Risk Sentiment Improves as Washington, Beijing Seek Trade Off-Ramp

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October 20, 2025 at 1:53 AM IST

GLOBAL MOOD: Cautiously Risk-off
Drivers: US–China trade talks, US Government Shutdown

Asian markets opened cautiously higher, reflecting a mild risk-on mood as easing US–China trade tensions lifted sentiment after two weeks of losses. Optimism over upcoming talks and Trump’s softer tariff stance offset lingering banking and growth concerns

TODAY’S WATCHLIST
 - China Jul-Sep GDP

THE BIG STORY
IMF Managing Director Kristalina Georgieva warned on Friday that a breakdown in US–China trade relations, particularly a cutoff in rare earth exports, could have a “material impact on global growth,” worsening already fragile economic conditions. Speaking at the IMF–World Bank annual meetings in Washington, Georgieva urged both nations to seek compromise, noting that prolonged uncertainty would further weaken investment sentiment and global supply chains.

Meanwhile, US Treasury Secretary Scott Bessent pressed the IMF and World Bank to adopt a tougher stance on China’s state-led economic practices, urging the institutions to redirect resources toward poorer nations. Bessent confirmed he will meet Chinese Vice Premier He Lifeng in Malaysia this week to prevent an escalation of tariffs President Trump admitted were “unsustainable.” The upcoming talks offer a potential off-ramp in a trade conflict that has roiled markets and weighed heavily on investor confidence worldwide.

Data Spotlight
The US government recorded a $198 billion budget surplus in September 2025, up from $80 billion a year earlier, as strong tax inflows and lower spending improved fiscal balances. Receipts rose 3.3% year-on-year to $543.6 billion, supported by higher individual and corporate income taxes alongside social security contributions. Outlays declined 22.6% to $345.7 billion, with the largest allocations going to social security of $133 billion, health $94 billion, and defence $76 billion.

Takeaway: The improvement reflects a seasonal surge in tax receipts and spending restraint, helping the fiscal 2025 deficit narrow by $41 billion to $1.775 trillion. It is the first annual decline in three years, offering a modest boost to the government’s fiscal credibility amid a prolonged shutdown.

WHAT HAPPENED OVERNIGHT

  • US stocks climb as regional bank earnings ease credit fears, trade tone softens
    • US equities ended higher on Friday as optimism over US–China trade talks and stronger regional bank earnings lifted sentiment.
    • President Trump hinted his proposed 100% tariff on Chinese goods “would not be sustainable,” signalling room for negotiation.
    • Regional banks rallied after solid quarterly results

 

  • US Treasury yields edge higher as trade optimism, bank stability ease fears
    • The 10-year yield rose 2.9 bps to 4.01%, while the 30-year gained 1.7 bps to 4.60%.
    • Yields rebounded as credit fears faded following regulator reassurances and improved trade sentiment.
    • Despite Friday’s uptick, yields ended the week near multi-month lows amid expectations of further Fed rate cuts and subdued growth.

 

  • US Dollar steadies after recent losses amid trade and banking concerns
    • The dollar index rose 0.16% to 98.42, while the euro eased 0.15% to $1.1669.
    • The greenback still posted weekly losses against the Swiss franc and yen, reflecting persistent caution.
    • The prolonged US government shutdown continued to cloud visibility on economic data and growth prospects.

 

  • Crude oil prices rise modestly but log weekly loss amid supply concerns
    • Brent gained 0.38% to $61.29 per barrel; WTI rose 0.14% to $57.54.
    • Both benchmarks ended the week nearly 3% lower as the IEA warned of a growing global supply glut by 2026.
    • Reports of a potential Trump–Putin meeting on Ukraine peace talks tempered market sentiment and future supply expectations. 


