Oil Surge Rekindles Inflation Worries; Investors Await Trump–Xi Diplomacy

GLOBAL MOOD: Cautiously Risk-on
Drivers: US sanctions on Russia, US-China Trade Talks, US Government Shutdown

Markets are cautiously optimistic but remain volatile ahead of next week’s Trump–Xi meeting, seen as a pivotal moment for easing US–China trade tensions. The confirmation of the talks brought some relief to investors, but lingering uncertainty over Russia-related sanctions and their impact on global energy flows has kept sentiment fragile. 

THE BIG STORY
The White House confirmed that US President Donald Trump will meet Chinese President Xi Jinping next Thursday during his upcoming Asia trip, which includes stops in Malaysia, Japan, and South Korea. The long-anticipated meeting set to take place on the sidelines of the APEC CEO Summit that comes amid renewed US-China trade tensions and efforts to stabilise relations between the two economic giants.

Meanwhile, global markets reacted to Trump’s new sanctions on Russia’s two largest oil companies, Rosneft and Lukoil, aimed at pressuring President Vladimir Putin to end the war in Ukraine. The move sent oil prices surging 5%, prompting Chinese refiners to suspend Russian oil purchases and Indian importers to scale back sharply. Putin dismissed the sanctions as ineffective but warned that reduced Russian supply could tighten global markets and raise energy costs worldwide.

TODAY’S WATCHLIST
- Flash PMI Data,
- SBI Life Insurance, Bharat Petroleum, and Dr.Reddys Laboratories earnings

Data Spotlight
New US jobless claims rose to an estimated 232,000 for the week ending October 18, up from 220,000 the prior week, signalling continued cooling in the labour market as more Americans collected unemployment benefits. Estimates from major banks ranged between 227,000 and 232,000, reflecting modest but consistent softening in hiring trends. Meanwhile, existing home sales climbed 1.5% to an annual rate of 4.06 million units, the highest since February, driven largely by upper-income buyers benefiting from stock market gains and slightly lower mortgage rates. However, analysts caution that labour market weakness could limit broader housing demand in the coming months.

Takeaway: The data points to a gradually softening US economy with hiring slowing but not collapsing, while the housing sector shows pockets of resilience among wealthier households despite overall economic uncertainty.

WHAT HAPPENED OVERNIGHT

• US Stocks ends higher as tech rebound offsets mixed earnings
  • All three major US indexes closed in positive territory on Thursday, with Nasdaq leading gains as tech stocks rebounded.
  • Tesla rose 2.3%, recovering from its earlier profit miss and helping lift the broader market amid cautious investor sentiment.
  • IBM slipped 0.9% after reporting a slowdown in its cloud segment, overshadowing its earnings beat.
  • Broader sentiment improved as traders balanced mixed corporate results with easing concerns over US-China trade tensions. 

• US Treasury yields rise as oil surge revives inflation worries
  • The 10-year US Treasury yield climbed to 3.99% on Thursday after oil prices spiked following fresh US sanctions on Russian oil producers, reigniting inflation concerns.
  • The move tempered expectations for additional Federal Reserve rate cuts this year as traders priced higher near-term price pressures.
  • Markets also digested reports that the Trump administration may restrict software-related exports to China in response to Beijing’s rare earth curbs. 

• US Dollar edges higher ahead of key inflation data amid ongoing government shutdown
  • The dollar index inched above 99 as traders awaited September’s inflation report for clues on the Fed’s next move.
  • The three-week US government shutdown has delayed most major economic releases, leaving inflation as one of the few indicators guiding markets.
  • President Donald Trump rejected requests from Democratic leaders to meet until the shutdown ends, extending policy uncertainty.

• Crude oil prices surge over 5% as US and EU sanctions on Russia tighten supply outlook
  • Brent crude oil rose 5.4%, to settle at $65.99 per barrel, while WTI crude gained 5.6%, to $61.79 per barrel.
  • Prices jumped to a two-week high after the US imposed sanctions on Russia’s energy sector over the Ukraine war.
  • The EU approved its 19th sanctions package, banning Russian LNG imports, while Britain imposed similar measures last week.

Day’s Ledger

Economic Data

• US Fed Balance Sheet
• Japan Sep Inflation Rate
• India October flash Manufacturing, Services and Composite PMI
• ECB Sep Consumer Inflation Expectations
• India FX Reserves 
• US Sep CPI 
• US October flash Manufacturing, Services and Composite PMI

Corporate Actions

• Jul-Sep Earnings: Bharat Electronics, SBI Life Insurance, Bharat Petroleum, Dr.Reddys Laboratories, Aditya Birla Sun Life, eClerx Services, SBI cards
• Bharst Rasayan to consider stock split, bonus share issue
• Federal Bank to consider fund raising

Policy Events

• ECB Cipollone Speech
• BoE Woods Speech
  
  

TICKERS TO WATCH

• Vedanta to invest ₹1 trn more in Odisha, add 100K jobs across three plants
• NCLAT asks IIHL to provide timeline to stop using Reliance trademark
• FSIB invites application for Canara MD & CEO a week after notification
• Biocon Biologics gets Health Canada approval for Yesintek, Yesintek I.V.
• Tata Trusts moves proposal to reappoint Mehli Mistry as lifetime trustee
• Glenmark Pharma to launch Ropivacaine Hydrochloride Injection USP in US
• TVS unveils Norton superbike sketch; JLR's McGovern joins design team
• US govt shutdown has not affected consumer sentiment, says Unilever CEO
• Maruti Suzuki's Jimny 5-door crosses 100K export milestone globally
• Hero MotoCorp enters UK market, partners with MotoGB for distribution

MUST READ

• When Collateral Isn’t Enough: Why ECL Could Redefine Indian Banking
• Corporate advance growth for large banks robust in Q2 as demand picks up
• Bihar Election 2025: NDA Banks on Experience, RJD Bets on Change
• NBFC and fintechs' micro loan play catches regulatory attention
• RBI flags geopolitical tensions as key risk to cross-border payments
• US sanctions on Russian oil majors may hurt Reliance Industries, Nayara
• SEBI mulls uniform process for opening MF folios, first investments
• Venture funding slowed in September quarter; exit activity at 7-year high
• The New Friction: How Supply Chains Are Quietly Redrawing India’s Map
• Central US Manufacturing Activity Increases at Faster Pace
• Turkey’s Central Bank Slows Pace of Interest-Rate Cuts After Inflation Uptick

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Ukraine and Russia: Is There Still a Road to Peace?

Ukraine’s war has entered a phase of exhaustion, not escalation. Both sides are battered, neither victorious, and the world may be ready to listen again.

Lt Gen Syed Ata Hasnain writes, Can Trump’s transactional diplomacy and Putin’s strategic patience find a middle ground?

Could India or Turkey emerge as credible peace brokers where others have failed?

And if the guns do fall silent, will trust last longer than the truce?