Global Mood: Cautiously risk-off
Drivers: AI sell-off, Strait of Hormuz tanker attacks

Asian markets plunged on Friday, tracking a sharp sell-off in US technology stocks amid concerns over artificial intelligence spending and data centre construction. South Korea’s Kospi tumbled over 8%, slipping below 5,000, while Japan’s Nikkei 225 fell more than 6%, entering bear market territory. Australia’s S&P/ASX 200 declined 0.9%. The GIFT Nifty was trading at 24,430, down 169.5 points or 0.69%, pointing to a weaker opening for Indian equities.

Wall Street suffered its worst session since April 2025, with the Nasdaq Composite plunging 5.5% and entering correction territory, while the S&P 500 fell 4.4% and the Dow dropped 3.4%. Concerns over a potential slowdown in data centre construction following the Democrats’ midterm victories added to selling pressure. US equity futures remained lower, with Nasdaq-100 futures down 0.8%. Investors also awaited the key US payrolls report.

THE BIG STORY
Iran reported three more tankers damaged in the Strait of Hormuz, with at least five vessels reporting incidents since November 1. Attacks on shipping continue despite diplomatic efforts, keeping risks to global energy supplies elevated. Qatar said Washington and Tehran are reviewing proposals to bridge differences, but major disagreements remain over sanctions, the blockade and Iran's nuclear programme.

Iran's parliament speaker accused Vance of allowing Trump to pursue further strikes, while Tehran's leadership warned against concessions. Vance blamed the Iran war for Republican election losses, highlighting its domestic political and economic costs.

Reports said Trump could still order renewed strikes after the midterms, despite falling oil prices and efforts to secure a settlement. The Nasdaq fell 5.56%, its steepest one-day decline in 19 months, as investors feared Democratic election gains could lead to tighter AI regulations.

Proposals to curb data centre construction, electricity costs and require independent AI testing raised concerns over the pace of infrastructure investment. Democratic gains in Congress and state governments could strengthen opposition to new data centres. Texas governor-elect Gina Hinojosa has pledged to halt new data centre construction in the state, a major AI infrastructure hub.

Trump said he had met Putin envoy Kirill Dmitriev privately and expected a broader agreement to end the Ukraine war. US officials held discussions with Ukraine, NATO and European partners on security guarantees ahead of November 10–11 talks in Abu Dhabi. Democrats are expected to push for greater support for Ukraine and scrutinise Trump's approach towards Russia. The Kremlin has said it hopes Trump will continue his efforts to broker peace despite the Republican election defeat.

Data Spotlight
US initial jobless claims fell by 6,000 to 189,000 in the final week of October, below expectations of 196,000 and matching the 57-year low recorded in mid-July. The decline points to continued labour-market resilience, with robust corporate profits and domestic demand helping limit layoffs. 

However, continuing claims rose by 23,000 to 1.718 million in the week ended October 24. US nonfarm business productivity increased 3.6% quarter-on-quarter in Q3 2026, its strongest rise since the third quarter of 2025 and above expectations of 2.8%. 

This followed an upwardly revised 2.1% increase in Q2. Output rose 3.7%, while hours worked increased just 0.1%, indicating stronger production relative to labour input. Annual productivity growth stood at 2.1%. US employers announced 43,994 job cuts in October, up 2% from September but down 71% from a year earlier, marking the lowest October total since 2023.  Announced layoffs through October fell 44% year-on-year to 617,189, the lowest year-to-date total for the period since 2022. Technology companies accounted for the largest number of cuts so far this year, at 171,501, up 21% from a year earlier.

Takeaway: The latest labour-market indicators reinforce the picture of a resilient US economy, with jobless claims at a multi-decade low and announced layoffs significantly below year-earlier levels. Strong productivity growth is also encouraging, as higher output with limited growth in hours worked could help businesses absorb wage pressures without passing on higher costs. However, the increase in continuing claims suggests some workers are taking longer to find new jobs. Overall, the data indicate a low-layoff environment rather than a broad-based hiring boom, giving the Federal Reserve reason to remain cautious about easing policy.

WHAT HAPPENED OVERNIGHT

US Stocks Suffer Biggest Daily Drop in 19 Months as AI Regulation Fears Trigger Tech Sell-Off

• S&P 500 fell 4.36% to 7,353.73, Nasdaq Composite dropped 5.52% to 24,315 and Dow Jones declined 3.44% to 51,523.06. The S&P 500 and Nasdaq recorded their steepest daily losses since April 2025.
• Nasdaq confirmed a technical correction, falling more than 10% from its Oct 6 record high, as investors feared tighter AI regulation under a Democratic-controlled Congress could slow data centre expansion.
• Nvidia plunged more than 9%, while the Philadelphia Semiconductor Index slumped over 12%. The sell-off wiped out around $3 trillion in S&P 500 market value.
• Data centre operators IREN and Applied Digital fell more than 14% each, while CoreWeave declined nearly 10%. Meta dropped 4%, while Amazon and Alphabet lost 2.2% each.
• Investors also assessed comments from Federal Reserve officials Beth Hammack and Thomas Barkin hinting at further rate hikes. Focus now turns to US October non-farm payrolls data due Friday.

