Tech Resurgence Drives Risk-On Mood Across Asia Despite Fed Uncertainty

GLOBAL MOOD: Risk-on
Drivers: Nvidia Earnings Strength, Fading Fed Rate-Cut Bets,

Asian markets turned risk-on as a powerful tech rebound, led by Japan and boosted by Nvidia’s blockbuster earnings, lifted sentiment across semiconductors and AI-linked stocks, overshadowing lingering uncertainty around Fed policy signals and mixed global data cues.

TODAY’S WATCHLIST
 - RBI Governor Malhotra Speaks
 - US Sep Non Farm Payrolls 

THE BIG STORY
The Federal Reserve’s October meeting minutes revealed a sharply divided FOMC, with policymakers cutting rates despite widespread concern that further easing risked entrenching inflation and undermining public trust in the central bank. While several officials supported the 25 basis points cut to 3.75%–4.00%, many argued they could have backed holding rates steady, and a number opposed the reduction outright. Looking ahead to the December meeting, the split appears even wider. Most policymakers acknowledged that additional easing could be warranted if economic conditions evolve as expected, but many stressed that another cut in December may not be appropriate. Others indicated a preference to keep rates unchanged for the rest of the year. Markets now assign only a 25% probability to a December cut, reflecting the Fed’s growing caution.

In corporate news, Nvidia delivered blowout earnings, reporting $31.9 billion in profit and a record $57 billion in quarterly revenue, far surpassing Wall Street forecasts. The results helped ease fears of an AI bubble, with the stock closing 2.85% higher at $186.52. Strong demand for AI chips kept momentum firm across the semiconductor sector despite broader market volatility.

Data Spotlight
The US trade deficit narrowed more than expected in August to $59.6 billion, a steep 23.8% contraction from July, as imports fell sharply amid higher tariffs and softer demand. The decline was driven by a 5.1% drop in total imports to $340.4 billion, with goods imports sliding 6.6%, led by an $11.3 billion fall in industrial supplies including a $9.3 billion plunge in nonmonetary gold, which does not affect GDP calculations. Consumer goods imports fell to their lowest level since July 2020, signalling weaker discretionary spending, while capital goods import such as computer accessories and telecom equipment also declined.

Exports were little changed, rising 0.1% to $280.8 billion, supported by gains in computers, crude oil, travel services, and intellectual property charges, while pharmaceutical exports and non-monetary gold shipments declined. Among major partners, the deficit with China widened slightly, was little changed with Mexico, and narrowed with Vietnam, Taiwan, and the EU.

Takeaway:A sharp fall in imports narrowed the August trade gap, offering a potential growth boost for Q3 but the drop in consumer and capital goods points to cooling domestic demand.

WHAT HAPPENED OVERNIGHT

• US tech stocks rebound lifts markets ahead of Nvidia results
  • US stocks ended higher as tech shares recovered ahead of Nvidia’s results.
  • Nvidia jumped 2.8% in regular trade and over 5% after hours on strong Q4 guidance.
  • AMD, Alphabet, and Palantir advanced, lifting broader growth stocks.
  • Caution persisted ahead of Thursday’s delayed September jobs report.

• US Treasury yields hold above 4.1% as rate-cut bets fade
  • 10-year yield held above 4.1% as expectations grew for the Fed to hold in December.
  • FOMC minutes showed deeper divisions on policy amid sticky inflation concerns.
  • Delayed jobs data reduced visibility for policymakers.
  • Initial claims stayed stable, easing labour-market worries.

• US Dollar Jumps as Yen Hits 10-Month Low
  • Dollar index rose to 100.17 as the euro slipped to $1.1526.
  • Yen hit a 10-month low after Japan’s finance minister signaled vigilance.
  • Traders scaled back bets on a December Fed cut.

• Crude oil prices falls as US pushes new Ukraine peace framework
  • Brent fell 2.1% to $63.51; WTI dropped 2.1% to $59.44.
  • Prices weakened after reports the US is pushing a renewed Ukraine peace plan, reducing geopolitical risk premia.

Day’s Ledger

Economic Data

• India Oct Infrastructure Output
• US Sep Non Farm Payrolls 
• US Jobless Claims 

Corporate Actions

• Fairchem Organics to consider share buyback
• Mufin Green to consider fund raising
• Jul-Sep earnings: Jaiprakash Associates, Libas Consumer

Policy Events

• RBI Governor Malhotra Speaks
• Fed Williams Speaks
• ECB General Council Meeting

Tickers to Watch

• ADANI sells 13% AWL Agri stake to Wilmar unit as part of major divestment
• JSW MG Windsor EV crosses 50,000 sales in under 400 days of launch
• Non-auto segments to drive growth for BHARAT FORGE as demand recovers
• CANARA BANK to raise ₹3,500 crore via AT-1 bonds in FY's first issue
• KEC INTERNATIONAL sees no material impact on existing Powergrid contracts
• RELIANCE CONSUMER PRODUCTS debuts Waggies in India's pet-care space
• L&T secures deal to manufacture BvS10 Sindhu vehicles for Indian Army
• Income Tax officials conduct probe at WAAREE ENERGIES' offices, facilities
• Private lender ICICI BANK raises senior citizen deposit rates to 7.2%
• OIL INDIA ropes in France's TotalEnergies for deepsea oil, gas hunt
• BAJAJ AUTO acquires majority stake in Austrian motorcycle maker KTM

Must Read

• Samriddhi 2025: 'Industry aligning with India's circular economy vision'
• RBI's inflation model under fire as persistent overestimates draw scrutiny
• Budget 2026-27: Make demergers tax-neutral, biz houses nudge govt
• MoSPI releases NIC 2025, aims to capture economy's new & emerging sectors
• IBBI asks resolution professionals to file detailed 29A notes before CoC
• Terminal Tariffs: Modeling the Final Destination of Trump’s Trade War

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day

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