Asian Stocks Rebound on China Data, But US Shutdown Worries Linger

GLOBAL MOOD: Cautiously Risk-on
Drivers: China Export Easing, US Consumer Sentiment

Asian markets adopted a cautiously risk-on tone Monday, rebounding from last week’s AI-led selloff as China’s stronger-than-expected inflation data signalled stabilising demand. Gains were tempered by weak US consumer sentiment and lingering worries over the prolonged government shutdown.

TODAY’S WATCHLIST
 - Bajaj Finance, ONGC, Vodafone Idea

THE BIG STORY
The ongoing US government shutdown has now claimed two consecutive monthly jobs reports, with the crucial October CPI also in jeopardy, leaving the Federal Reserve to navigate an increasingly opaque economic landscape. The Bureau of Labor Statistics was scheduled to release the CPI on Thursday, but the closure has halted in-person data collection, making it likely that no official inflation report will be published for October. This growing data blackout has left policymakers divided over whether to proceed with another rate cut at the December meeting, as they attempt to balance rising job cuts with lingering inflation pressures. The Fed, already the most split it has been in years, now faces heightened uncertainty around its near-term policy direction.

In a separate development, China moved to ease trade tensions by suspending its ban on exports of several dual-use materials including gallium, germanium, antimony, and super-hard materials to the US. The suspension, effective immediately and valid through November 2026, also covers graphite-related items and select rare earth materials. The rollback marks a temporary de-escalation in the critical minerals trade dispute, following months of tightened export restrictions and rising geopolitical friction.

Data Spotlight
US consumer confidence deteriorated sharply in November, with the University of Michigan’s consumer sentiment index dropping to 50.3 from 53.6 in October, well below expectations of 53.2. The reading marked the second lowest on record, just above the June 2022 trough, as Americans grew more anxious about the economic fallout from the prolonged government shutdown.

The Current Conditions Index fell to a record 52.3, driven by a 17% decline in personal finance assessments, while the Consumer Expectations Index slipped to 49.0, its weakest in six months. Inflation expectations softened slightly with 1-year outlook at 3.2% down from 3.4%, while 3-year and 5-year expectations held steady at 3.0%, signalling anchored long-term views.

Home price expectations remained unchanged at 3.0% for a fifth month, while projected gas and food price increases eased marginally. In contrast, consumer credit rose $13.09 billion in September, exceeding forecasts as both revolving and non-revolving borrowing strengthened, pointing to ongoing household reliance on credit amid rising financial stress.

Takeaway:
The plunge in sentiment underscores growing strain from the government shutdown and persistent cost pressures, though steady inflation expectations suggest long-term stability in consumer outlook.

WHAT HAPPENED OVERNIGHT

• US Stocks Mixed; Late Gains on Shutdown Optimism
  • US stocks ended mixed as shutdown optimism offset growth worries.
  • Nasdaq slipped, while S&P 500 and Dow rebounded from intraday losses.
  • EXPEDIA surged 17.6% after strong B2B bookings lifted earnings.

• US Treasury Yields Slide on Weak Data, Growth Concerns
  • 10-year yield fell to 4.1%, down from a one-month high of 4.16%.
  • Michigan Consumer Sentiment Index plunged to its second-lowest level ever.
  • With official data suspended amid the government shutdown, private surveys gained greater influence on market sentiment.

• US Dollar Slips as Economic Mood Darkens
  • Dollar index dropped to 99.4 as traders weighed Fed’s hawkish tone against worsening sentiment.
  • University of Michigan survey showed consumer confidence at 50.3, lowest in three years.
  • Prolonged shutdown, high inflation, and rising job worries dampened outlook.

• Crude Oil Rebounds on Diplomatic Optimism
  • Brent crude rose 0.39% to $63.63/barrel; WTI gained 0.54% to $59.75.
  • Optimism grew after Trump–Orbán meeting suggested Hungary may continue Russian crude imports.

Day’s Ledger

Economic Data

• Japan FX Reserves 
  
• BoJ Summary of Opinions
  
• US WASDE Report

Corporate Actions

• Jul-Sep Earnings: Bajaj Finance, HUDCO, KPIT Technologies, ONGC, SJVN, Solar Industries, Vodafone Idea
  
• Nureca to consider share buyback

Policy Events

• BoJ Nakagawa Speech             
  
  

Tickers to Watch

• Anant Raj Q2 consolidated PAT rises 30.8% YoY to ₹1.38 bln
• Ashoka Buildcon receives LoA for ₹5.39 bln project
• JSW Cement provides ₹2.20 bln corporate guarantee for JV working capital
  
• Karnataka Bank Q2 PAT slips 5% YoY on slower business growth
  
• Lupin’s Pune unit clears US FDA inspection with no observations
  
• Reliance Power denies any link after ED arrests Amar Nath Dutta
• CONCOR wins fresh orders worth ₹2.4 bln from GATX India and ₹1.6 bln from Touax Taxmaco
  
• Force Motors Q2 profit more than doubles year-on-year to ₹3.5 bln
  
• Hindustan Aeronautics enters into a partnership agreement with US-based General Electric
  
• Godrej Prop confident of surpassing ₹325 billion sales target 

Must Read

• Centre directs regulators to frame tariff norms for monetising grid assets
• US govt shutdown delays inflation data, deepens uncertainty for divided Fed
• China's producer price deflation eases in October as consumer prices rise
• Trump signals no shutdown compromise as senators schedule weekend session
• Trump Dismisses Affordability Concerns, Insists Prices Are Coming Down
• US to Reduce Flight Traffic by 10% at 40 Airports Because of Shutdown
• CII urges govt to establish India Development and Strategic Fund

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

Prune the List of Major Oilseeds and Sharpen Policy Focus 

G Chandrashekar writes, why India's oilseed policy needs a sharper knife, not a broader net.

India’s oilseed strategy has been stretched too wide, chasing multiple crops with uneven focus. A new paper argues that pruning the list of “major” oilseeds and investing deeply—especially in mustard, soybean, and groundnut—could bring better returns.

These three already make up 80% of India’s oilseed output. Instead of spreading thin subsidies and R&D across nine crops, can we double down where scale, yield, and import substitution matter most?