Markets Cautious Despite Hopes of Trump–Xi Meeting

GLOBAL MOOD: Cautiously Risk-on
Drivers: US–China trade thaw, US Government Shutdown

Asia-Pacific markets stayed mixed as investors weighed easing rhetoric from US President Trump against fresh maritime trade frictions with China. Optimism over a potential Trump–Xi meeting was offset by renewed tariff and port fee worries.

TODAY’S WATCHLIST
 - Fed Chair Powell Speech 
 - IMF World Economic Outlook
 - Tech Mahindra and Bank of Maharashtra Earnings

THE BIG STORY
US President Donald Trump is expected to meet Chinese President Xi Jinping in South Korea later this month, signalling progress in efforts to calm trade tensions after weeks of tariff threats and export control disputes. US Treasury Secretary Scott Bessent confirmed that both sides have maintained “substantial communication” and that the planned tariffs would not take effect until November 1, allowing room for diplomacy. The meeting is set to coincide with the Asia-Pacific Economic Cooperation summit, where global trade policy and regional stability are expected to dominate discussions.

However, tensions persist as both countries prepare to impose new port fees on shipping companies starting October 14, turning maritime trade into a new flashpoint. Analysts warn that China’s COSCO Shipping could absorb nearly half of the projected $3.2 billion in costs by 2026, while small and emerging economies may face collateral damage from prolonged uncertainty. UNCTAD Secretary-General Rebeca Grynspan cautioned that continued trade frictions risk slowing investment flows and dampening growth momentum across developing markets.

Data Spotlight
UK retail activity softened in September, rising 2% year-on-year on a like-for-like basis, down from 2.9% in August and below expectations of 2.5%. The British Retail Consortium attributed the slowdown to inflation pressures, tax concerns, and unseasonably warm weather, which discouraged autumn wardrobe purchases. Food sales rose 4.3%, largely due to inflation, while non-food sales edged up 0.7%, with tech products seeing a boost from new Apple product launches.

Meanwhile, US natural gas futures hovered around $3.1/MMBtu, near a three-week low, as mild weather forecasts and strong storage levels eased supply concerns. Gas output in the Lower 48 states averaged 106.4 bcfd so far in October, down slightly from September’s levels but still sufficient to keep inventories 4% above seasonal norms.

Takeaway: Softer UK retail data and stable US gas markets signal easing inflationary pressures but highlight the fragility of consumer demand ahead of the UK budget.

WHAT HAPPENED OVERNIGHT

• US Stocks rallies as easing US–China tensions boost tech stocks
  • US stocks rebounded sharply on Monday, led by a strong rally in chipmakers after President Donald Trump struck a more conciliatory tone on trade with China.
  • Investor sentiment improved further after Treasury Secretary Scott Bessent confirmed Trump’s plan to meet Chinese President Xi Jinping in South Korea later this month to discuss de-escalation.
  • Broadcom surged nearly 10% after announcing a partnership with OpenAI to develop its first in-house AI processors.
  • Other AI-linked stocks also advanced, Nvidia rose 2.8%, while Micron Technology jumped over 6%.

• US Treasury shut on Monday for Columbus Day
  • US Treasury markets remained shut on Monday in observance of the Columbus Day/Indigenous Peoples’ Day holiday.

• US Dollar strengthens as trade tensions ease and political uncertainty weighs on yen
  • The dollar index rose 0.22% to 99.27, rebounding from the prior session’s losses after President Donald Trump softened his tone on China, assuring that trade relations “will all be fine.”
  • Vice President JD Vance reinforced the conciliatory stance, saying Washington is open to dialogue if Beijing is “reasonable.”
  • The euro slipped 0.44% to $1.1567, while the yen weakened 0.77% to 152.32 per dollar, pressured by renewed political uncertainty in Japan following doubts over Sanae Takaichi’s expected appointment as prime minister.

• Crude oil prices rebound from a 5-month low as trade tensions ease
  • Brent crude oilprices recovered on Monday after confirmation that US President Donald Trump and Chinese President Xi Jinping will meet later in October, easing fears of a renewed trade war.
  • Brent crude rose 0.9% to $63.32 per barrel, while WTI crude rose 1% to $59.49 per barrel.

Day’s Ledger

Economic Data

• RBA Meeting Minutes
• India WPI Sep data
• IMF/World Economic Outlook
• IMF/World Bank Annual Meeting

Corporate Actions

• Jul-Sep Earnings: Aditya Birla Money, Bank of Maharashtra, Cyient DLM, ICICI Lombard, ICICI Prudential, IREDA, Persistent System, Navkar Corp, Tech Mahindra
• Asian Hotels to consider fund raising
• Thyrocare Tech to consider bonus shares 
• Star Cement to consider fund raising 

Policy Events

• BoE Mann Speech
• ECB Cipollone Speech
• BoE Taylor Speech 
• Fed Bowman Speech 
• ECB Donnery Speech 
• BoC Rogers Speech 
• Fed Chair Powell Speech 
• BoE Gov Bailey Speech
  
  
  

Tickers to Watch

• SC dismisses ASIAN PAINTS’ plea challenging CCI probe over Grasim Industries complaint
  
• SC defers VODAFONE IDEA’s plea on additional AGR demand to Oct 27
  
• HERO MOTOCORP enters Italian market through distribution tie-up with Pelpi International
  
• JIO FINANCIAL SERVICES arm, Jio Payments Bank, ventures into next-gen toll collection services
  
• RELIANCE POWER CFO Ashok Pal resigns following arrest in money laundering case
  
• US FDA flags one observation at BIOCON’s Cranbury, New Jersey manufacturing facility
  
• KEC INTERNATIONAL secures ₹11.74 billion transmission and distribution orders in India, Saudi Arabia
  
• ADITYA BIRLA REAL ESTATE divests joint venture Birla Advanced to RSWM for ₹541 million
  
• LT FOODS to acquire three Global Green International subsidiaries for up to €7.8 million
  
• OIL INDIA extends gas supply agreement with North Eastern Electric Power for 15 years
  
• LODHA DEVELOPERS acquires full ownership of Chaitanya Bilva for ₹5 billion
• BHARTI TELECOM plans to raise up to ₹105 billion crore via bonds on Tuesday

MUST READ

• Why the Dollar Is Quietly Winning Again
  Easy Money, Hard Lessons
• Singapore court approves crypto exchange WazirX's scheme of arrangement
• MSME industry bodies urge RBI to extend ECLGS to tackle US tariff impact
• RBI move to ease risk weights may free up Tata Capital's equity: Fitch
• India’s September Retail Inflation Lowest Since 2017; Core Rises to 4.5%
• JPMorgan unveils $1.5 trn plan to boost investments in US industries
• FMCG companies see mid single digit revenue growth in Q2 FY26
• Baker Hughes CEO Sees $100 million Hit From Trade Tariffs

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

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