Asian Equities Rally on Fed Rate-Cut Hopes

GLOBAL MOOD: Cautiously Risk-on
Drivers: Fed Rate cut bets, US Mixed data

Asian markets are firmer, with the Nikkei jumping over 1% and the Topix higher, supported by rising Fed rate-cut bets, while geopolitical risks around US–Japan–China tensions keep sentiment measured rather than euphoric.

TODAY’S WATCHLIST

• US New Home Sales Data
  
• Germany GfK Consumer Climate Index

THE BIG STORY
Conflicting signals from Federal Reserve officials have fuelled a surge in hedging across the interest-rate derivatives market, with traders ramping up positions in short-dated swaptions and SOFR options. The moves reflect uncertainty ahead of the December 9–10 meeting, as markets weigh the risk of either a third rate cut or a pause.

Dovish comments from New York Fed President John Williams and Governor Christopher Waller have strengthened expectations for a December cut, citing a weakening labour market. However, several regional Fed presidents continue to argue for holding rates steady until inflation shows a clearer downtrend, leaving the policy outlook sharply divided.

Geopolitical risks added another layer of caution. US President Donald Trump urged Japan’s Prime Minister Sanae Takaichi to avoid escalating tensions with China after she suggested a Chinese attack on Taiwan could trigger Japanese military action. The call followed Trump’s discussion with Xi Jinping, who reiterated that Taiwan’s “return to China” remains central to Beijing’s strategic vision.

Data Spotlight
US labour market readings delivered a mixed signal. Initial jobless claims fell by 6,000 to 216,000 in the week ending 22 November, the third straight decline and tied for the lowest level since February, undershooting expectations. However, continuing claims rose to 1.96 million, reinforcing signs that hiring is slowing, as displaced workers take longer to find new jobs. Claims filed by former federal employees dropped sharply, reflecting the normalisation following the shutdown.

Manufacturing data showed resilience. US durable goods orders rose 0.5% in September, beating expectations, with gains across electrical equipment, primary metals, computers, and fabricated metals. Core capital goods, a key proxy for business investment, rose 0.9%, matching August’s pace and signalling steady capex momentum despite tariff-related pressures.

In contrast, regional activity weakened sharply. The Chicago Business Barometer slumped to 36.3, a steep fall and the 24th consecutive month below 50, indicating a deep contraction across new orders, production, and employment, even as supplier deliveries lengthened.

US crude stockpiles increased by 2.77 million barrels last week, reversing the prior draw and exceeding expectations, adding to concerns about a softening demand backdrop.

Takeaway:
Labour market data remained stable on the surface but signalled underlying hiring strain, while manufacturing held firm and regional activity weakened sharply, a fragmented backdrop that keeps the Fed’s December decision finely balanced.

WHAT HAPPENED OVERNIGHT

• US stocks rally extends on tech rebound, Fed cut hopes
  • US stocks rallied for a fourth straight session on Wednesday as tech strength returned and odds of a December Fed rate cut increased.
  • All three major indexes advanced ahead of Thanksgiving, with investors looking past last week’s tech-valuation concerns.
  • Dell surged 5.8% after delivering better-than-expected earnings and issuing an upbeat outlook.

• US Treasury yields steady after early dip
  • The 10-year US Treasury yield held near 4.02% on Wednesday, rebounding slightly after touching a one-month low of 4.0% earlier in the session.
  • Yields initially fell as initial jobless claims hit their lowest since February and durable goods orders surprised to the upside, offering a firmer read on the economy.
  • Treasuries found support from reports that NEC Director Kevin Hassett, a vocal advocate of dovish policy, is the leading candidate for Fed Chair.
  • Additional buying interest emerged as the FDIC prepared to ease SLR rules, potentially allowing large banks to hold more Treasuries.

• US Dollar softens as dovish Fed bets hold
  • The dollar index dipped to 99.6 on Wednesday as markets held firm to expectations of a 25 bps Fed cut in December, with odds staying above 80%.
  • Mixed US data, lower jobless claims and stronger durable goods orders failed to shift sentiment toward a stronger dollar.
  • Reports that NEC Director Kevin Hassett is the leading candidate for Fed Chair added to the currency’s weakness, with investors viewing him as more dovish and aligned with President Trump’s preference for lower rates. 

