AI Stock Rout Triggers Risk-Off Mood Across Asia Despite Trade Truce Hopes

GLOBAL MOOD: Risk-off
Drivers: US-China Tariff Truce, US Weak Labour Data, BoE Dovish Tilt

Asian markets turned risk-off Friday, mirroring Wall Street’s tech-led slide as investors pared exposure to overvalued AI stocks. Optimism from the Trump–Xi trade pause was overshadowed by profit-taking and weak global growth sentiment.

TODAY’S WATCHLIST
 - Jul-Sep Earnings: Bajaj Auto, Hindalco
 - Fed Waller Speech

 

THE BIG STORY
The Trump administration moved to cool trade tensions with China on Thursday, announcing a one-year suspension of port fees on China-linked vessels and halting punitive actions from its Section 301 trade practices investigation. The US Trade Representative said the pause, effective November 10, aims to facilitate negotiations with Beijing over its dominance in global shipbuilding and logistics. China reciprocated with a similar pause on retaliatory tariffs in what officials are calling the Trump–Xi de-escalation agreement. The move signals a tactical easing in trade friction after months of tariff-related strain on logistics firms such as Matson, which paid $6.4 million in Chinese port fees since mid-October. Analysts estimate that state-owned COSCO could face up to $1.5 billion in annual US port costs without such relief.

Meanwhile, across the Atlantic, the Bank of England held rates steady at 4%, but the narrow 5–4 vote and dovish tone from Governor Andrew Bailey fuelled bets on a December rate cut. Policymakers noted waning demand risks and easing inflation pressures, suggesting that monetary policy may soon pivot toward supporting growth.

Data Spotlight
US labour market showed clear signs of strain in October as job losses mounted across key sectors and layoff announcements spiked. Workforce analytics firm Revelio Labs reported a net loss of 9,100 jobs, led by declines in government by 22,200 and retail by 8,500 payrolls, partly offset by modest gains in education and health services that gained 22,000.

The Chicago Federal Reserve estimated the unemployment rate rose to 4.36% from 4.35%, suggesting a marginal softening in employment conditions amid the ongoing government shutdown that has obscured official labour data. Meanwhile, Challenger, Gray & Christmas reported planned layoffs surged 183% to 153,074, the highest October total in 22 years, as firms cited AI-driven restructuring, weaker demand, and cost-cutting pressures. The combination of elevated job cuts and slower hiring indicates a cooling job market that could influence the Fed’s near-term policy stance.

Takeaway: Mounting layoffs and muted hiring momentum signal a fragile labour backdrop, reinforcing expectations for a potential Fed rate cut while underscoring rising risks to growth.

WHAT HAPPENED OVERNIGHT

• US Stocks fell as tech rout resumes amid economic jitters
  • US stocks retreated on Thursday as renewed pressure on high-valuation tech names weighed on sentiment.
  • Investor caution resurfaced as economic uncertainty and stretched valuations curbed risk appetite, particularly in AI-linked momentum stocks.
  • DoorDash plunged 17.5% after posting weaker-than-expected Q3 profits due to higher costs, while Elf Beauty collapsed 35% following a downbeat outlook.
  • Snap surged 9.7% after beating revenue expectations and unveiling a partnership with Perplexity AI, bucking the broader tech slump.

• US Treasury yields fall as labour weakness fuels rate-cut bets
  • The 10-year US Treasury yield dropped to 4.08% on Thursday, retreating from the session high of 4.16%, as soft labour data reinforced expectations of a Fed rate cut next month.
  • Challenger job cuts surged to their highest October level in two decades, reflecting weaker consumer demand and corporate cost-cutting.
  • The data strengthened the dovish case within the Fed, which has leaned more heavily on private labour indicators during the BLS blackout.

• US Dollar slides on soft labour data, rate cut bets rise
  • The dollar weakened for a second session on Thursday, falling against the euro and Swiss franc as fresh labour market data revived expectations of another Fed rate cut.
  • The dollar index fell below 100, down from a five-month high of 100.3 after weak job data.
  • Challenger job cuts tripled in October, with companies citing weaker consumer demand, tempering optimism from the earlier rebound in ADP payrolls.

• Crude oil prices slip on oversupply concerns
  • Brent crude prices fell on Thursday as fears of a potential supply glut and softer US demand weighed on sentiment.
  • Brent crude settled down 0.22% at $63.38 a barrel, while WTI slipped 0.29% to $59.43.
  • The decline marked the third consecutive monthly drop in October, as OPEC+’s output growth and rising non-OPEC supply fuelled oversupply concerns. 

Day’s Ledger

Economic Data

• Fed Balance Sheet
• US Payrolls Data
• India FX Reserves 

Corporate Actions

• Jul-Sep Earnings: Bajaj Auto, Divi’s Labs, FSN E-Commerce, Hindalco, Kalyan Jewellers, NALCO, Petronet LNG, PFC, Torrent Pharma, Trent
• Swiggy to consider fund raising 

Policy Events

• ECB Lane Speech
• Fed Waller Speech
• Fed Paulson Speech
• Fed Musalem Speech
• ECB Elderson Speech
• Fed Jefferson Speech 
  
  

Tickers to Watch

• LIC Q2 profit rises 31% to ₹100.98 billion, premium income grows 5.5%
• APOLLO HOSPITALS PAT up 26% in Q2; eyes HealthCo breakeven within 2 qtrs
• LUPIN Q2 PAT rises 73% on strong growth across key global markets
• NHPC Q2 results: Net profit rises nearly 15% to ₹12.19 billion on higher income
• MANKIND PHARMA Q2 PAT drops 21% on high finance costs; revenue up 20%
• After ₹100 trillion biz, SBI enters $100 billion market capitalisation club
• The slow energy switch: IOC, BPCL, HPCL need faster ride to net-zero goals
• Cash flow concerns likely to keep HINDALCO's stock under pressure
• Adani's Kutch Copper inks MoU with Caravel Minerals for Australia project
• Rebound in US biopharma funding may boost orders, says PIRAMAL PHARMA
• INFOSYS announces record date for ₹180 billion share buyback
• SINGTEL unit to sell Bharti Airtel stake worth ₹103 billion cr via block deals 

Must Read

• SMBC to invest $200 million in Indian startups amid booming IPO market
• Govt to soon launch sustainable aviation fuel policy: Aviation Minister
• SEBI plans more IPO reforms, streamlining share pledge norms & disclosures
• Bank unions protest Nirmala Sitharaman's privatisation 'endorsement'
• India will need more banks to meet future needs: DFS Secretary Nagaraju
• NPPA fixes retail price of 28 drugs, ceiling price of six formulations
• US military to establish presence at Damascus airbase
• Trump’s Tariffs Are a Massive Money Grab. That’s Why They Are in Trouble
• Bank of England Diverges From Fed With Rate Hold
• Tata Motors split: Who keeps the debt, and what it means for interest bills

 

 

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

 

 

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