Global Mood: Cautiously risk-on
Drivers: Saudi Airport attacks, Energy supply risks, Russia-Ukraine ceasefire

Asian markets opened mixed on Monday as investors assessed renewed geopolitical risks and looked ahead to a busy week of corporate earnings and inflation data. South Korea’s Kospi fell 1.34%, while Australia’s S&P/ASX 200 gained 0.61%; Japan’s markets were closed for a holiday. US equity futures edged higher, with S&P 500 futures up 0.12%, Nasdaq 100 futures rising 0.24% and Dow futures gaining 0.05%, following a positive week for Wall Street led by technology stocks. The GIFT Nifty was trading at 22,636.5, up 34 points or 0.15%, pointing to a mildly positive opening for Indian equities.

Sentiment remained cautious as US President Donald Trump said he was considering joining Saudi Arabia in its fight against Iran-backed Houthis in Yemen, following a deadly attack on Riyadh’s international airport. The remarks revived concerns over an escalation in West Asia and potential disruption to energy supplies, keeping oil prices and inflation risks in focus. Investors are also watching upcoming earnings results and inflation data for clues on corporate performance and the outlook for US monetary policy.

THE BIG STORY
Houthi attacks on Riyadh’s King Khalid International Airport killed at least 12 people and wounded more than 300, followed by another strike that killed one person and injured additional victims. The attacks prompted Saudi Arabia to vow retaliation and raised concerns over regional security and energy supplies. Further threats to Saudi airports raise regional security risks. Saudi Arabia has intensified its campaign against the Houthis, who are fighting Saudi-backed forces near the strategic Bab el-Mandeb Strait. The conflict threatens shipping routes and regional energy infrastructure.

Trump said Russia and Ukraine had agreed to an immediate halt to attacks on energy infrastructure, but neither Moscow nor Kyiv confirmed the deal. Zelenskiy said Ukraine supported the proposal but was awaiting details as Russian strikes continued. Washington reportedly threatened to restrict intelligence sharing and arms supplies unless Ukraine halted attacks on Russian refineries. Trump has linked those strikes to higher diesel prices ahead of November's US midterm elections.

Data Spotlight
US consumer sentiment fell to 46.3 in early October, its lowest since May and below expectations of 47.6.  The current economic conditions index plunged to a record low of 44.7, as high prices and borrowing costs weighed on durable-goods buying conditions.

Lower-income households and consumers with smaller stock portfolios reported sharper declines in sentiment, highlighting the uneven impact of persistent inflation and tighter financial conditions. Consumers across political groups increasingly viewed the economic outlook as deteriorating.

US year-ahead inflation expectations rose to 4.7% in October, the highest since May, while five-year expectations increased to 3.5%. Both measures point to renewed concerns over the persistence of inflation.

Takeaway: Deteriorating US consumer sentiment alongside rising short- and long-term inflation expectations presents a challenging backdrop for the Federal Reserve. Persistent price pressures may constrain the scope for monetary easing even as households become increasingly pessimistic about economic conditions.

WHAT HAPPENED OVERNIGHT

US stocks rise as investors eye earnings season and inflation data

• The Dow rose 0.83% to 51,654.95, the S&P 500 gained 0.59% to 7,811.51 and the Nasdaq advanced 0.64% to 27,366.17 on Friday, with all three indexes posting weekly gains.
• Investors turned their focus to third-quarter earnings and upcoming inflation data for clues on the Federal Reserve’s policy outlook, amid uncertainty over developments in the Iran conflict. 
• Analysts expect S&P 500 earnings to grow 30.6% year on year in July–September, led by the energy and technology sectors.
• US telecom stocks fell sharply after SpaceX agreed to acquire a nationwide low-band spectrum portfolio, intensifying competition concerns. T-Mobile, AT&T and Verizon fell 8.8% to 13.3%.
• Apple fell 1.1% after a report said it had asked suppliers to cut production of components for its iPhone 18 Pro models, as higher memory-chip costs and price increases weighed on demand expectations. 

US Dollar set for fourth weekly gain as Fed rate outlook supports greenback

• The US dollar index was little changed around 102.1 on Friday but was on track for a 0.2% weekly gain, its fourth consecutive advance and highest level since April 2025.
• Investors assessed developments in West Asia and their implications for energy prices and inflation. 
• Oil prices eased after US President Donald Trump pledged not to attack Iran before the November midterm elections, tempering concerns over further supply disruptions.
• Persistent inflation risks continued to support expectations of the Federal Reserve keeping rates higher for longer, despite easing near-term geopolitical concerns.
• Markets priced in about an 81% chance of the Fed holding rates steady in October, while the odds of a 25-basis-point hike in December stood at around 69%.

