Markets Turn Risk-On Amid AI Boom, Fed Rate-Cut Hopes

GLOBAL MOOD: Risk-on
Drivers: AI optimism,  Fed Minutes, Israel-Hamas Peace Deal

Asian markets opened in a risk-on mood, tracking Wall Street’s tech-led rally fueled by AI optimism and expectations of renewed Fed rate cuts. However, lingering US shutdown risks and mixed inflation signals kept sentiment guarded.

TODAY’S WATCHLIST
- Fed Chair Powell Speech
- TCS earnings

THE BIG STORY
Federal Reserve officials acknowledged rising risks to the US labour market at their September 16–17 meeting, with most participants agreeing that interest rate cuts were warranted to support employment. However, divisions persisted over inflation, as several members cautioned that price pressures could remain above the Fed’s 2% target amid continued tariff effects and uncertainty over policy transmission. The minutes reflected a delicate balancing act within the committee between those prioritising job protection and others still wary of inflationary persistence. 

Markets responded with a surge in gold prices, which climbed past $4,050 per ounce as investors sought safety amid dovish Fed signals and ongoing US government shutdown concerns that threatened further economic disruption.

Data Spotlight 
The RICS UK Residential Market Survey for September 2025 reported a 4-point rise in the house price balance to -15, marking the first improvement in four months and outperforming expectations of -18. While this indicates some easing in the market downturn, house prices remained under pressure, with the Southeast and East Anglia experiencing the sharpest declines, contrasted by modest gains in Scotland and Northern Ireland. Market sentiment stayed cautious, as respondents projected both short-term and 12-month sales volume expectations at -9%. Near-term price expectations also remained negative at -21%, yet a net 12% of participants anticipated prices would increase over the next year. 

Takeaway: UK house prices showed their first improvement in four months, but sentiment remained cautious as regional weaknesses and subdued sales expectations limited optimism about a sustained recovery.

WHAT HAPPENED OVERNIGHT

• US tech stocks gain lift S&P 500 & Nasdaq despite Fed uncertainty
  • US stocks ended higher on Wednesday, lifted by technology shares.
  • Investors sought direction from the Federal Reserve’s latest meeting minutes amid the ongoing government shutdown and lack of economic data.
  • Nasdaq recorded the strongest percentage rise, driven by artificial intelligence-related mega cap stocks that have dominated market performance throughout the year.

• US Treasury yields steady as traders await fresh catalysts
  • US 10-year Treasury yield hovered to 4.1% mark on Wednesday, staying in the tight range for third straight session.
  • A weak 10-year treasury note auction saw limited demand, pushing yields slightly higher.
  • Minutes from the Fed’s latest meeting reaffirmed expectations for further rate cuts this year, as officials pointed to growing weakness in the labour market, highlighted by consecutive declines in ADP private payrolls.

• US Dollar extended rally as major peers weekend
  • The US dollar index rose for the third straight session on Wednesday, surpassing 98.9 its highest since early August.
  • The greenback gained sharply against the yen amid expectations of significant fiscal stimulus under Japan’s new government.
  • The euro weakened due to persistent political instability in France, while the Swiss franc also declined.

• Crude oil prices rose on optimism over demand & geopolitical concerns
  • Brent crude oil prices gained about 1% on Wednesday, reaching a one-week high.
  • Traders cited stalled progress on a Ukraine peace deal as a factor likely to keep Western sanctions on Russia intact, tightening supply expectations.
  • A weekly US report indicated higher domestic oil consumption, adding to demand optimism.

Day’s Ledger

Economic Data

• Australia Oct Consumer Inflation Expectations
• US Initial Jobless Claims
• US Aug Wholesale Inventories           

 Corporate Actions

• Jul-Sep Earnings: Aris International, Ashiana Ispat, Avasara Finance, Eimco Elecon, Evoq Remedies, GM Breweries, TCS, Tata Elxsi, Triton Corp 
• 5Paisa Capital to consider right issue
• Alstone Textiles to consider fund raising
• Astal Laboratories to consider fund raising 
• Covidh Technologies to consider right issue
• GTV Engineering to consider right issue
• Jana Small Finance Bank to consider fund raising 
• Padam Cotton Yarns to consider right issue
• Tilak Ventures to consider fund raising

 Policy Events

• Fed Kashkari Speech
• Fed Barr Speech
• ECB Monetary Policy Meeting Accounts
• Fed Chair Powell Speech
• Fed Bowman Speech    
• ECB Lane Speech 
• Eurogroup Meeting
  
  

Tickers to Watch

• Triveni Turbine’s promoter group, Nikhil Sawhney Trust, acquires an indirect stake in the company.
• PVR INOX opens an 8-screen multiplex and launches a dine-in cinema in Bengaluru.
• Prestige Estates reports ₹60 billion in sales during Q2, selling 6,788 units in H1.
• IRB Infrastructure board approves ₹7.5 billion investment in its InvIT fund via preferential issue.
• HFCL secures export orders worth $34.19 million to supply optical fibre cables.
• Lupin to set up a new manufacturing facility in the US with an investment of $250 million over five years.
• Cholamandalam Investment board approves conversion of 30,700 debentures into 2.24 million shares.
• Escorts Kubota plans to invest up to ₹20 billion in its Haryana plants by 2031.
• Coal India signs MoU with Ircon International for railway infrastructure development.
• Garden Reach Shipbuilders signs MoU with Centum Electronics for advanced navigation systems.
• ABB to sell its robotics division to SoftBank at an enterprise value of $5.38 billion.

Must Read

• SEBI preparing action plan for quantum-safe computing: Tuhin Kanta Pandey
• India's outbound FDI moderates to $4.41 bn in September, shows RBI data
• SEBI to review SLB framework for wider user participation: Ananth Narayan G
• IMF chief warns of economic uncertainty and offers this advice: 'Buckle up'
• The Unofficial Jobs Numbers Are In and It’s Rough Out There
• Cash-Strapped UK Discovers Missing $4 Billion Thanks to Data Flub
• EU Proposes Regulation to Support Farmers in Mercosur Trade Deal

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

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