Global Mood: Cautiously risk-off
Drivers: AI Spending Concerns, Russia-Ukraine Conflict, US-Iran Tensions, Oil Supply Risks

Asian markets traded lower on Monday, tracking losses in technology stocks last week, while US equity futures edged higher ahead of a busy week of corporate earnings, jobs data and US midterm elections. Japan’s Nikkei 225 fell 0.54%, and the Topix declined 0.74%, while South Korea’s Kospi dropped 1.39%, and the Kosdaq slipped 0.81%. Australia’s S&P/ASX 200 was down 0.24%. US futures gained 0.2–0.4%.

Wall Street ended last week lower, with the Nasdaq Composite falling 2%, as investors reassessed spending on artificial intelligence infrastructure. Optimism following Anthropic’s public IPO filing faded amid concerns over capital expenditure outlooks from Alphabet, Microsoft and Amazon. Investors will watch upcoming earnings and US jobs data for clues on corporate spending and economic strength. The GIFT Nifty was trading at 23,286.5, up 200.5 points or 0.87%, pointing to a positive opening for Indian equities.

THE BIG STORY
Russian strikes hit power infrastructure in four Ukrainian regions, leaving hundreds of thousands of households without electricity.  Ukraine said it had targeted a Russian missile-manufacturing plant in Rostov, while Moscow reported significant damage to an unidentified industrial facility in Nizhny Novgorod. The damage in Nizhny Novgorod raised concerns over regional fuel supplies, with authorities urging motorists to avoid panic buying. Russia said Ukrainian refinery strikes were worsening global fuel-market imbalances and affecting prices.

Iran's IRGC Navy said two oil tankers exploded after hitting mines while using what it described as an unauthorised route through the Strait of Hormuz, highlighting the risks to shipping through the strategic waterway. Continued restrictions on vessel movements and attacks on ships threaten oil flows through the strait, keeping global energy supply concerns elevated.

Iranian and Qatari negotiators held a third day of talks in Doha to advance a proposal to end the US-Israeli war on Iran. Tehran said discussions were progressing, but no final agreement had been reached. Iran said it was prepared for both diplomacy and defence, while US President Donald Trump has left open the possibility of renewed military action after the November 3 midterm elections.  A proposed framework could reopen the Strait of Hormuz within two days of an agreement.

Data Spotlight
US employment costs rose 0.8% quarter-on-quarter in Q3 2026, slowing from 0.9% in the previous quarter but matching expectations.  Wages and salaries increased 0.7%, while benefits rose 0.9%. Compensation costs for private-sector workers advanced 0.8%, while those for state and local government employees rose 0.6%. Annual employment cost growth remained unchanged at 3.4%.

The Chicago Business Barometer fell 3.5 points to 55.3 in October, below expectations of 56.1, but remained in expansion for a second consecutive month. Production and new orders softened, while employment jumped 10.3 points to its highest since April 2021, returning to expansion.  Prices paid rose 8.9 points to their highest since December 2021, reflecting higher costs of chemical- and petroleum-based inputs.

China's official manufacturing PMI fell to 49.3 in October from 50.1 in September, below expectations of 50.0 and its lowest reading since July. Output, export orders, new orders and purchasing activity all slipped into contraction, pointing to weakening domestic and external demand. 

Employment remained in contraction, while input cost inflation eased to 56.8 from 60.8 and output price growth slowed to 51.7 from 54.0. Business confidence fell to a seven-month low.

Takeaway: The US data point to moderating labour cost growth but persistent input-price pressures, complicating the Federal Reserve's inflation outlook. China's manufacturing sector returned to contraction in October, with weaker orders and production highlighting challenges for domestic and external demand.

