China Deepens ASEAN Ties with New Trade Pact; Global Markets Eye Trump–Xi Meeting

GLOBAL MOOD: Cautiously Risk-on
Drivers: US-China Trade Talks, Fed Rate Decision, US-Asia diplomacy

Asian markets are trading mildly positive as optimism around China-ASEAN trade cooperation offsets lingering uncertainty ahead of key US-Asia diplomatic meetings. Investors are treading carefully, awaiting the outcome of US President Donald Trump’s talks with Chinese President Xi Jinping and South Korea’s Lee Jae Myung later this week.

TODAY’S WATCHLIST
 - US Fed Interest Rate Decision
 - Coal India, L&T earnings

THE BIG STORY
China and the ASEAN countries signed an expanded version of their Free Trade Agreement, Asean-China FTA 3.0 on Tuesday, aiming to deepen economic ties amid rising US protectionism. Premier Li Qiang highlighted that “unity is strength,” urging closer cooperation to navigate global uncertainty. The new deal witnessed by Li and Malaysian Prime Minister Anwar Ibrahim updates the 2002 framework to further cut tariffs, boost services and investment, and expand a market of over 2 billion people. Trade between China and ASEAN has surged nearly fourfold to $1 trillion since 2010, underscoring the region’s growing interdependence.

Meanwhile, US President Donald Trump continues his Asia tour, arriving in South Korea for talks with President Lee Jae Myung and a highly anticipated meeting with China’s Xi Jinping. While the US and South Korea reached a preliminary trade deal in August, talks remain stalled over the structure of $350 billion in South Korean investments in the US. Trump is also expected to push Seoul to increase defence spending and address labour shortages linked to US immigration rules, following a raid on Hyundai’s Georgia battery plant.

The meetings mark a pivotal moment for US-Asia relations, balancing competition with China against efforts to reinforce alliances.

Data Spotlight
US crude oil inventories dropped by 4.0 million barrels in the week ending October 24, 2025, marking the second straight weekly draw, suggesting steady refinery demand despite softening global sentiment. Meanwhile, ADP’s preliminary weekly employment estimates showed modest job creation, averaging 14,250 jobs per week (around 57,000 monthly), hinting at a slow but stabilising labour market following September’s contraction.

On the consumer front, US consumer confidence slipped to a six-month low of 94.6 in October, weighed down by worries over near-term job availability, according to The Conference Board. The decline was most pronounced among younger and older households, while middle-aged consumers reported a slight improvement.

Takeaway:
The latest US data reflected a mixed economic landscape, balancing signs of stabilising activity with ongoing concerns around labour and housing markets. The data reinforces expectations of a Federal Reserve rate cut, as soft confidence, slow job gains, and muted housing appreciation highlight a fragile yet stabilising US economy in need of continued policy support.

WHAT HAPPENED OVERNIGHT

• US Stocks Soar to Record Highs as AI Momentum, Rate-Cut Hopes Drive Rally
  • All three major US indexes closed at record highs on Tuesday, driven by renewed AI momentum and strong earnings optimism.
  • Nvidia surged 5%, adding over $230 billion in market value after announcing plans to build seven AI supercomputers for the US Department of Energy, with $500 billion in chip bookings reported.
  • Microsoft gained 2% after striking a deal to restructure OpenAI into a public benefit corporation, securing a 27% stake in the ChatGPT developer.
  • Investors remained upbeat ahead of this week’s megacap earnings releases, while easing inflation and expectations of a Fed rate cut continued to underpin market sentiment.
    
    

• US Treasury yields steady ahead of Fed decision and Trump–Xi trade meeting
  • The 10-year US Treasury yield held around 3.99% on Tuesday after early volatility, as traders positioned ahead of the Federal Reserve’s policy decision on Wednesday.
  • The Fed is widely expected to cut rates by 25 bps, following last week’s cooler-than-expected inflation data.
  • Yields were also influenced by anticipation of the Trump–Xi meeting, where the two leaders are expected to finalise a broad trade deal covering rare earths, agricultural exports, and tech investments.
    
