Asia Stocks Mixed; Fed Cut Hopes and US-China Talks in Focus

GLOBAL MOOD: Cautiously Risk-on
Drivers:  US-China talks, US Fed rate cut bets, Israel-Gaza war

Markets remain cautious with a mixed risk mood as US-China talks in Spain unfold and investors await the Federal Reserve’s rate decision this week. Rising US yields and softer consumer sentiment add to the uncertainty

TODAY’S WATCHLIST

• India August Trade data
  
• India August WPI Inflation data
  
• China August Industrial Production Data
  
• China August PPI

THE BIG STORY
Israeli forces have destroyed at least 30 residential buildings in Gaza City, displacing thousands of Palestinians on Sunday as US Secretary of State Marco Rubio visited the region to discuss the conflict’s future. Israel aims to seize the city, targeting what it calls Hamas’ last stronghold, and intensified its strikes on the group’s political leadership, including an airstrike in Doha that drew widespread condemnation. An Arab-Islamic leaders’ summit in Doha on Monday is expected to consolidate support for Qatar, while regional tensions rise, particularly affecting ties between the United Arab Emirates and Israel.

Meanwhile, US Commerce Secretary Howard Lutnick criticised India’s trade policies, stating that although India boasts a population of 1.4 billion, it refuses to buy even a small amount of American corn. He asserted that New Delhi must reduce its tariffs or face difficulties doing business with the US. Lutnick highlighted the perceived one-sided nature of trade, saying, “They block us from their economy, and they sell to us while we are wide open for them to come in and take advantage. The president says fair and reciprocal trade.”

Data Spotlight 
US consumer sentiment declined for a second consecutive month in September, reflecting growing concerns over business conditions, the labour market, and inflation. The University of Michigan’s Consumer Sentiment Index dropped to 55.4, the lowest since May, down from 58.2 in August, missing economists’ expectations of 58.0. One-year inflation expectations remained steady at 4.8%, while five-year expectations increased to 3.9% from 3.5% last month, signalling that consumers foresee slightly higher long-term inflation.

Takeaway: US Consumers are becoming more cautious amid economic uncertainty, which could weigh on spending and growth in the near term.

WHAT HAPPENED OVERNIGHT

• US stocks mixed, Nasdaq hits record high as tech leads 
  
  • US stocks closed mixed on Friday with S&P 500 ended marginally lower.
  • Nasdaq closed at a record high on Friday, lifted by Microsoft and Tesla.
  • Dow Jones declined due to losses in Goldman Sachs and Sherwin-Williams. 
  • Investors are focused on the Fed’s policy meeting this week for expected rate cuts.

• US treasury yields rise ahead of Fed meeting
  
  • The benchmark US treasury 10-year note yield increased 5.1 basis points to 4.062%.
  • 30-year bond yield rose 2.7 basis points to 4.6776% while 2-year note yield climbed 2.9 basis points to 3.558%.
  • Yields rebounded after sliding the previous day amid rising expectations of US rate cuts.

• US dollar edges higher ahead of Fed rate cuts
  
  • The US dollar index rose slightly after falling on Thursday due to higher jobless claims and modest inflation.
  • Dollar index increased 0.05% to 97.60.
  • US and Japanese finance ministers affirmed that neither country will target currency levels in policy decisions.

• Crude oil prices rise on Ukrainian drone attack
  
  • Brent crude oil prices climbed after a Ukrainian drone attack halted shipments from Russia’s largest western port.
  • US crude rose 0.51% to $62.69 a barrel while brent crude gained 0.93% to $66.99 a barrel.
  • Concerns about weakening US demand capped further price gains.

Day’s Ledger

Economic Data

• China August Industrial Production Data
• China August PPI
• India August Trade data
• India August WPI Inflation data
• Eurozone July Trade Data
• NY Empire State September Manufacturing Index

Corporate Actions

• Maharashtra Scooters to consider dividend
• Patel Retail to consider fund raising earnings
• Knowledge Realty Trust to consider fund raising
• Magnum Ventures to consider fund raising
• Sejal Glass to consider fund raising

Policy Events

• ECB's Schnabel Speaks  

TICKERS TO WATCH 

• ADANI POWER signs Power Supply Agreement with Bihar State Power Generation for 2,400 MW from upcoming Pirpainti plant.
• ALEMBIC PHARMA  receives USFDA Establishment Inspection Report for its API-I and API-II facilities at Panelav.
• APOLLO HOSPITALS  to buy 30.58% in Apollo Health & Lifestyle from IFC for ₹12.54 billion; also to invest ₹5.73 billion in Gurugram oncology centre.
• CEIGALL INDIA emerges L1 bidder for ₹5.09 billion GMADA road construction project at Aerotropolis, SAS Nagar.
• DIAMOND POWER INFRA  wins ₹2.37 billion LOI from Adani Energy for supply of 5,403 km AL-59 Zebra conductor.
• DR REDDY’S LABS – USFDA issues Form 483 with five observations after PAI at Bachupally biologics facility.
• ENGINEERS INDIA  secures ₹6.18 billion PMC & EPCM contract for new fertilizer plant in Africa.
• GMR AIRPORTS reports Aug passenger traffic down 3.5% YoY to 9.35 million; aircraft movements down 4.2%
• INFO EDGE receives whistle-blower complaint on alleged policy violations in 99acres vertical; law firm appointed for probe.
• RAILTEL gets ₹ 2.10 billion order from Bihar Education Project Council for quality enhancement under PM SHRI.
• SAMVARDHANA MOTHERSON forms JV with Taiwan’s Macauto; incorporates wholly owned unit Motherson Macauto Solutions.
• SHAKTI PUMPS  bags ₹3.74 billion order from MSEDC for 12,451 solar pumps; total bookings now ₹6.16 billion across two tranches.
• STEEL STRIPS WHEELS CFO Naveen Sorot resigns due to relocation to Gurgaon.
• TATA TECHNOLOGIES  to acquire Germany’s ES-Tec GmbH for €75 million; deal completion by Dec 2026.

MUST READ:

• Powell's Last Chance to Protect the Fed
  
• India’s Bank Mergers: The Folly of Mistaking Size for Strength
  
• Act Before It’s Too Late, Build a Sovereign Digital Backbone
  
• Rupee on a Leash: RBI’s Dictated Depreciation Strategy
  
• Why India’s Stock Markets are Poised for a Major Shift
  
• Discord in Nepal & Divided States of America
• SBI, pvt banks to reap ₹134.83 billion YES Bank gains, all tax-free
• Inflation's ways give room for a rate cut, but RBI may not do it
• Govt proposes tax exemption of up to 20 years for data centre developers

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See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Bihar heads into one of its tightest contests in years. The second round of Vote Vibe’s survey shows NDA and MGB separated by less than half a percentage point.

Margins this slim mean turnout and last-minute swings could decide the outcome.

For in-depth analysis, read Amitabh Tiwari's article: Tight Race; Voter Turnout, Last Minute Swings Remain Key.