Risk Appetite Builds on Robust US Data, Gold and Oil Signal Caution

GLOBAL MOOD: Risk-On
Drivers: US Economic Data, Geopolitical escalation

Markets are in a risk-on mode as Asian equities track Wall Street’s record highs, underpinned by strong US growth and resilient corporate profits. Risk appetite remains firm into year-end, even as Fed rate-cut expectations ease. Surging gold and oil prices reflect geopolitical hedging rather than broad risk aversion.

TODAY’S WATCHLIST
 - US Jobless Claims Dat
 - BoJ Monetary Policy Minutes

THE BIG STORY
Venezuela’s National Assembly has passed a law imposing up to 20 years in prison for promoting or financing “piracy” or blockades, mainly in response to recent US actions against its oil trade. This follows US attempts to intercept Venezuelan oil tankers, including the seizure of a supertanker. The legislation represents Caracas’ strongest legal countermeasure and highlights increasing tensions after tougher US measures against PDVSA.

Global investors are moving capital toward Chinese AI firms to diversify as US AI stock valuations rise. Beijing’s drive for tech self-reliance is attracting interest, and high-profile chipmaker listings like Moore Threads and MetaX suggest China is narrowing the AI gap with the US. This reflects a broader market revaluation amid geopolitical tensions and changing valuation concerns.

Data Spotlight
US GDP grew 4.3% annually in Q3 2025, beating the expected 3.3%. The main driver was consumer spending, up 3.5%, with notable gains in healthcare, travel, information equipment, and prescription drugs. Exports rebounded strongly, government spending recovered, and the drag from private inventories eased, although fixed investment growth slowed and residential investment remained weak.

On the corporate side, US corporate profits rose 4.4% quarter-on- quarter to $3.40 trillion, following a modest rise in Q2. Undistributed profits surged 14%, net cash flow improved meaningfully, and profits were up 10.5% year-on-year, highlighting resilient margins despite tighter financial conditions. Meanwhile, US crude oil inventories increased by 2.4 million barrels, marking the first build after four weeks of drawing, following the sharp inventory decline since June in the prior week.

Takeaway: US The US economy shows strong momentum heading into year-end, led by resilient consumers and improving external demand. Firm growth and rising profits may give the Federal Reserve less urgency to ease aggressively, even as parts of investment and housing remain under pressure.

WHAT HAPPENED OVERNIGHT

• US stocks hit fresh highs as tech and energy lead gains
  • S&P 500 rose 0.6% to a new record close, with the Nasdaq up 0.6% and the Dow gaining 0.3%.
  • Technology and energy stocks led a broad-based advance, offsetting weakness in defensives.
  • Megacaps mostly rose with Nvidia +3%, Alphabet +1.4%, Amazon +1.6%, Broadcom +2.3%; Apple, Microsoft, Meta saw slight increases.
  • Eli Lilly slipped 0.5%, even after FDA approval of Novo Nordisk’s weight-loss pill

• US Treasury yields test September highs on strong growth data
  • The 10-year US Treasury yield rose to 4.19%, testing its highest level since early September.
  • Stronger-than-expected Q3 GDP growth at 4.3% annualised vs 3.3% forecast lifted yields.
  • Robust growth eased concerns that tight financial conditions were sharply weakening the labour market
  • Data strengthened the case for more hawkish FOMC members heading into 2026.

• US Dollar stays under pressure despite strong growth as rate-cut bets dominate
  • The dollar index weakened in holiday-shortened trade, trimming losses but holding near early-October lows around 98.
  • Strong US GDP growth and steady private payrolls failed to lift the greenback.
  • Markets expect the Fed to hold rates in January but price the next cut in June.
  • Cooling inflation, softening labour market and President Trump’s calls for easier policy weigh on sentiment. 

• Crude oil prices firm on supply risk concerns and resilient US growth
  • Brent crude rose 0.5% to $62.38 per barrel, while WTI gained 0.6% to $58.38 a barrel.
  • Markets priced in potential disruptions from Venezuela and Russia, amid ongoing US enforcement actions and geopolitical uncertainty.
  • Stronger-than-expected US economic growth underpinned demand expectations, offering support despite broader supply concerns.

Day’s Ledger

Economic Data

• India M3 Money Supply
• US Jobless Claims Data

CORPORATE ACTIONS

• Shah Metacorp board to consider fund raising
• Purple Finance board to consider fund raising

POLICY EVENTS

• BoJ Monetary Policy Minutes

TICKERS TO WATCH

• Tata Motors' EV arm to launch five new models by FY30; capex ₹180 billion
• Union Bank of India cuts rates on select retail loans by up to 160 bps
• Brookfield India Reit raises ₹20 billion crore via sustainability-linked bonds
• GAIL signs MoU with Chhattisgarh for 12.7 LMT gas-based urea project
• Ola Electric rolls out Hyperservice Centres with same-day service guarantee
• IRB Infrastructure Trust wins NHAI's TOT-18 highway concession in Odisha
• L&T wins BPCL order worth up to ₹100 billion crore for hydrocarbon business
• Bharat Biotech inks tech transfer pact with Biofabri for MTBVAC TB vaccine
• APSEZ completes acquisition of NQXT Australia, revises FY26 Ebitda guidance
• Tata Steel secures CCI nod for 100% control of Tata BlueScope
• Emcure Pharma's Gujarat plant gets all-clear from FDA

MUST READ

• RBI announces ₹3 trillion liquidity injection through OMOs and FX swaps
• US GDP growth beats forecasts, accelerates to 4.3% in third quarter
• India reclaims third place in global wind market in 2025: BNEF report data
• Direct equity investors turn net sellers in 2025 for first time in 6 years
• Local consent clears way to restart world's largest nuclear plant in Japan
• India offers higher FDI, easier bank branch norms under New Zealand FTA
• New CPI series to use e-commerce, online sources for price data: Govt
• India to adopt double deflation in new GDP series, addresses IMF concerns on data methodology

 

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day

The Underpriced Asset Class: Pleasant Uncertainties

GURUMURTHY R writes, markets price fear well but relief poorly. Peace in Ukraine could compress uncertainty, steady the dollar, lift EMs and drive rotation.