Asia Opens Lower as Contraction in China Factories Weighs on Sentiment

GLOBAL MOOD: Cautiously Risk-off
Drivers: China Factory Data, Fed Rate Cut Bets

Asia opened in a risk-off mood as traders waited for fresh China manufacturing data and leaned on rising odds of a December Fed rate cut. Cautious sentiment persisted as China’s factory activity remained in contraction, underscoring ongoing demand weakness.

TODAY’S WATCHLIST
 - India October IIP
 - US November S&P Global Manufacturing PMI

THE BIG STORY
The Trump administration intensified its push for a Ukraine–Russia peace deal this weekend, with senior officials including Secretary of State Marco Rubio, Special Envoy Steve Witkoff and Jared Kushner meeting Ukrainian negotiators in Florida to refine a US-backed framework ahead of crucial talks in Moscow. The effort comes at a sensitive moment as Washington seeks to accelerate diplomatic momentum.

Kyiv, meanwhile, was hit by political upheaval after President Volodymyr Zelenskiy accepted the resignation of his powerful chief of staff, Andrii Yermak, the country’s lead negotiator, following an anti-corruption raid on his home. The dismissal comes amid a widening scandal involving $100 million allegedly embezzled from the energy sector, adding pressure on Zelenskiy as Ukraine evaluates US proposals.

Markets were thrown into disarray on Friday after a major outage at CME Group froze trading for more than 11 hours across futures, FX and commodities. The disruption, blamed on a cooling-system failure at a CyrusOne data centre, halted contracts from WTI crude to Nasdaq 100 and gold before operations gradually resumed, injecting fresh volatility into already fragile global sentiment.

Data Spotlight
US natural gas futures climbed above $4.7/MMBtu, approaching their highest level since late 2022, as colder weather swept across major consuming regions and forecasts pointed to below-normal temperatures in the Northeast and Great Lakes. Strong LNG exports, averaging 18 bcfd in November, added support, though record Lower-48 production near 110 bcfd and storage levels about 5% above average kept supplies well balanced. Meanwhile, China’s official NBS Manufacturing PMI inched up to 49.2 in November, matching expectations but marking an eighth straight month of contraction as domestic and external demand remained subdued.

Takeaway:
Gas markets tightened on colder weather and record LNG flows, though ample supply prevented a larger spike. China’s manufacturing sector remains under pressure, signalling persistent demand softness despite slight stabilisation.

WHAT HAPPENED OVERNIGHT

• US stocks ended up led by retail strength, tech rebounds
  • US stocks rose on Friday in light post-Thanksgiving trading, supported by retail gains and a modest tech rebound.
  • Expectations for a December Fed rate cut firmed throughout the week, helping lift overall sentiment.
  • Most S&P 500 sectors advanced, except healthcare, dragged by Eli Lilly.
  • Intel surged 10.2% after a TF International Securities analyst said the firm is expected to begin shipping Apple’s lowest-end M-series processor by 2027, making it one of the session’s top performers.

• US Treasury yields ended higher post-holiday
  • The 10-year US Treasury yield rose slightly above 4% on Friday, rebounding from early-week October lows during a shortened post-Thanksgiving session.
  • Despite the uptick, the 10-year yield is down nearly 5 bps for the month as expectations strengthen for a December Fed rate cut.
  • Dovish signals from Fed Governor Waller and NY Fed President Williams reinforced market conviction that the Fed may cut rates at its December meeting.

• US Dollar steady but record worst weekly decline since July
  • The dollar index steadied around 99.6 on Friday, pausing its recent slide but 0.5% weekly decline, its weakest week since late July.
  • Traders increased bets on a December Fed rate cut, driven by weakening labour data despite hawkish caution from several Fed officials.
  • Markets now price in odds of a 25 basis points cut this month, with three more cuts expected in 2026.
  • Sentiment was also shaped by reports that NEC Director Kevin Hassett is the leading candidate for Fed Chair, reinforcing expectations of a more dovish policy stance aligned with President Trump.

• Crude oil prices dip ahead of OPEC+ meeting
  • Brent crude prices lower on Friday as markets weighed the geopolitical risk premium tied to prolonged Russia–Ukraine peace talks.
  • Traders remained cautious ahead of Sunday’s OPEC+ meeting.
  • WTI crude settled at $58.55 down 0.17% after resuming trade following a CME system outage caused by a data-centre cooling issue.
  • Brent January contract fell to $63.20, while the more active February Brent closed at $62.38, down.

Day’s Ledger

ECONOMIC DATA

• India November S&P Global Manufacturing PMI
  
• Eurozone November HCOB Eurozone Manufacturing PMI
  
• India October Industrial Production Data
  
• US November S&P Global Manufacturing PMI
  
• US Atlanta Fed Oct-Dec GDPNow

CORPORATE ACTIONS

• Hindustan Construction Company to consider fund raising
  
• NACL Industries to consider fund raising
  
• Steel City Securities to consider dividend
  
• Nexus Select Trust to consider fund raising  

POLICY EVENTS

• German Buba President Nagel Speaks  

TICKERS TO WATCH

• ADANI ENTERPRISES projected total group debt of ₹1 trillion by 2030.
• ARVIND SMARTSPACES acquired an Ahmedabad high-rise project with estimated topline potential of ₹4 billion.
• BRIGADE ENTERPRISES signed a JDA for a premium Hyderabad residential project with revenue potential above ₹8 billion.
• DALMIA BHARAT reported tax notices totalling ₹2.66 billion for its subsidiary.
• GAIL INDIA received PNGRB’s new tariff order that implies an estimated positive impact of about ₹12 billion.
• ICICI BANK raised another ₹39.45 billion through Tier-2 bonds carrying a 7.40% coupon.
• IRFC raised ₹29.81 billion via its first zero-coupon bond issue.
• LENSKART posted Q2 profit of ₹1.03 billion, up 19.8%  year-on-year.
• LODHA DEVELOPERS prepared to launch housing projects worth ₹140 billion in the second half of the year.
• MAHARASHTRA SEAMLESS received a ₹2.17 billion seamless-pipe supply order from ONGC.
• MAHINDRA & MAHINDRA reiterated its focus on premium SUVs across ICE and EV segments.
• NCC won a ₹20.63 billion order along with three additional orders worth ₹5.31 billion across its buildings, water and transportation divisions.
• NTPC received NCLT approval for the NTPC–MAHAGENCO resolution plan for the 1,350 MW Sinnar Thermal Power project.
• TATA TECHNOLOGIES completed its €75 million acquisition of Es-Tec Group.
• WAAREE ENERGIES secured an order to supply 140 MW of solar modules to a major renewable-energy developer.

MUST READ

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• India’s Exports to US Fall 28.5% in Past Five Months as Tariffs Batter Key Sectors
• Switzerland has long welcomed the ultra wealthy. A referendum on a new tax has riled them up
  
• Pope Leo: Palestinian state 'only' solution to Israeli conflict
  
• Janet Yellen Says the US Is Undermining Its Economic Success
• Trump Says He Has Made His Choice to Lead the Federal Reserve 
• Japan’s Two-Year Yield Hits Highest Since 2008 on Rate-Hike Bets
• SP Group in talks to raise Rs 25,000 crore via unrated NCDs

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

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