Asia Slides as Tech Selloff and Geopolitics Drive Risk-Off Mood

GLOBAL MOOD: Risk-Off
Drivers: Venezuela Oil Blockade, Stalled Ukraine Peace Negotiations, Fed Easing Bias

Asia-Pacific markets slipped into a risk-off mode as Wall Street’s rotation away from technology stocks weighed on sentiment ahead of President Donald Trump’s address and key global policy decisions. Heightened geopolitical risks around Venezuela and Ukraine, alongside uncertainty before US CPI and central bank meetings, kept investors cautious despite supportive signals on gradual Fed easing.

TODAY’S WATCHLIST

• US CPI Data
• ECB Interest Rate Decision 
• BoE Interest Rate Decision
  
  

THE BIG STORY
Russian President Vladimir Putin warned on Wednesday that Moscow would seize more territory in Ukraine by force if Kyiv and European leaders failed to engage with US-backed peace proposals, sharply escalating rhetoric amid stalled negotiations. While Washington has held separate talks with Russia, Ukraine and European allies, no agreement has emerged, with Kyiv and its partners resisting territorial concessions and demanding stronger security guarantees. Ukrainian President Volodymyr Zelenskiy urged allies to demonstrate unwavering support ahead of a key EU summit on Russia’s frozen assets, saying Moscow must be convinced that continuing the war is futile.

On the monetary front, US Federal Reserve Governor Christopher Waller said the central bank still has scope to cut interest rates as the labour market continues to soften. Speaking a week after the Fed delivered a 25 bp cut, Waller noted policy may still be 50–100 bps above neutral and stressed there was “no rush” to ease aggressively. He said rates could be lowered gradually as inflation remains above target, but employment risks are rising, reinforcing expectations of a measured and data-dependent easing path.

Data Spotlight
US crude oil inventories declined by 1.27 million barrels in the week ended December 12, extending the prior week’s draw and broadly in line with expectations. Stocks at the Cushing hub fell sharply by 742,000 barrels, the largest drop in nearly two months. However, refined products painted a weaker demand picture, with gasoline inventories surging 4.81 million barrels and distillates rising 1.71 million barrels, underscoring persistent oversupply in fuels.

In Europe, Germany’s Ifo Business Climate Index slipped to 87.6 in December, the lowest in seven months, as companies turned more pessimistic about early 2026. The expectations component weakened notably, while current conditions were flat, with manufacturing sentiment deteriorating across most industries despite marginal near-term stability.

Takeaway: US crude draws are supportive, but rising fuel inventories highlight fragile demand conditions. German business sentiment signals a soft start to 2026, reinforcing Europe’s sluggish growth outlook.

WHAT HAPPENED OVERNIGHT

• US stocks slide as AI worries deepen
  • S&P 500 and Nasdaq fell to three-week lows, dragging Wall Street lower.
  • Renewed concerns over AI-related capex and rising debt weighed on sentiment.
  • Oracle shares dropped 5.4% after reports that Blue Owl Capital would not back a $10 billion data centre deal.

• US Treasury yields edge higher as investors eye CPI report
  • The 10-year US Treasury yield up slightly to around 4.16%, hovering just below September highs.
  • Investors await the delayed US CPI report for clearer signals after the 43-day government shutdown.
  • Fed Governor Christopher Waller reiterated a dovish stance, supporting a gradual move toward neutral rates rather than rushed easing. 

• US Dollar steady near two-month lows
  • The dollar index inched up to 98.3, but stayed close to two-month low
  • Markets continue to assess the Fed’s rate path for 2026.
  • Governor Christopher Waller reiterated a dovish stance, favouring a gradual move toward neutral rates.
  • Waller said there is no urgency to cut aggressively, allowing the Fed to ease policy steadily.

• Crude oil prices jumps on Venezuela blockade
  • Brent crude prices gained more than 1% amid heightened geopolitical tensions.
  • US President Trump ordered a blockade of all sanctioned oil tankers entering and leaving Venezuela.
  • Move raised fears of tighter global supply, easing worries over a crude surplus.
  • Brent crude settled up 1.3% at $59.68 per barrel. While WTI crude rose 1.2% to $55.94 per barrel.

DAY’S LEDGER

ECONOMIC DATA

• Euro construction output
• US CPI Data
• US Initial Jobless claims 

CORPORATE ACTIONS

• Amarnath Securities board to consider fund raising
• Jonjua Overseas board to consider bonus share issue

POLICY EVENTS

• ECB Buch Speech
• ECB Interest Rate Decision 
• BoE Interest Rate Decision
• RBI ₹500 Billion Gilt OMO Buy Auction 
  

TICKERS TO WATCH

• TCS pegs annualised AI revenue at $1.5 billion as adoption scales up
• VEDANTA demerger into five listed firms likely by March 2026: Anil Agarwal
• Japan's Mizuho Group to acquire over 60% stake in AVENDUS CAPITAL from KKR
• TATA MOTORS' Sierra clocks 70,000 bookings on opening day of sales
• MARUTI SUZUKI expects new EV lifting green-car share of India sales to 45%
• GMR POWER board approves ₹12 billion fundraising via preferential issue
• TITAGARH RAIL wins ₹2.73 billion -crore Indian Railways order for 62 maintenance vehicles 

MUST READ

• Sabka Bima Sabki Raksha bill passed; paves way for 100% FDI in insurance
• SEBI revamps MF expense ratio norms, overhauls three-decade-old rules
• India to see rare coal-fired power dip in 2025, only third in 50 years: IEA
• Fed’s Waller Wants Lower Interest Rates But Says No Rush to Cut
• Fed’s Bostic Says Inflation Still Clearer, More Pressing Risk
• Warner Bros Discovery board rejects Paramount's $108 bn hostile bid
• Spooked by AI and Layoffs, White-Collar Workers See Their Security Slip Away
  
  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

Why Indian Deal Pricing No Longer Rests with Bankers

SEBI just redrew the line between who makes the deal and who values it

SEBI’s latest rule changes have quietly, but significantly, redrawn India’s dealmaking map. Valuations for takeovers and ESOPs will now be handled by independent registered valuers. That's a significant change in the dealmaking power balance.

At the same time, SEBI has raised the bar for merchant bankers — fatter balance sheets, consistent revenue, and stricter liquidity norms. The era of thinly capitalised deal hustlers may be ending.

Krishnadevan V writes, why does this matter? Because valuation is power. And SEBI has just shifted that power from the sell-side to a new class of regulated professionals.

The next big test could come when the first contested open offer lands on their desks.