Global Mood: Cautiously risk-on
Drivers: Fed Decision, AI Chip Rally, US-Iran Talks

Asian markets rose on Wednesday, led by South Korea, as technology stocks strengthened and oil prices eased ahead of the US Federal Reserve’s policy decision. Japan’s Nikkei 225 gained 0.7% and the Topix 0.3%, while the Kospi rose 2%, the Kosdaq 1.8% and Australia’s S&P/ASX 200 0.8%. US equity futures were little changed.

Technology stocks rallied after Broadcom announced a 63-billion-dollar financing arrangement for chips and networking equipment to be leased to Anthropic. Broadcom rose 4%, AMD gained 5.5% and Micron advanced 2.8%, lifting the Nasdaq Composite 1.2%. Oil prices fell amid renewed Iran-US diplomatic discussions. The Fed is expected to hold rates at 3.75–4%, with investors watching for signals on future hikes. The GIFT Nifty was down 62.5 points, or 0.27%, at 22,749.5, pointing to a weaker opening for Indian equities.

THE BIG STORY
Yemen's Houthis claimed a ballistic missile strike on Saudi Arabia's Ras Tanura refinery, which has a capacity of 550,000 barrels per day, and said the attack caused a fire.  Saudi Arabia had not confirmed the strike, while a Bloomberg report cited by Reuters said a fire near the terminal had been contained. Further attacks on Saudi oil infrastructure and the Bab el-Mandeb shipping route threaten to deepen supply disruptions and sustain oil-price pressures. Saudi Arabia intercepted two ballistic missiles targeting Riyadh, with falling debris causing material damage, according to civil defence authorities. The attacks come amid intensified Saudi-led strikes on Houthi targets in Yemen and diplomatic efforts by Saudi Arabia, Turkey and Pakistan to ease tensions with Iran.

President Volodymyr Zelenskiy said Ukrainian forces had recaptured territory through several offensives, including an operation near Kupiansk that used underground gas pipelines to outflank Russian positions. Kyiv said further Western air-defence supplies could strengthen its position, while Moscow continues to claim advances along the front line.

Data Spotlight
US crude inventories fell by 2.031 million barrels in the week ended October 23, defying expectations for an 800,000-barrel increase and extending the previous week’s 4.93-million-barrel draw. Stocks at Cushing declined by 453,000 barrels, while gasoline and distillate inventories rose by 2.39 million and 380,000 barrels, respectively. US oil production fell to 13.269 million barrels per day from 13.679 million barrels per day.

US new home sales fell 0.6% month-on-month to an annualised 676,000 units in September, exceeding expectations of 650,000. Sales fell in the South and Midwest but rose sharply in the West and Northeast. New home supply fell to 476,000 units, equivalent to 8.4 months of supply, while the median sales price rose to $ 400,400.

US durable goods orders increased 1.8% month-on-month in September, beating forecasts of 1.5% after an upwardly revised 0.1% rise in August. Transportation equipment orders rebounded 4.6%, led by a 28.4% surge in civilian aircraft bookings. Orders excluding transportation rose 0.5%, while non-defence capital goods orders excluding aircraft—a gauge of business investment—advanced 0.5%.

Takeaway: The unexpected decline in US crude inventories, alongside lower domestic production, points to tighter near-term oil supply, although rising gasoline and distillate stocks temper the signal. In housing, new home sales remained relatively resilient but elevated mortgage rates and an 8.4-month supply indicate continuing affordability and demand challenges. Stronger durable goods orders suggest business demand and investment plans are holding up, providing a counterweight to weakness in interest-rate-sensitive sectors. Overall, the data indicate resilient industrial demand alongside persistent vulnerabilities in housing and energy markets.

WHAT HAPPENED OVERNIGHT

US Stocks Rise as AI Rally Extends Ahead of Fed Decision, Big Tech Earnings

• US stocks closed higher on Tuesday, led by technology shares, as optimism around Anthropic’s planned IPO revived demand for AI-linked stocks. 
• The Dow edged up 0.03% to 52,377.57, the S&P 500 gained 0.60% to 7,722.60 and the Nasdaq rose 1.18% to 26,477.81.
• The Philadelphia semiconductor index rose for a third consecutive session. Data showing stronger orders for computers and peripheral equipment reinforced expectations of sustained AI spending, although the chip index remained more than 20% below its June record.
• Nearly half of S&P 500 companies had reported third-quarter results, with 83% beating earnings expectations, according to LSEG data. 
• Microsoft and Alphabet were due to report on Wednesday, followed by Amazon on Thursday.
• Boeing plunged 10.7% after reporting a larger-than-expected quarterly loss, while UPS gained 5.8% after raising its annual revenue and profit forecasts. 
• Meta fell 1.6% after increasing its planned equity fundraising to 97.5 billion dollars to finance AI expansion.
• The Federal Reserve began its two-day policy meeting, with markets widely expecting rates to remain at 3.75–4%. Investors are also assessing the possibility of a rate hike in December. 
• Easing crude prices weighed on energy stocks as attention shifted to West Asia peace talks.

