Renewed Global Diplomacy Lifts Asian Markets, But Caution Persists

GLOBAL MOOD: Cautiously Risk-on
Drivers: US-China Trade Talks, Fed Rate Cut Hopes, US–Japan Summit

Asian markets opened in a cautiously risk-on mood,, buoyed by expectations of constructive talks between the US and Japan and tentative signs of renewed global trade dialogue. Investors welcomed efforts by world leaders to stabilise geopolitical and economic ties, even as tensions over tariffs, rare-earth exports, and defence alignments continue to cloud sentiment. Markets remain guardedly optimistic, with investors embracing diplomatic progress while staying alert to potential geopolitical flare-ups and policy unpredictability from Washington and Beijing.

TODAY’S WATCHLIST
 - FOMC Meeting Begins
 - India Sep Industrial Production 

THE BIG STORY
US President Donald Trump will meet Japan’s newly appointed Prime Minister Sanae Takaichi in Tokyo on Tuesday to discuss trade and security cooperation, marking their first meeting since Takaichi became Japan’s first female leader. The talks are expected to focus on a $550 billion US–Japan investment package, including collaboration in shipbuilding and energy, as well as new Japanese purchases of pickup trucks, soybeans, and natural gas.

Meanwhile, global trade diplomacy remains in flux. The EU is preparing to hold rare-earth export talks with China in Brussels this week, while Chinese Premier Li Qiang urged Asian leaders at the ASEAN summit in Malaysia to defend open trade and resist protectionism, a pointed response to Trump’s steep US tariffs. The week’s meetings underscore mounting geopolitical and economic frictions shaping trade flows and security alignments across Asia and Europe.

Data Spotlight
Business confidence showed tentative signs of improvement in both the US and Germany, though conditions remained uneven. In the US, the Dallas Fed’s Texas manufacturing index rose slightly to -5.0 in October, signalling continued contraction. Output growth was below average for the second month, and uncertainty jumped sharply, reflecting persistent weakness in new orders and capacity utilisation.

In Germany, the Ifo Business Climate Index improved to 88.4, above expectations, supported by stronger optimism for 2026 despite a marginal deterioration in current conditions. Manufacturers and service providers reported a better outlook, while retail sentiment improved modestly.

Takeaway: Both reports indicate cautious optimism as businesses are hopeful for recovery in the coming year, but near-term growth remains subdued amid weak demand and global uncertainty.

WHAT HAPPENED OVERNIGHT

• US Stocks rallies to record highs on trade optimism and tech strength
  • US stocks surged for a second straight session on Monday as optimism over a potential US–China trade deal.
  • Investors also looked ahead to major tech earnings and an expected Fed rate cut later this week.
  • Qualcomm led to gains, soaring 11% after unveiling two new AI chips for data centers, set for commercial release next year.
  • Nvidia rose 2.8%, providing the largest lift to the S&P 500, while Tesla climbed 4.3% amid optimism surrounding trade negotiations.

• US Treasury yields rise ahead of Trump–Xi summit and Fed rate decision
  • The 10-year US Treasury yield inched up to 4.03% on Monday, marking its highest level in over a week.
  • Markets are focused on the upcoming Trump–Xi meeting, with hopes for progress on trade issues following reports of productive weekend talks addressing export controls and tariffs.
  • Attention also turned to the Federal Reserve meeting, where traders have fully priced in a 25-basis point rate cut after last week’s softer inflation data.
  • However, the ongoing US government shutdown continues to cloud investor sentiment and could complicate the Fed’s near-term outlook.

• US Dollar eases as trade optimism lifts risk sentiment
  • The dollar index weakened on Monday, losing ground to the euro, Chinese yuan, and Australian dollar as optimism over a potential US–China trade deal boosted risk appetite.
  • The dollar index slipped 0.11% to 98.84, while the euro rose 0.15% to $1.1643.
  • Broader currency movements remained muted, with traders exercising caution ahead of several major central bank meetings later this week.

• Crude oil prices dips as OPEC supply outlook outweighs trade optimism
  • Brent crude oil prices edged lower on Monday, pressured by expectations of another OPEC output hike that offset optimism over a potential US–China trade deal framework and renewed US sanctions on Russia.
  • Brent crude slipped 0.5% to $65.62 per barrel, while WTI crude fell 0.3% to $61.31 per barrel.
  • Both benchmarks had dropped nearly 1% earlier in the session before paring losses.
     

Day’s Ledger

Economic Data

• India Sep Industrial Production  

Corporate Actions

• Jul-Sep Earnings: Adani Green, Adani Total Gas, Jindal Steel, M&M Financial, Premier Energies, Shree Cements, TVS Motor Company
• Aditya Birla Real to consider fund raising 

Policy Events

• US FOMC Meeting
  
  

TICKERS TO WATCH

• Supreme Court allows Centre to reconsider VODAFONE IDEA's AGR dues issue
• JK TYRE & INDUSTRIES Q2 profit jumps 64% on rural demand, GST boost
• TATA CONSUMER distributors told to halt targets over unresolved issues
• LTIMINDTREE strengthens large-deal momentum with new $100-mn contract
• INDIAN OIL reports ₹78.17 billion net profit in Q2FY26, revenue up 3.9%
• BATA INDIA Q2 results: Net profit down 73% at ₹139 million on lower revenue
• SRF LTD Q2 results: Profit jumps 93% to ₹3.88 billion on higher sales
• Cut in earnings expectations, valuations to cap upside in SBI Cards 

MUST READ

• Govt approves 7 projects worth ₹55.32 billion under ECMS, to create 5,000 jobs
• SEBI proposes incentives for select investors in debt public issues
• Domestic demand, GST cut to drive 8-10% growth for fleet firms: Crisil
• Need to promote wider use of digital solutions, says RBI deputy governor
• SEBI proposes higher threshold, simpler rules for high-value debt entities
• Bank nomination rules amended to align with will, avoid disputes
• Govt plans to hike foreign investment cap in PSBs to 49%, says report
• Trump Reaches Trade Pacts With Southeast Asian Nations
• Bessent names Fed chair finalists ahead of year-end decision 

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Why This Outrage over LIC Investing in Adani?

Any outrage over depicting Adani as a fair damsel in distress is perfectly understandable, but is the presumed stink over the relationship between the government and big business as real as it is construed to be?

TK Arun writes, should we really be outraged that an Indian financial institution stepped in to stabilise a major domestic conglomerate at a moment of market stress?

Where does financial pragmatism end and crony capitalism begin?

https://basispointinsight.com/Story/Home/why-this-outrage-over-lic-investing-in-adani-_8bed11a23f38.html