Day’s Ledger

Economic Data

  • China Jul-Sep GDP
  • China Sep Industrial Production
  • Germany Sep PPI
  • US Sep Industrial Production

Corporate Actions

  • Geojit Financial Services to detail Jul-Sep earnings

 

Policy Events

  • PBoC Loan Prime Rate
  • ECB's Schnabel Speaks
  • German Buba Balz Speaks

 

TICKERS TO WATCH

  • ALEMBIC PHARMACEUTICALS gets final USFDA nod for Triamcinolone Acetonide injectable (Kenalog-40 equivalent).
  • BANK OF INDIA Q2 profit up 7.6% to ₹25.5 billion; NII down 1.2% to ₹59.1 billion; provisions drop 57.7%.
  • CESC Q2 profit up 20.4% to ₹4.3 billion; revenue up 12% to ₹52.7 billion.
  • FEDERAL BANK Q2 profit falls 9.6% to ₹9.6 billion; NII up 5.4% to ₹25 billion; GNPA at 1.83% (QoQ).
  • HAVELLS INDIA Q2 profit up 16.5% to ₹3.2 billion; revenue up 5.2% to ₹47.7 billion.
  • HDFC BANK Q2 profit up 10.8% to ₹186.4 billion; gross NPA improves to 1.24%. 
  • ICICI BANK Q2 profit rises 5.2% to ₹123.6 billion; gross NPA eases to 1.58%.
  • IDBI BANK Q2 profit jumps 97.5% to ₹36.3 billion; NII down 15.2% to ₹32.9 billion; GNPA at 2.65% (QoQ).
  • IDFC FIRST BANK Q2 profit surges 75.5% to ₹3.5 billion; NII up 6.8% to ₹51.1 billion.
  • INDUSIND BANK posts Q2 loss of ₹4.4 billion vs profit of ₹13.3 billion; NII down 17.5% to ₹44.1 billion.
  • IRCON INTERNATIONAL wins ₹3.6 billion civil works order from PETRONET LNG for Dahej plant.
  • JSW ENERGY Q2 profit down 17.4% to ₹7 billion; revenue surges 60% to ₹51.8 billion.
  • MARICO acquires remaining 46% stake in TRUE ELEMENTS, making it a wholly owned subsidiary.
  • POONAWALLA FINCORP Q2 profit at ₹7.4 billion vs loss of ₹47.1 billion YoY; NII up 42% to ₹9 billion.
  • PUNJAB NATIONAL BANK Q2 profit up 13.9% to ₹49 billion; NII flat at ₹104.7 billion; GNPA at 3.45% (QoQ).
  • RAIL VIKAS NIGAM (RVNL) emerges L1 for ₹1.44 billion OHE upgradation project under South Central Railway.
  • RBL BANK informs that EMIRATES NBD to acquire around 60% stake via ₹268.5 billion primary infusion, marking India’s largest banking FDI; open offer for additional 26% to follow.
  • RELIANCE INDUSTRIES Q2 profit up 14.3% to ₹220.9 billion; revenue rises 9.9% to ₹2.83 trillion.
  • RPP INFRA PROJECTS bags ₹1.26 billion contract for NADFM complex in Pune.
  • STERLING & WILSON RENEWABLE ENERGY declared L1 for solar EPC projects totaling ₹17.7 billion across Rajasthan, Uttar Pradesh, and South Africa; FY inflows now ₹37.8 billion.
  • TATA POWER temporarily suspends operations at Mundra units until Nov 30.
  • TATA TECHNOLOGIES Q2 profit up 5.1% to ₹1.7 billion; revenue up 2.1% to ₹13.2 billion.
  • ULTRATECH CEMENT Q2 profit surges 75.2% to ₹12.3 billion; revenue up 20.3% to ₹196.1 billion.
  • YES BANK Q2 profit rises 18.3% to ₹6.5 billion; NII up 4.6% to ₹23 billion; provisions surge 41%.

 

MUST READ

 


 

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Fixed Vegetable Oil Tariffs: A Recipe for Market Distortion

Import tariffs on edible oils should be flexible and adapt to the needs of the relevant stakeholders. In markets where palm, soybean, and sunflower prices swing in days, rigidity risks consumers and shortchanges growers.

G. Chandrashekhar writes, tariffs exist to protect domestic oilseed farmers and households—not to pad refining margins.

That’s why industry body ASSOCHAM’s pitch for a three-to-five-year framework with annual reviews and advance notice is flawed. The smarter path is data and discipline, compulsory registration of import contracts to see shifts early; force quick pass-through when duties drop; and build backward linkages to grow domestic supply. Let import tariffs track the market’s pulse—and prioritise farmers and families over factory margins.