US Dollar Hits Two-Week High as Investors Brace for Central Bank Decisions

• The dollar index rose to 102.2 on Tuesday, extending gains for a third consecutive session to its highest level in about two weeks, as investors positioned for a busy week of central bank decisions.
• The European Central Bank, Bank of Japan and Bank of Canada are due to announce policy decisions this week.
• Improved stability in equity markets supported the greenback as sentiment towards AI-related stocks recovered from last week’s volatility.
• The dollar traded mostly higher against the euro, which remained under pressure from France’s deteriorating fiscal outlook and growing concerns in its government bond market.

US Treasury Yields Hold Below 5% as Investors Await Fed Guidance, Economic Data

• The US 10-year Treasury yield remained below 5%, following a three-week decline that had pushed it to one-month lows.
• The Federal Reserve is widely expected to hold rates steady, with investors looking for signals on the possibility of a rate hike in December.
• US GDP growth and the personal consumption expenditures (PCE) inflation index due this week will be closely watched for clues on the monetary policy outlook.
• Falling oil prices eased concerns over renewed inflationary pressures, helping keep yields below the 5% mark.

Oil Falls Nearly $2 as Iran Peace Talks Ease Supply Fears; Brent Stays Near Six-Month Highs

• Brent crude fell 1.67% to settle at $113.88 a barrel on Tuesday, while WTI declined 1.83% to $99.90. Both benchmarks remained elevated amid persistent shipping disruptions and uncertainty over a resolution to the US-Israeli war with Iran.
• Diplomatic efforts offered some relief after Saudi Arabia, Turkey, Pakistan and Iran agreed to continue talks on peace and security. However, the Houthis claimed an attack on Saudi Arabia’s Ras Tanura refinery, keeping supply risks in focus.
• October has been the worst month for attacks on commercial shipping in the Strait of Hormuz and nearby waterways since tracking began in 2017. UBS expects Brent to remain near $110 a barrel through year-end, raising its forecast from $100.
• Russia’s crude exports from Baltic and Black Sea ports are expected to fall next month as refiners increase processing and diesel production following maintenance and a pause in Ukrainian drone attacks. This could tighten export availability.

Day’s Ledger*

Economic Data

• India September Industrial Production
• US September Goods Trade Balance
• US Atlanta Fed GDPNow
• US Crude Oil Inventories
  

Policy

• Canada BoC Interest Rate Decision
• US Fed Interest Rate Decision
• UK Autumn Forecast Statement
  
  

Corporate Actions 

• Earnings: Adani Enterprises, Adani Ports and Special Economic Zone, Bandhan Bank, City Union Bank, Hero MotoCorp, Hindustan Unilever, Hyundai Motor India, PNB Housing Finance, Shipping Corporation of India TVS Motor Company, Vedanta Aluminium Metal, Vedanta Limited
• Jio Platforms Listing

Tickers to Watch

• JIO PLATFORMS Set for stock market debut on Wednesday, October 28. The 302.13-billion-rupee IPO drew bids worth around 7,400 billion rupees. It was subscribed 22.19 times overall, one of India's most sought-after public issues.
• VEDANTA IRON AND STEEL reported a consolidated net loss of 3.24 billion rupees for July-September 2026, which represents a 32.1% year-on-year decrease from the previous loss of 4.77 billion rupees. Revenue down 2.5% to 27.88 billion rupees. EBITDA was 480 million rupees, compared to 5.08 billion rupees in the April-June 2026 period. Iron ore revenue at 6.38 billion rupees vs 11.9 billion rupees QoQ. Steel revenue at 24.88 billion rupees vs 28.39 billion rupees QoQ.
• TATA CAPITAL July-September 2026 consolidated net profit up 51.32% YoY to 16.6 billion rupees from 10.97 billion rupees. Revenue is up 20.7% to 93.42 billion rupees. AUM is up 26% to 3,080.3 billion rupees as of September 30, 2026. Excluding motor finance, AUM growth is at 32%. Retail and SME lending make up 85.4% of net AUM. High-margin retail is around 25%.
• INFOSYS Completes a global SAP S/4HANA rollout for Syngenta's crop protection business. The program is called Crop Protection Core (CP Core). It unifies multiple ERP systems for 10,000+ employees across 80 countries.

Must Read

• The Forces That Set Exchange Rates and the Regimes of the Rupee
• RBI’s Loan Pricing Draft Still Leaves Hard Questions Over Fairness
• Optimising Capital Efficiency Through Better Risk Management
• A Hub That Moves Billions, but Falls Short on Living Amenities
• Why South India Wants More Babies
• Expenditure quality key to states' long-term fiscal health: RBI Governor
• GST officers told to split multi-yr tax notices, substantiate fraud claims
• Venezuelan crude offers Reliance margin boost, but supply is a hurdle
• India needs $500 bn by 2030 to decarbonise key sectors: CEEW report
• India's diesel exports set to surge in 2027 on refining capacity boom
• Indian tax officials visit liquor maker Radico Khaitan's offices amid Scotch imports review
• Indian lenders defer dollar debt sale plan as rates turn expensive
• India needs to build up shipping capacity to cash in on cheap crude, IOC chairman says
• India economic growth seen losing momentum after strong start to fiscal year

(*Compiled from various media sources)

See you tomorrow with another edition of The Morning Edge.

Have a great trading day