Ceasefire Eases Geopolitical Tensions, But US Shutdown Keeps Markets Guarded

GLOBAL MOOD: Risk-on
Drivers: Israel-Hama Ceasefire, US Government Shutdown

Global markets adopted a cautiously risk-on tone as Israel’s ceasefire with Hamas eased geopolitical tensions and crude prices fell. However, optimism was tempered by US government shutdown worries, rising jobless estimates, and uncertainty over economic data flow.

TODAY’S WATCHLIST
- Noble Peace Prize
- India AMFI Data

THE BIG STORY
Israel’s government approved a ceasefire deal with Hamas, paving the way to end hostilities in Gaza within 24 hours and secure the release of Israeli hostages within 72 hours. The agreement, brokered under US President Donald Trump’s initiative, includes a phased withdrawal of Israeli troops and an exchange of hostages for Palestinian prisoners. Prime Minister Benjamin Netanyahu confirmed the cabinet’s approval of the framework to free “all of the hostages – the living and the deceased.”

Meanwhile, the US Securities and Exchange Commission moved to ease IPO restrictions during the ongoing federal government shutdown. Normally, companies cannot list during shutdowns due to halted regulatory reviews, but the SEC announced it will not penalise firms omitting pricing details from filings, allowing IPOs to proceed automatically after 20 days. This move aims to sustain market activity and investor confidence amid political gridlock in Washington.

Data Spotlight

Unofficial estimates from leading banks suggested an uptick in US jobless claims last week, signalling early signs of strain from the ongoing government shutdown. Economists at JPMorgan and Goldman Sachs projected initial unemployment claims at around 235,000 for the week ending October 4, up from 224,000 previously. With official data collection suspended due to the shutdown, these private estimates filled a critical gap, hinting at potential layoffs among federal contractors.

Takeaway:

The rise in estimated jobless claims underscores growing economic vulnerabilities from the prolonged government shutdown, amplifying concerns over its impact on employment momentum and broader consumer confidence.

WHAT HAPPENED OVERNIGHT

• US Stocks slip as optimism fades and shutdown weighs
  • US stocks retreated on Thursday as investors took a breather on recent enthusiasm for AI and rate cuts.
  • The S&P 500 lost 0.3%, the Nasdaq 100 dipped 0.1%, and the Dow fell 243 points, pulling back from record highs.
  • Sentiment weakened due to the prolonged government shutdown and the delay of key economic data.
  • Focus shifted to upcoming Q3 earnings to gauge the economic outlook and the persistence of the AI-led rally.

• US Treasury yields ticks higher amid data freeze
  • US 10-year Treasury yield edged up to 4.14% on Thursday.
  • This slight rise followed small declines over the previous two sessions.
  • Traders stayed cautious while federal economic data releases remain suspended by the government shutdown.
  • The latest FOMC minutes gave little new insight into the Federal Reserve’s likely policy direction for the rest of the year.

• US Dollar hits multi-month highs as Yen and Euro weaken
  • The US dollar climbed to its highest level against the Japanese yen since mid-February, after Japan’s newly elected ruling party leader failed to reassure markets on the currency outlook.
  • The greenback’s strength against the yen followed conservative Sanae Takaichi’s leadership win in Japan, which fuelled expectations of increased fiscal spending.
  • Meanwhile, the euro continued to slide under political pressure in France, where uncertainty lingers pending President Macron’s appointment of a new prime minister within 48 hours.

• Crude oil prices drop as Israel-Hamas ceasefire lowers geopolitical risk
  • Brent crude oil prices fell on Thursday as Israel and Hamas reached a ceasefire agreement in Gaza, reducing geopolitical risk in the region.
  • Brent crude futures settled down 1.6%, at $65.22 a barrel.
  • US West Texas Intermediate crude ended lower 1.7%, at $61.51 a barrel. 

 Day’s Ledger

• Economic Data
• Japan Sep PPI 
• Fed Balance Sheet
• India Foreign Exchange Reserves
• US Monthly Budget Statement

Corporate Actions

• Jul-Sep Earnings: Elecon Engg, Hathway Bhawani, Indosolar, Waree Renewables
• Amic Forging to consider fund raising 
• Capricorn Systems to consider right issue
• Computer Age Management Services to consider stock splits
• ⁠Emerald Leisures to consider warrant issue
• IndiGrid Infrastructure Trust to consider fund raising
• Pro Fin Capital to consider bonus share issue
• Steel Exchange India to consider fund raising

Policy Events

• Fed Bowman Speech
• Fed Goolsbee Speech
• Fed Musalem Speech
  

Tickers to Watch

• IHH Healthcare launches open offer for 26.1% stake in FORTIS HEALTHCARE
  
• INFOSYS challenges ₹4.15 billion tax show-cause notice in High Court
  
• COMPUTER AGE rolls out offline UPI solution for payments business
  
• LUPIN expands PrecisionSphere long-acting injectable platform in the US
  
• M&M rules out business demerger, citing stronger value in integrated operations
  
• INFO EDGE Q2 billings climb 12% YoY to ₹7.3 billion
  
• TATA TRUSTS to meet Friday as government mediates internal rift
  
• TCS acquires US firm ListEngage for $72.8 million to boost Salesforce offerings
  
• CUMMINS INDIA sees strong sales outlook supported by multiple demand drivers 

Must Read

• The EU Must Stand Up to Trump
• Recent RBI policies to help banks keep biz at equilibrium: KV Kamath
• The Battle of Two MYs: Decoding Bihar's Electoral Arithmetic
  PE investment in real estate down 32% in Jul-Sep to $1.5 bn: Report
• Festive demand, GST sops push truck rentals up 2% in September: Report
• India, UK say will strengthen air defence, develop naval propulsion systems
• BOE Must Keep Key Rate Restrictive to Boost Growth, Mann Says
• US Job Market Is Rebalancing Not Weakening, Dallas Fed Blog Says
• Japan’s Takaichi Denies Intention to Spur Further Yen Weakness  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Self-Sufficiency Will Need More Than Just Pulses Mission

The Union Cabinet’s 6-year Pulses Mission aims for self-sufficiency with ₹114 billion in funding. But production is falling, imports have hit a record 7 million tonnes, and acreage keeps shrinking.

The challenge isn’t intent - it’s design.

G. Chandrashekhar writes, without breakthroughs in seed tech, irrigation, and procurement, this “mission” risks becoming another headline.