WHAT HAPPENED OVERNIGHT

US stocks slide as Intel and Amazon results rekindle AI spending concerns; Nasdaq falls 2.86%

• Wall Street tumbled on Friday as disappointing results from Intel and Amazon intensified concerns over heavy AI investment and the time needed to generate returns.
• The Dow fell 1.09% to 51,770.31, the S&P 500 lost 1.82% to 7,580.07, and the Nasdaq dropped 2.86% to 25,437.00.
• The Nasdaq recorded its biggest one-day percentage decline since June 5 and ended 7.8% below its October 6 record closing high.
• The index fell over the week, while the S&P 500 and Nasdaq posted monthly losses; the Dow ended October higher.
• Intel plunged 28.6% after its results highlighted significant cash-burn concerns. Nvidia fell 4.2%, and AMD lost 10.9%, while the Philadelphia semiconductor index dropped 7.2%, taking its monthly loss above 15%.
• Amazon also came under pressure after issuing weaker-than-expected fourth-quarter sales guidance.
• Cryptocurrency-related stocks Coinbase, Strategy and Robinhood fell 7.2%-10.6% following reports of a $6.3 billion hack at Binance.
• The broader earnings picture remained relatively firm, with 82% of 299 S&P 500 companies reporting results above consensus estimates.

US Dollar Holds Near 102 as Strong US Data and Rate-Hike Bets Support Greenback

• The dollar index was little changed near 102 on Friday as disappointing technology earnings and concerns over the sustainability of the AI rally triggered a flight to safe-haven assets.
• The greenback gained 0.2% for the week and 0.5% in October, supported by resilient US economic data and expectations of further Federal Reserve tightening.
• US GDP grew at an annualised 3.4% in the third quarter, beating forecasts, while consumer spending and AI-related investment supported growth.
• The US PCE price index rose 0.5% in September, its biggest monthly increase since March, adding to concerns over persistent inflation.
• Markets priced in a 72% probability of a December rate hike, according to the CME FedWatch Tool, despite the Fed holding rates steady on Wednesday.

US Treasury Yields Near Seven-Week Low as Tech Sell-Off Fuels Safe-Haven Demand

• The US 10-year Treasury yield was little changed at 4.93% on Friday, hovering near seven-week lows as disappointing technology earnings triggered a broad sell-off in US stocks and renewed concerns over the sustainability of the AI-driven rally.
• Stronger-than-expected US GDP growth of 3.4% in the third quarter, supported by consumer spending and AI investment, limited the decline in yields.
• US PCE inflation rose 0.5% in September, its biggest monthly increase since March, reinforcing expectations of further monetary tightening. The Federal Reserve held rates steady on Wednesday.
• Markets priced in a 72% probability of a rate hike in December, according to the CME FedWatch Tool.
• The 10-year Treasury yield fell around 36 basis points in October, despite persistent inflation and expectations of further rate increases, as demand for safe-haven assets supported bond prices.

Oil Settles at Six-Month Highs as Hormuz Tanker Attack Fuels Iran Escalation Fears

• Brent crude rose 2.4% to $117.64 a barrel on Friday, while US WTI gained 2.08% to $104.12, with both benchmarks settling at their highest levels since late April amid fears of further escalation in the Iran war.
• Brent gained 13.6% in October, while WTI advanced 15.2%, as attacks on shipping and energy infrastructure heightened concerns over supply disruptions.
• A tanker was hit by explosive devices attached to a small boat in the Strait of Hormuz, the first known successful limpet mine attack in the waterway since the US-Israeli war with Iran began in February.
• The US ordered non-emergency government staff and their families to leave Saudi Arabia over security risks, following Houthi claims of attacks on Saudi oil facilities and a missile launch towards the kingdom.
• Qatari mediators returned to Tehran to pursue a US-Iran deal, while Washington's outreach to Tehran offered a possible diplomatic counterweight to rising tensions. However, the approach of the November 3 US midterm elections could heighten volatility.
• Saudi crude exports rose in October from September, according to ship-tracking data, while Libya halted around 15,000 barrels per day of crude flows after an armed group shut a pipeline valve.