US Dollar Holds Near 101.6 as Investors Assess Democratic Sweep; US Jobs Data in Focus

• Dollar index was little changed around 101.6 after falling 0.3% in the previous session, as investors assessed the implications of Democrats gaining control of Congress for US economic, trade and foreign policies.
• The Democratic sweep has raised expectations of lower federal spending, limits on tax cuts and a possible diplomatic resolution to the conflict with Iran, although the President retains significant control over economic and foreign policy decisions.
• Investors await Friday's US non-farm payrolls report for further clues on labour-market conditions.
• Recent data showed US private businesses added 86,000 jobs in October, according to ADP, while initial jobless claims fell to their lowest level in 57 years. Third-quarter productivity growth also exceeded expectations.
• Markets are pricing in an approximately 75% probability of a 25-basis-point Fed rate hike next month.

US Treasury Yields Fall to 4.83% as Equity Sell-Off Triggers Flight to Safety

• US 10-year Treasury yield fell to 4.83%, hovering near two-month lows, as a sharp equity sell-off prompted investors to seek safer assets.
• Investors continued to cut exposure to technology stocks amid concerns that a Democratic sweep could lead to tighter AI regulation and constrain data centre investment.
• The yield had already declined around 8 basis points in the previous session following the midterm election results.
• Focus now shifts to Friday’s US non-farm payrolls report for further clues on labour-market strength. ADP data showed private businesses added 86,000 jobs in October, while initial jobless claims fell to a 57-year low.
• Stronger-than-expected third-quarter productivity growth added to evidence of a relatively resilient economy. Markets are pricing in a roughly 75% probability of a 25-basis-point Fed rate hike next month.

Oil Rises Nearly 4% to $98.29 as Tanker Attacks Rekindle Supply Fears

• Brent crude rose $3.67, or 3.88%, to settle at $98.29 per barrel, while US WTI gained $2.40, or 2.72%, to $90.52, reversing Wednesday's slump of more than 8%.
• Fresh attacks on tankers in the Gulf heightened concerns over supply disruptions, with the UK Maritime Trade Operations agency reporting incidents involving at least five vessels since Sunday. The pace is close to October, when 35 vessels reported incidents.
• Traders remained cautious about expectations of a rapid resumption of oil flows, as diplomatic progress has yet to translate into reliable shipping and deliveries. Iran's position on negotiations with the US also remains unchanged.
• Eurasia Group lowered its estimate of renewed US strikes on Iran to 60% from 65%, but cut the probability of a diplomatic deal to 10% from 20%. It raised the likelihood of a prolonged standoff to 30% from 15%.
• Any escalation could push Brent to 110-125 per barrel, Eurasia Group said. Meanwhile, Saudi Arabia warned of potential threats to its Yanbu oil export hub, while Iran's Revolutionary Guard reported fires involving two tankers and a tugboat in the Strait of Hormuz.
• Ukrainian attacks on Russian refineries added to supply concerns, with the Ryazan refinery appearing to have been targeted in a drone strike, according to Reuters video analysis.

Day’s Ledger*

Economic Data

• German September Industrial Production
• India Weekly Forex Reserves
• US October Unemployment Rate
  

Policy

• US FOMC Member Williams Speaks
  
• ECB's Lane Speaks
• BoE MPC Member Pill Speaks
• US FOMC Member Bowman Speaks

Corporate Actions 

• Earnings: Hindustan Oil Exploration Company, National Highways Infra Trust

Tickers to Watch

• TITAN July-September 2026 net profit up 56.3% YoY to 15.72 billion rupees. Revenue up 7.8% to 178.3 billion rupees. EBITDA up 62.1% to 26.26 billion rupees. Margin at 14.7% vs 9.8%. Profit and EBITDA beat estimates. Revenue missed. Jewellery up 24% to ~174.95 billion rupees. Watches up 27% to 18.81 billion rupees.
• AADHAR HOUSING FINANCE July-September 2026 net profit up 15.7% YoY to 3.083 billion rupees. Revenue up 16.8% to 10.48 billion rupees from 8.97 billion rupees.
• ONGC July-September 2026 standalone net profit down 9.1% QoQ to 154.89 billion rupees from 170.34 billion rupees. Revenue down 5.6% to 438.75 billion rupees. EBITDA down 12.3% to 248.6 billion rupees. Margin narrows to 57% from 61%. All figures below estimates: profit 155.91 billion rupees, revenue 442.57 billion rupees, EBITDA 265.74 billion rupees, margin 60%.
• BHARTI AIRTEL July-September 2026 consolidated net profit up 8.8% QoQ to 88.875 billion rupees. Misses the 92.09 billion rupee estimate. Revenue up 4% to 608.775 billion rupees. EBITDA up 4.9% to 349.46 billion rupees. Margin at 57.4% vs 57%. Revenue, EBITDA and margin beat estimates.

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(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day