pressures. 

Monthly, producer prices rose 0.7%, reversing September's 0.2% decline and recording their strongest increase in five months.

Takeaway: The decline in US mortgage rates coincided with stronger purchase and refinancing applications, although borrowing costs remain elevated. In energy markets, the unexpectedly large crude inventory build and record domestic production point to a looser US supply balance, potentially weighing on prices. Japan's accelerating producer inflation highlights renewed cost pressures across energy, raw materials and machinery, complicating the Bank of Japan's policy outlook.

WHAT HAPPENED OVERNIGHT

US Stocks Rally as CoreWeave Results Ease AI Spending Concerns; Nasdaq Gains 1.6%

• The Dow Jones Industrial Average rose 0.49% to 52,486.49, the S&P 500 gained 1.31% to 7,619.38 and the Nasdaq Composite advanced 1.60% to 25,466.19.
• AI infrastructure stocks led the rebound after CoreWeave forecast adjusted profitability in the first half of 2028, easing concerns over the returns from its debt-funded expansion. Its shares surged 24.7%.
• Nvidia rebounded after losing around $430 billion in market value over the previous two sessions, while the Philadelphia Semiconductor Index jumped 5.7%, with all its components advancing.
• The S&P 500 technology sector rose 2.7%, leading gains among the 11 major sectors. The VIX fell for a fourth consecutive session to 17.49, its lowest in a week.
• Investors continued to weigh concerns over tighter AI regulation following Democratic gains in the midterm elections, alongside uncertainty over Nvidia's leadership.

US Dollar Rises to 103, Hits Highest Since April 2025 as Hawkish Fed Fuels Rate Bets

• The US dollar index hovered just below 103 on Thursday after gaining more than 1% over the previous two sessions, reaching its highest level since April 2025.
• Stronger-than-expected October inflation data and hawkish comments from Federal Reserve officials reinforced expectations of further interest rate hikes.
• Fed Governor Christopher Waller said a 50-basis-point hike in December may be necessary if inflation continues to accelerate, while Dallas Fed President Lorie Logan backed at least two additional 25-basis-point increases.
• Markets are pricing in a 91% probability of a rate hike next month, with further tightening in January and potentially April also being factored in.
• Investors now await US initial jobless claims and existing home sales data for further cues on the economy and the Fed's policy outlook.

US 10-Year Treasury Yield Holds Near 5% Despite Monthly Decline

• The 10-year US Treasury yield held steady at 4.99% on November 12, remaining just below the psychologically important 5% mark.
• The yield has declined by 23 basis points over the past month, suggesting some easing in selling pressure on US government debt.
• However, it remains 87 basis points higher than its level a year ago, reflecting the broader rise in borrowing costs over the past 12 months.
• The yield remains sensitive to inflation trends, expectations for the Federal Reserve's interest rate trajectory and investor demand for longer-dated government debt.

Oil Rises 1% as Iran Rules Out Relinquishing Enriched Uranium, Raising Supply Concerns

• Brent crude rose $1.27, or 1.39%, to settle at $92.76 a barrel, while WTI gained 49 cents, or 0.57%, to $86.53.
• Prices rebounded after Iran ruled out allowing enriched nuclear material to leave the country, raising concerns over a prolonged conflict and delaying hopes of a diplomatic resolution.
• Iran's position complicates negotiations with Washington, which has insisted that nuclear issues must be part of initial discussions aimed at ending the war.
• Persistent shipping risks in the Strait of Hormuz also supported prices, with 37 vessels attacked in October, the highest monthly tally since the war began in February. Iranian forces also targeted shipping navigation systems on Oman's Didamar Island.
• Brent and WTI have fallen about 21% and 17%, respectively, since the start of November on hopes of an end to the conflict.
• US crude inventories rose by 9 million barrels last week, according to API data cited by market sources, adding to concerns over near-term supply.
• Meanwhile, Middle Eastern crude supply outages eased to around 3.8 million barrels per day in early November, according to Kpler, with Saudi and Iraqi production returning to pre-war levels.
• A Ukrainian drone attack also triggered a fire at Russia's Baltic port of Ust-Luga, adding to concerns over disruptions to Russian oil infrastructure.

Day’s Ledger*

Economic Data

• India October CPI
  
• UK September GDP
• UK September Trade Balance
• US Initial Jobless Claims
• US October Existing Home Sales
• US Crude Oil Inventories

Policy

• ECB Economic Bulletin
• US Fed Vice Chair for Supervision Barr Speaks
• US Fed Goolsbee Speaks
• German Buba President Nagel Speaks
• US FOMC Member Daly Speaks

Corporate Actions

• Earnings: EIH Limited, GIC Housing Finance, Hindustan Aeronautics, IFCI Limited, Manappuram Finance, Oil India, Reliance Power

Tickers to Watch

• ADANI ENTERPRISES Kutch Copper receives Veramark assurance.
• VINTAGE COFFEE Board allots 39 lakh warrants to promoter group at ₹164 each.
• BAJAJ FINANCE QIP opens with floor price at  ₹992.25/share. May offer up to 5% discount to floor price.
• TATA POWER Approves investment in 1,800 MW pumped storage project. Approves ₹118.71 billion investment in additional capacity. Appoints Sanjay Banga as MD & CEO for five years from May 1, 2027. He is CEO-designate until then.
• AUROBINDO PHARMA USFDA classifies Seymour unit as 'OAI'. Unit was inspected August 17-21 and received four observations.

Must Read

• Customs holds Pernod, Diageo Scotch shipments in dispute over 150% tariff
• India's wealthy pivot to real estate as stock market returns cool off
• Rupee outperforms most Asian peers as foreign inflows boost sentiment
• Indian firms rush to raise $3 bln in debt as yields plunge ahead of RBI review
• India bans export of lithium-ion battery recycled material
• India approves high-capacity power corridor to support clean energy boom
• Gold’s Shine Fades, but its Foundations Hold
• Delhi’s Air Pollution: The Real Reform Lies Beyond Emergency Measures
• The Iran War Is Far From Over
• Why the US Treasury’s Quarterly Refunding is Becoming a Market Event
• The Satellite Internet Conundrum for India
• Stress Testing Banks Before the Next Crisis

 (*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day