Day’s Ledger*

Economic Data

• India October S&P Global Manufacturing PMI
• German October HCOB Manufacturing PMI
• Eurozone October HCOB Manufacturing PM
• US October S&P Global Manufacturing PMI
• US October ISM Manufacturing PMI

Policy

• German Buba President Nagel Speaks
• US Fed Goolsbee Speaks

Corporate Actions

• Earnings: Container Corporation of India, Gujarat Narmada Valley Fertilisers and Chemicals, ITC Limited, National Aluminium Company, PTC India, Tata Investment Corporation, Trident Limited

Tickers to Watch

• RIL July-September 2026 consolidated net profit up 33.8% YoY to a record 295.5 billion rupees. Revenue up 27.8% to a record 3,620 billion rupees. EBITDA up 23.9% to 624.09 billion rupees. PBT up 32.6% to 386.13 billion rupees. April-September profit crosses 500 billion rupees for the first time.
• JIO PLATFORMS July-September 2026 net profit up 13.7% YoY to 83.89 billion rupees from 73.79 billion rupees. Up 8% QoQ. Gross revenue up 11.3% to 474.85 billion rupees. Operating revenue up 11.4% to 404.75 billion rupees.
• MAX HEALTHCARE INSTITUTE July-September 2026 network gross revenue up 20% YoY to 32.19 billion rupees. Network PAT up 10% to 4.48 billion rupees from 4.06 billion rupees. Bed occupancy at 77%. Average revenue per patient up 8% to 231,000 rupees.
• INDIAN OIL CORPORATION posts highest-ever quarterly standalone net profit of 216.3 billion rupees for July-September 2026. Compares with a 26.61-billion-rupee loss in April-June 2026. Revenue down 4.6% QoQ to 2,500 billion rupees. EBITDA at 302.97 billion rupees vs 19.47 billion rupees. Margin at 12% vs 0.7%.
• SJVN July-September 2026 net profit at 6.574 billion rupees vs 3.08 billion rupees. Revenue up 117.5% YoY to 22.443 billion rupees. EBITDA up 84.3% to 15.85 billion rupees. Margin fell to 70.6% from 83.3%.
• BEL July-September 2026 standalone PAT up 19.8% YoY to 15.41 billion rupees. Beats the 13.8-billion-rupee estimate. EBITDA up 20.4% to 20.4 billion rupees. Beats the 18.2-billion-rupee estimate. Margin down 140 bps to 28%, ahead of the 27.5% estimate.
• BANK OF BARODA July-September 2026 net profit up 35.8% YoY. NII up 9%. Asset quality improves sequentially.
• NTPC GREEN ENERGY July-September 2026 net profit up 56.2% to 1.375 billion rupees. Revenue up 53.2%. EBITDA up 56.6%. Margin at 88.4% vs 86.5%.
• PB FINTECH July-September 2026 net profit up 42.7% to 1.925 billion rupees. Revenue up 35% to 21.78 billion rupees. EBITDA up 69.2%. Margin at 7.6% vs 6.1%.
• IGL July-September 2026 net profit down 89.2% QoQ to 259 million rupees from 2.404 billion rupees. Revenue up 11.6%. EBITDA loss of 317 million rupees vs profit of 2.939 billion rupees.
• MUTHOOT FINANCE July-September 2026 net profit up 27% YoY, in line with estimates. NII up 34.4%, above estimates.
• NTPC July-September 2026 net profit up 14.3% to 53.2 billion rupees. Revenue up 16.8%. Both beat estimates. EBITDA up 8.7%, below estimates. Margin falls to 24% from 26%.
• BIRLA CORP July-September 2026 net profit down 58.6%. EBITDA down 25.3%. Revenue up 9.5%. Margin falls to 9.4% from 13.8%.
• COAL INDIA October production up 19.3% YoY to 67.2 MT. Offtake up 18.7%.
• VODAFONE IDEA CCI clears Xavier Niel's proposal to buy up to 16.2% in Vodafone Group Plc, per PTI.

Must Read

• Is AI in Inflation? Should Central Banks Care?
• Why Corporate India Chooses Silence Over Political Confrontation
• The Business Question Behind Gandhi’s Appeal to India Inc.
• The Long Road to a Woman's Workplace
• The Superficially Intuitive Case Against Capital Gains Tax
• Retail e-invoicing pilot likely from April 2027 to improve GST compliance
• Companies pessimistic about economy, bullish on business: IMA India survey
• Quanshium AI Core develops indigenous quantum-secure drone technology
• Commercial LPG rates increase by ₹10, ATF prices up by ₹1.37 per litre
• PM to meet Niti top brass amid global headwinds
• Food inflation worries mount amid low kharif yield, sluggish rabi sowing
• Crypto cards enter RBI's radar as Indians use offshore wallets for everyday payments

(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day