• Crude oil prices rebound ahead of holiday
  • Brent crude prices rose on Wednesday, recovering from one-month lows as traders reassessed the oversupply outlook and monitored progress in Russia–Ukraine peace talks.
  • Brent gained 1.04% to $63.13, while WTI climbed 1.21% to $58.65.
  • Pre-Thanksgiving positioning and reduced liquidity also contributed to the modest rebound.
    

Day’s Ledger

Economic Data

• Germany GfK Consumer Climate Index
• Euro Nov Consumer Confidence 
  
• US Building Permits Data
  
• US New Home Sales Data

Corporate Actions

• Vineet Lab to consider fund raising
• Bodhi Tree to consider fund raising 
• Kridhan Infra to consider Jul-Sep earnings 

Policy Events

• ECB Account of Monetary Policy Meeting
• ECB Guindos Speech
• BoJ Noguchi Speech

 Tickers to Watch

• ASIAN PAINTS UAE subsidiary plans second plant with an investment of approx ₹3.4 billion, capacity 55,800 KL/year.
• BHARTI AIRTEL promoter entity ICIL sells 3.43 cr shares for ₹71.89 billion
• ETERNAL infuses ₹6 billion into Blinkit as qcom expansion accelerates
• HAVELLS INDIA to acquire 26% in Kundan Solar for ₹0.0563 billion; plant to develop 15 MWac solar project under a long-term PPA.
• INFOSYS' ₹180 billion buyback gets 8.3x bids; 826 million shares tendered
• JAMMU & KASHMIR BANK board approves equity raise of ₹7.5 billion via QIP and up to ₹5 billion via NCDs.
• OBEROI REALTY signs redevelopment deal for a Nepean Sea Road plot; free-sale entitlement estimated at 1.18 lakh sq ft; EVP Ashok Choudhury resigns.
• ONE 97 COMMUNICATIONS subsidiary Paytm Payments Services receives RBI authorisation to operate as a Payment Aggregator.
• PATEL ENGINEERING wins two LoIs from Saidax Engineers for SECL-linked coal excavation and transport works worth ₹7.98 billion.
• WHIRLPOOL OF INDIA promoter to sell up to 9.5 million shares via block deal worth ₹9.65 billion at a floor price of ₹1,030 per share.
• WIPRO announces a strategic R&D alliance with IISc and FSID to collaborate on frontier tech and innovation.
• ZYDUS LIFESCIENCES, RK Pharma sign deal for licensing, commercialisation

Must Read

• Cabinet Oks Sintered Rare Earth Permanent Magnets Manufacturing Scheme
  
• IMF Reclassifies India’s Exchange-Rate Regime as “Crawl-like arrangement”
• Rate cuts, tax breaks could lift India's Nifty 50 to 30,000 by end-2026, J.P. Morgan says
• Mall Operators Set for Double-Digit Growth Through FY27: Crisil
  
• UK government allows some new oil, gas fields, but holds firm on taxes
• SBI’s key margin target safe even if RBI trims repo rate by 0.25%: Chairman C S Setty
• India must aim to become world’s manufacturing hub, industry leaders say
• IMF says India’s economy will stay robust despite external headwinds as inflation remains “well contained”
• India may attract ₹360 trillion in green investments by 2047: CEEW
• MPC's inflation forecasts have no systematic bias, says RBI DG Gupta
• Apple tells Delhi HC CCI's global turnover penalty rule risks $38-bn fine
• Chicago Business Activity Slumps Unexpectedly
  
• PepsiCo brings global gourmet brand Red Rock Deli to India
  
• Apple set to become world’s top phone maker, overtaking Samsung
  
  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

Pakistan’s 27th Amendment: Constitutionalising the Deep State

Lt Gen Syed Ata Hasnain writes, Pakistan’s 27th Constitutional Amendment hasn’t triggered the attention it deserves in India, yet it marks the most sweeping restructuring of the Pakistani state in decades. By formally placing strategic and nuclear authority under a single military office, and elevating the Army Chief as the constitutional centre of power, Pakistan has created a faster, more centralised, and less politically moderated crisis-response structure.

Add to this the rise of radicalised urban networks inside India, and the strategic landscape around us is shifting in ways that blend deterrence, ambiguity, and hybrid pressure.

This moment demands that India upgrade both its external deterrence and internal resilience.