Risk-On Returns as AI Rally and Year-End Bets Lift Asian Markets

GLOBAL MOOD: Risk-Off
Drivers: Fed Easing Bias, Geopolitical Escalation, Ukraine Diplomacy,

Asia-Pacific markets signalled a risk-on tone, tracking strong US equity gains led by a revival in AI stocks and year-end positioning hopes. Stable China policy, upbeat tech momentum, and expectations of Fed easing in 2026 offset geopolitical risks, encouraging dip-buying and supporting the case for a seasonal rally.

TODAY’S WATCHLIST
 - UK Jul-Sep GDP Data
 - US Oct Core PCE Price Index

THE BIG STORY
The United States has intercepted an oil tanker off the coast of Venezuela in international waters, Homeland Security Secretary Kristi Noem confirmed, days after President Donald Trump announced a “blockade” of all sanctioned oil tankers entering and leaving the country. The move marks the second such interception in recent weeks and comes amid a significant US military build-up in the region. Noem said on Saturday that the tanker had last docked in Venezuela and warned that Washington would continue targeting illicit oil flows used to fund “narco-terrorism”.

At the same time, US negotiators met Russian officials in Florida on Saturday as part of renewed efforts to end the war in Ukraine. The talks followed earlier meetings with Ukrainian and European officials and come amid cautious optimism around a potential peace framework. Russia’s special envoy Kirill Dmitriev described the discussions with US envoy Steve Witkoff and Trump’s son-in-law Jared Kushner as constructive, adding that negotiations would continue, signalling that diplomatic channels remain active even as geopolitical tensions elsewhere intensify.

Data Spotlight
US existing home sales rose 0.5% in November 2025 to an annualized 4.13 million units, the highest in nine months but slightly below forecasts, as lower mortgage rates offset weak labor data. Single-family sales increased 0.8%, and median prices edged up 1.2% year-over-year to $409,200, among the slowest gains since mid-2023. Inventory dropped 5.9% to 1.43 million units, or 4.2 months of supply, marking the tightest level since March.

Consumer sentiment slipped, with the University of Michigan index at 52.9 in December. Inflation expectations fell to 4.2% for the next year and held steady at 3.2% over five years, indicating stable longer-term inflation concerns.

Takeaway: US housing market is stabilising with lower mortgage rates, but tight inventory continues to constrain activity. US consumer sentiment remains fragile, even as longer-term inflation expectations stay relatively well anchored.

WHAT HAPPENED OVERNIGHT

• US stocks rose on Friday led by tech stocks
  • S&P 500 up 0.9%, Nasdaq 100 up 1.4%, Dow rises 180 points in volatile trading.
  • Oracle surged over 7% after TikTok agreed to sell its US operations to a JV involving Oracle and Silver Lake.
  • Micron rose 7%, extending Thursday’s 10% jump; Nvidia climbed over 3% on reports the Trump administration is reviewing potential AI chip sales to China.
  • Nike plunged 11% after weak China revenues and margin pressure from higher tariffs.

• US Treasury yields rise as Fed outlook assessed
  • The 10-year US Treasury yield rose to around 4.14%, reversing the prior session’s dip.
  • Softer inflation and cooling labour signals give the Fed room to cut rates in 2026, though a January pause is widely expected.
  • Investors’ attention is shifting to potential rate cuts in March and July next year.

• US Dollar firms as Yen slides post-BoJ hike
  • The dollar jumped 1.38% to ¥157.69, as the yen weakened sharply despite the Bank of Japan raising rates to a 30-year high, a move markets viewed as insufficiently hawkish.
  • The dollar index rose 0.27% to 98.70, supported by yen weakness and relative policy divergence
  • The dollar was largely flat last week as investors balanced yen-driven gains against expectations of further Fed rate cuts next year amid easing inflation and cooling labour data.

• Crude oil prices edge higher on Venezuela supply risks
  • Brent crude prices rose 1.1% to $60.47 a barrel while WTI gained 0.9% to $56.66 barrel.
  • Support came from concerns over potential disruptions linked to a US blockade of Venezuelan oil tankers.
  • Gains were capped as markets continued to watch for developments around a possible Russia–Ukraine peace deal, which could eventually ease supply constraints.

Day’s Ledger

Economic Data

• PBoC Loan Prime Rate Fixing
  
• UK Jul-Sep GDP Data
  
• US Oct Core PCE Price Index

Corporate Actions

• IIFL Finance to consider fund raising
  
• IRB InvIT Fund  to consider fund raising
  
• Silgo Retail to consider fund raising

Tickers to Watch

• ADANI GROUP is evaluating a potential entry into nuclear power generation following policy changes allowing private participation.
• ALLCARGO TERMINALS reported November CFS volumes of 55.3 thousand TEUs, up 16% year-on-year but down 8% month-on-month.
• FORTIS HEALTHCARE agreed to acquire the 125-bed PEOPLE TREE HOSPITAL in Bengaluru for ₹4.30 billion, with plans to invest another ₹4.10 billion over three years to expand capacity.
• GRANULES INDIA said the US FDA completed a GMP and prior approval inspection at its Hyderabad facility with five procedural observations and no data integrity or product safety issues.
• INDIAN HOTELS COMPANY approved the sale of its 25.52% stake in TAJ GVK HOTELS & RESORTS to the GVK-BHUPAL family at ₹370 per share, shifting to a management arrangement.
• INDRAPRASTHA GAS formed a 50:50 joint venture with HINDUSTAN WASTE TREATMENT to develop compressed biogas plants and biofuel projects.
• IRB INFRASTRUCTURE DEVELOPERS approved related-party contracts under the TOT-17 project, agreeing to act as project manager for 20 years with an estimated value of up to ₹67.85 billion.
• JUPITER WAGONS promoter TATRAVAGONKA AS acquired a 0.55% stake for ₹1.35 billion at ₹470 per share.
• KEC INTERNATIONAL said the High Court kept PGCIL’s exclusion order in abeyance, allowing the company to participate in ongoing tenders pending further action.
• MARUTI SUZUKI plans to approach the Prime Minister’s Office over proposed CAFE-III norms, citing concerns over costs and impact on small cars.
• TATA CHEMICALS subsidiary TATA CHEMICALS INTERNATIONAL signed an SPA to acquire 100% of Singapore-based NOVABAY for 25 million euro, subject to conditions.
• TATA STEEL infused ₹13.55 billion into wholly owned subsidiary T STEEL HOLDINGS and received a CGST order demanding tax of ₹4.93 billion, penalty of ₹6.39 billion, plus interest.
• VEDANTA RESOURCES received a Fitch outlook revision to positive, citing deleveraging progress, improved liquidity and better earnings visibility.
   

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day

India’s exports to the US slumped sharply mid-2025 before partially rebounding, revealing a two-phase adjustment to tariff uncertainty. The recovery reflects short-term coping and inventory restocking, not a durable revival in trade momentum.

Ajay Srivastava explains what’s Behind the Rebound in Indian Exports to the US — and Is It Sustainable?