    

• US Dollar steady ahead of Fed rate cut and Trump–Xi trade talks
  • The dollar index held around 98.8 on Tuesday as traders stayed cautious ahead of the Fed policy meeting.
  • Market focus turned to Thursday’s Trump–Xi meeting, where both leaders are set to discuss a potential trade deal covering rare earth minerals, soybean exports, and TikTok’s US operations.
  • The dollar weakened against the yen after Treasury Secretary Scott Bessent met Japan’s Finance Minister Satsuki Katayama, urging Tokyo to adopt a “sounder monetary stance”, remarks interpreted as a veiled criticism of Japan’s slow rate normalisation.
     

• Crude oil prices extended losses on supply and sanctions concerns
  • Brent crude oil prices fell for a third straight session on Tuesday as traders weighed the impact of US sanctions on Russia’s Rosneft and Lukoil against expectations of an OPEC+ output increase.
  • Concerns that additional supply could offset any disruption from Russian sanctions pressured sentiment.
  • Brent crude settled 1.9% lower at $64.40 per barrel, WTI was down 1.95% at $60.15 a barrel.

Day’s Ledger

Economic Data

• Australia Jul-Sep CPI
• India Money Supply

 Corporate Actions

• Jul-Sep Earnings: APL Apollo, BHEL, CG Power, Coal India, HPCL, LIC Housing, L&T, NTPC Green, PB Fintech, SAIL, Varhn Beverages,
• Thirumalai Chemicals to consider fund raising 

Policy Events

• BoC Interest Rate Decision 
• Fed Interest Rate Decision
  
  
  

Tickers to Watch

• MAX HEALTHCARE's 10,000-bed expansion built with zero debt: MD Abhay Soi
• Domestic expansion, Europe recovery to drive growth for TATA STEEL
• Growth revival in H2 key for SUPREME INDUSTRIES after weak Q2 show
• SUNDRAM FASTENERS posts record Q2 profit of ₹1.53 billion, raises dividend
• RAYMOND REALTY Q2 FY26 results: Profit jumps over 12x to ₹602 million
• ADANI GREEN Q2FY26 results: Net profit jumps 25% at ₹6.44 billion, revenue up 20%
• SEBI seeks details after MCX hit by four-hour outage, probe underway
• $300 mn dividend from Russian assets stuck in banks: OIL INDIA chairman
• BEML signs MoUs with Deendayal Port Authority, Delhi Metro Rail, and Umeandus Tech
• OLA ELECTRIC secures government certification for its battery pack, to be used in the S1 Pro+ model
• EXIDE INDUSTRIES invests ₹650 million in subsidiary Exide Energy Solutions through a rights issue

Must Read

• Credit card spends hit record ₹2.2 trillion in September on festive boom
  
• Industrial output growth moderates to 3-month low of 4% in September
  
• Trump’s Big Tariff Task in Asia Is to Close the Deal
  
• The Fed’s $6.6 Trillion Test: When to End Its Portfolio Runoff
  
• BOJ Mulls Rate-Hike Timing Amid Tariff Impacts, Political Shift
  
• Services sector risks falling into 'low-wage job trap': NITI Aayog report
  
• Ficci seeks faster tax appeal disposal, TDS rationalisation before Budget
  
• Trai aligns with DoT on CNAP, makes caller ID service default with opt-out
  
• India's data centre capacity to double by 2027, rise 5x by 2030: Macquarie

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Bihar’s Economy Is Hostage to Its Politics: Its People Deserve Better

Bihar is still locked in a cycle of low-income growth, heavy dependence on central transfers and political distractions. Despite two decades of leadership change, the state remains mired in structural fragility.

Sharmila Kantha writes, the people of Bihar deserve better than short-term giveaways and election-driven statesmanship. It’s time to focus on real reform: boosting manufacturing, building fiscal capacity, improving education and creating jobs that stay in-state, not just moving people out.