US Treasury yields edge higher as inflation concerns offset auction demand

• The US 10-year Treasury yield edged up to 5.26% on Friday after a volatile session on Thursday, when it fell 6 basis points from its highest level since 2002. The yield was down around 5 basis points for the week.
• Investors assessed developments in West Asia and their implications for energy prices and inflation. 
• Oil prices eased after US President Donald Trump pledged not to attack Iran before the November midterm elections, easing concerns over further supply disruptions.
• Persistent inflation risks kept expectations of the Federal Reserve maintaining higher interest rates for longer in focus. 
• Strong demand at this week’s 10-year and 30-year Treasury auctions suggested investors remained willing to buy longer-dated government debt despite the recent sell-off and elevated yields.

Oil rises as Hurricane Isaias shuts more US Gulf production, Brent and WTI set for weekly gains

• Brent crude settled 0.42% higher at $104.72 a barrel, while WTI rose 0.39% to $91.85, as Hurricane Isaias threatened US Gulf of Mexico output. Both benchmarks were on track for weekly gains.
• Oil prices had earlier declined after US President Donald Trump said Washington’s discussions with Iran were productive and ruled out an attack before the November 3 midterm elections, easing immediate concerns over further supply disruptions.
• US Gulf of Mexico producers had shut in around 1.3 million barrels per day of oil output, or 62.9% of current production, as of Thursday, according to the US Marine Minerals Administration, with further shutdowns expected as the hurricane approached.
• Plans by China, the world’s largest oil importer, to resume refined-fuel exports after a brief holiday suspension also weighed on prices, potentially easing pressure on global fuel markets.
• Supply risks remained elevated amid threats to shipping through the Strait of Hormuz, which handled about 20% of global oil and fuel shipments before the war.
• The US also imposed fresh sanctions on Iran’s oil trade, while the Iran and Russia-Ukraine conflicts continued to disrupt refined-fuel supplies, particularly diesel.

Day’s Ledger*

Economic Data

• India September CPI

Policy

• UK BoE Breeden Speaks
• UK BoE MPC Member Mann
• US Fed Hammack Speech

Corporate Actions

• Earnings: Gujarat State Fertilisers & Chemicals, HCL Technologies, ICICI Prudential Asset Management Company, RBL Bank

Tickers to Watch

• AVENUE SUPERMARTS net profit rose 8.5% y/y to 7.44 billion rupees in the July-September quarter, while revenue grew 17.8% to 196.44 billion rupees. EBITDA rose 15% to 13.94 billion rupees, but margin fell to 7% from 7.3%, below estimates.
• CAN FIN HOMES net profit rose 9.2% y/y to 2.75 billion rupees, while net interest income increased 6.6% to 4.32 billion rupees. Loan book grew to 435.39 billion rupees, while net interest margin eased to 3.89% from 4.02%.
• CANARA ROBECO ASSET MANAGEMENT COMPANY net profit rose 21.5% y/y to 592 million rupees, while revenue grew 18.6% to 1.28 billion rupees. Total AUM fell 1% to 1.16 trillion rupees; the board approved an interim dividend of 2 rupees per share.
• ANAND RATHI WEALTH net profit fell 9.5% y/y to 899.5 million rupees, while revenue rose 15.7% to 3.44 billion rupees. EBITDA margin declined to 34% from 46.2%, despite a 39% rise in net inflows to 41.86 billion rupees; the board approved a 4-rupee interim dividend per share.
• POONAWALLA FINCORP net profit rose to 3.75 billion rupees from 740 million rupees a year ago, while net interest income increased 75.7% to 15.89 billion rupees. AUM stood at 740.08 billion rupees, and gross NPA improved to 1.2% from 1.37% in June.
• CANARA HSBC LIFE INSURANCE net profit rose 5.5% y/y to 431 million rupees, while net premium earned grew 13% to 25.53 billion rupees. Value of new business rose 24% to 2.66 billion rupees in April-September.

Must Read

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• RBI announces special dollar window for PSU oil cos, regulatory measures for FX market
• 'Time for Ukraine to get a new president', says Trump
• Jefferies Says Found Fraud in $900 Million of Radiant Deals

(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day