Asia Edges Risk-On Mode as Japan’s Yen Surge Lifts Sentiment, but Fed Uncertainty Limits Optimism

GLOBAL MOOD: Cautiously Risk-On
Drivers: Fed Rate Cut Hopes, Mixed Data Signals, Ukraine Peace Diplomacy

Asian markets showed a mild risk-on tone, helped by Japan’s gains as a weaker yen lifted exporters, though sentiment stayed cautious ahead of a sharply divided Fed meeting. Supportive currency moves competed with uncertainties in global rates, geopolitics and trade, keeping broader optimism restrained.

TODAY’S WATCHLIST
 -US FOMC Meeting Outcome
 -ECB Lagarde Speech

THE BIG STORY
The Federal Reserve headed into one of its most divided meetings in years, with markets fully pricing in a quarter-point cut even as policymakers remain sharply split between inflation concerns and weakening labour signals. This week’s decision will effectively preview how US monetary debates may unfold in 2026.

Meanwhile, Ukraine and European leaders have refined their peace-plan proposals and are preparing to present them to Washington. Kyiv continues to resist pressure for a quick deal that appears too favourable to Moscow, insisting on firm security guarantees to prevent future Russian aggression.

Separately, a major US-Indonesia trade agreement is at risk, as US officials say Jakarta has walked back key commitments on tariff and market-access reforms. The dispute raises the possibility of renewed U.S. tariffs and adds another layer of global policy uncertainty.

Data Spotlight
US job openings inched up to 7.67 million in October 2025, according to delayed BLS data, with both September and October figures well above expectations following the government shutdown. Labour data signals were mixed with ADP data showed private employers added an average of 4,750 jobs per week in mid-November, but the official payrolls report recorded a 32,000 job loss, the largest since March 2023 and driven by sharp layoffs at small firms.

US crude oil inventories fell by 4.8 million barrels in the week ending 5 December, the third straight weekly draw and the largest since early June pointing to firmer demand and tightening supplies.

Takeaway: Labour data remains contradictory, keeping uncertainty high ahead of the Fed decision, while a sharp crude draw signals strengthening near-term demand.

WHAT HAPPENED OVERNIGHT

• US stocks end flat as traders await Fed decision
  • US stocks were mostly unchanged Tuesday as markets assessed labour data and corporate news ahead of the Fed meeting.
  • S&P 500 finished flat; Nasdaq edged higher; Dow slipped 0.3%.
  • JPMorgan fell 4.7% after projecting 2026 expenses near $105B, weighing on bank stocks.
  • Nvidia dipped 0.3% amid reports China may curb domestic H200 purchases despite US approval with a 25% surcharge.
  • Home Depot lost 1.3% after issuing softer 2026 earnings guidance.

• US Treasury yields rise on firm labour data signals
  • The 10-year US Treasury yield climbed toward 4.2%, the highest since late September, as stronger labour data complicated the Fed’s policy outlook.
  • The firmer labour backdrop reduced clarity on the Fed’s easing path, even with a 25-basis point cut widely priced in for this week.

• US Dollar firms on strong labour data ahead of Fed decision
  • The dollar strengthened after better-than-expected job-market figures, signalling labour resilience before the Fed meeting.
  • Policymakers expected to stress inflation risks, limiting room for additional easing.
  • On Tuesday, the dollar index climbed to 99.2, and USD/JPY reached its highest point in two weeks, rising 0.6% to trade at 156.85.
  • Euro slipped 0.1% to $1.1629 as the dollar broadly gained.

• Crude oil prices slips further ahead of Fed, peace-talk uncertainty
  • Brent crude prices settled at $61.94, down 0.88%; WTI at $58.25, down 1.07%.
  • Markets monitored Russia-Ukraine peace talks, with doubts over progress pressuring prices.
  • Supply outlook remains ample, further weighing on sentiment.
  • Traders cautious ahead of a key Fed rate decision, which could influence demand expectations.

Day’s Ledger

Economic Data

• Japan Nov PPI
• India M3 Money Supply

Corporate Actions

• Yug Decor board to consider rights share issue
• KSR Footwear to consider quarterly earnings 

Policy Events

• US FOMC Meeting Outcome
  
• ECB Lagarde Speech
  
• BoC Interest Rate Decision

Tickers to Watch

• Govt cuts IndiGo flight schedule by 10% to help stabilise operations
• Birla Estates aims for top 3 spot in core markets with ₹450 billion pipeline
• Synergy gains from stake purchase positive for pharma major Biocon
• Zydus, Formycon sign licensing deal for Keytruda biosimilar in US, Canada
• Acquisitions, partnerships to drive operational gains for JSW Infra
• IndusInd Bank makes key appointments to strengthen leadership team
• Ageas Federal Life Insurance aims 3x premium growth by FY28: CEO Gomes
• Swiggy to use nearly half of ₹100 billion QIP proceeds for quick commerce expansion 

Must Read

• Microsoft to invest $17.5 billion in India, says CEO Satya Nadella
• US, India hold high-level talks to reset ties as trade deal remains elusive
• Centre resumes MGNREGA works in West Bengal but with stringent riders
• Tamil Nadu govt set to buy out Indian Railways' stake in Chennai MRTS
• Fertiliser import likely to jump 41% in FY26 on strong monsoon demand: FAI
• Govt flags export gains, manufacturing momentum ahead of Modi's Oman FTA
• An Unusually Divided Fed Is Expected to Deliver a Rate Cut
• China’s Manufacturing Is Booming Despite Trump’s Tariffs

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

MPC Signals Maturity as Policy Counters Shocks with Confidence

Former MPC member Ashima Goyal offers a sharp take on how India’s monetary policy has matured. Instead of the old instinct to tighten in volatile times, the MPC used countercyclical moves grounded in domestic conditions, recognising that real rates had stayed too high and that trend inflation was already anchored. Clearer communication, OMO support and a data-dependent stance now strengthen pass-through and credibility.