Asia Extends Gains on Fed Cut Optimism and Geopolitical Easing

GLOBAL MOOD: Risk-on
Drivers: Ukraine Peace Framework Talks, Fed Cut Bets, US Data

Asian markets tilted risk-on Wednesday as Japanese equities surged, fuelled by rising confidence in a December Fed rate cut. The Nikkei jumped 1.3%, climbing above 49,200, while the Topix also gained 1.3%, tracking Wall Street’s rally and reflecting improved sentiment across regional markets.

TODAY’S WATCHLIST

• US Core PCE Prices
  
• US GDP Data
  
• ECB Lagarde Speech

THE BIG STORY
The US federal budget deficit widened to $284 billion in October, according to a delayed Treasury report distorted by the 43-day government shutdown and a large timing shift in benefit payments. The shortfall was 10% higher than October 2024, largely because $105 billion in November military and healthcare benefit payments were pulled into last month’s accounts.

Adjusted for this shift, the deficit would have been about $180 billion, a 29% reduction from the prior year’s adjusted figure, reflecting record tariff revenues and shutdown-related delays in federal employee pay. October outlays totalled $689 billion, up 18% year-on-year, though the Treasury noted that shutdown-related payment delays likely trimmed reported outlays by less than 5%.

At the same time, geopolitical attention sharpened as Ukraine signalled readiness to advance a revised US-backed peace framework aimed at ending its war with Russia. President Volodymyr Zelenskiy said Kyiv is prepared to discuss remaining points directly with President Donald Trump, stressing that European allies must be included in any talks.

Data Spotlight
US producer prices rose 0.3% in September, rebounding from August’s decline and matching expectations, driven by sharp increases in food (+1.1%) and energy (+3.5%) costs. This pushed goods inflation to 0.9%, its fastest monthly pace in over a year. Meanwhile, retail sales slowed to 0.2%, the weakest in four months, as gains in miscellaneous retailers, petrol stations and health & personal care were offset by declines in sporting goods, non-store retail, electronics, and autos—signalling uneven consumer momentum.

Labour market indicators pointed to renewed strain. US private employers shed an average of 13,500 jobs per week in the four weeks ending 8 November, a sharp deterioration from the 2,500 weekly losses in the prior period, according to ADP Research. The acceleration reflects a wave of announced layoffs from major firms including Amazon and Target. The official November jobs report will be released on 3 December.

Elsewhere, business inventories were unchanged in August, highlighting a broader slowdown in restocking. Housing activity showed more resilience: pending home sales rose 1.9% in October with gains across all regions, while FHFA home prices were flat in September but up 2.2% year-on-year, led by the Middle Atlantic.

Takeaway: Inflation pressures firmed at the factory level while consumer spending softened and job losses accelerated—painting a mixed economic picture ahead of crucial November labour data.

WHAT HAPPENED OVERNIGHT

• US stocks rise on Fed cut optimism
  • US stocks rallied on Tuesday as December cut bets strengthened.
  • Cyclicals and defensives led gains; tech lagged.
  • ALPHABET +1.6% and META +3.8% on reports of Meta exploring Google AI chip deal.
  • NVIDIA -2.6%, down ~15% this month and heading for its worst month since Sept 2022. 

• US Treasury yields fall on easing expectations
  • 10-year US Treasury yield dropped to 4.0%, a near one-month low, as markets priced in a December cut.
  • Curve softened ahead of Thanksgiving on safety demand.
  • Delayed data showed weaker September retail sales and contracting ADP employment indicators. 

• US Dollar weakens on dovish Fed tilt
  • Dollar index fell 0.5% to 99.75 as softer data boosted rate-cut expectations.
  • Mixed signals--weak retail sales, firmer PPI--reinforced cooling-economy sentiment.
  • Dollar slipped against most majors. 

• Crude declines on peace-deal hopes
  • Brent fell 1.4% to $62.48, WTI down 1.5% to $57.95.
  • Progress in US-Ukraine diplomacy raised expectations of future Russian supply.
  • Oversupply fears for 2026 added pressure 

Day’s Ledger

Economic Data

• Japan Core CPI
• ECB Financial Stability Review
• US Initial Jobless Claims
• US Building Permits Data
• US Core PCE Prices
• US GDP Data 

Corporate Actions

• Arman Financial to consider fund raising 
• HCC to consider rights issue
• IIFL Finance to consider fund raising
• J&K Bank to consider fund raising

Policy Events

• Reserve Bank of New Zealand Interest Rate Decision
• ECB Lane Speech
• ECB Lagarde Speech

 Tickers to Watch 

• ASIAN PAINTS signs 3-year BCCI partnership as Team India's colour partner
• BAJAJ AUTO to take Riki e-rickshaw presence to 200 cities in Q1 2026: Exec
• BHARTI AIRTEL promoter entity ICIL launches a block trade of up to $806 million.
• CCI clears ICICI Pru AMC’s purchase of select ICICI Venture Funds operations
• ERIS LIFESCIENCES to acquire 30% stake in Swiss Parenterals for ₹423 cr
• HINDUSTAN POWER wins SECI bids for solar and battery storage projects
• INDRAPRASTHA GAS signs JV with CEID to develop compressed bio-gas and biofuel projects, with 50:50 ownership.
• JAYANT INFRATECH secures Konkan Railway EPC contract for traction system upgrade worth ₹1.62 billion.
• NCC wins Assam government contract for Gauhati Medical College expansion worth ₹20.63 billion.
• NELCO receives 10-year DoT authorisation to offer VSAT services of other UL-GMPCS licensees under UL VNO.
• UNITED BREWERIES launches Heineken Silver in New Delhi for the domestic market.
• WELSPUN CORP files $35.5–$43.5 million arbitration claim against Wasco units over lost Qatar investment opportunity.
• ZYDUS LIFESCIENCES gets final USFDA approval for Verapamil ER tablets (120/180/240 mg), a $24.5 million US market.

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Import Visibility Needed to Complete India’s Edible Oils Data Reform

India’s edible oils reform has taken a meaningful step forward with the new VOPPA 2025 rules mandating monthly production reporting. But without visibility into import contracts—quantities, prices, and expected arrivals—policy will remain reactive, driven by symptoms rather than signals. For a market where 60% of consumption is imported, forward guidance is not optional; it is the missing link between transparency and true market stability.

G. Chandrashekhar writes, can India build a real-time import monitoring system that gives policymakers advance sight of supply pressures?