Tech Surge Lifts Sentiment, All Eyes on Trump’s Speech

GLOBAL MOOD: Cautious Risk On
Drivers: Trump Tariff, US-Iran Tension

Asia-Pacific equity markets gained Wednesday, tracking Wall Street’s tech-led rebound and signalling a tentative return to risk-on sentiment. Renewed optimism around artificial intelligence --driven by major corporate partnerships and a landmark chip deal--helped investors look past lingering disruption fears. Stronger US consumer confidence and improving hiring momentum added to the constructive tone.

Still, conviction remains fragile. Confusion over US tariff policy, with rates shifting between 10% and 15%, has kept trade partners and businesses in limbo. Treasury yields near three-month lows suggest underlying caution, while a sharp build in US crude inventories pressured oil despite easing Iran tensions. Markets appear willing to add risk for now, but policy uncertainty and geopolitics continue to anchor sentiment beneath the surface.

TODAY’S WATCHLIST
 - Trump’s State of the Union Address
 - Fed Collins Speech
 - Euro CPI Data

THE BIG STORY
The US began collecting a 10% global import tariff on Tuesday, but confusion reigned almost immediately as the Trump administration signalled its intent to raise the rate to 15% under Section 122 of the Trade Act of 1974. Trump had signed the 10% order on Friday following the Supreme Court's strike down of his emergency tariffs, only to announce a 15% rate on Saturday, before Customs and Border Protection notified shippers of the original 10% rate ahead of the midnight collection start. The White House insisted Trump had "no change of heart" on the 15% target but offered no clarity on timing, leaving importers, trading partners, and markets in a state of policy limbo that has become a defining feature of the administration's trade approach.

On the geopolitical front, Iran is reported to be close to finalising a deal with China to purchase CM-302 anti-ship cruise missiles, supersonic weapons with a 290-kilometre range designed to fly low and fast to evade shipborne defences. The near-complete deal, described by six people with knowledge of the negotiations, comes as the US deploys a significant naval force near the Iranian coast ahead of possible strikes. Weapons experts warn the missiles would meaningfully enhance Iran's strike capabilities and pose a direct threat to US naval assets in the region, significantly raising the stakes of any military confrontation.

Data Spotlight
The US consumer confidence rebounded more than expected in February, with the Conference Board index rising 2.2 points to 91.2, above the 87.0 forecast and above a upwardly revised 89.0 in January. However, the share of consumers viewing jobs as "hard to get" climbed to a five-year high, raising the risk of a tick up in unemployment this month, even as the headline number recovered from January's near-decade low. On the hiring front, ADP data showed private employers added an average of 12,750 jobs per week in the four weeks ending February 7^th, the fastest pace since late November and the fourth consecutive week of accelerating growth, pointing to renewed employment momentum.

Meanwhile, US crude oil inventories surged 11.4 million barrels in the week ended February 20th, more than six times the expected 1.85-million-barrel build and widely offsetting the prior week's modest 0.61-million-barrel draw.

Takeaway:
US data tells a split story — hiring momentum is picking up and consumer confidence is recovering, but cracks are appearing in labour market perception just as the Fed watches for signs of softening. The massive crude inventory build is a bearish signal for oil prices and could temper the recent rally, provided geopolitical risk premium around Iran does not reassert itself.

WHAT HAPPENED OVERNIGHT

• US stocks rebounds as AI enthusiasm returns and earnings impress
  • US Stocks bounced back firmly on Tuesday, with tech leading the recovery as investors rediscovered AI optimism a day after Monday's steep selloff.
  • Anthropic launched new AI plug-ins targeting investment banking and human resources, developed jointly with Thomson Reuters, Salesforce, and FactSet, reframing AI as a collaborator rather than a pure disruptor.
  • FactSet surged 5.9%, Thomson Reuters jumped 11.5%, and Salesforce gained 4.1%, all among the day's standout performers on the Anthropic partnership news.
  • AMD soared 8.8% after announcing a landmark deal to sell up to $60 billion in AI chips to Meta over five years, with Meta retaining the option to acquire up to 10% of the chipmaker. Meta edged 0.3% higher.
  • Home Depot gained 2.0% after beating fourth-quarter estimates and maintaining its full-year forecasts, offering a constructive read on consumer spending.
  • Keysight Technologies leapt 23.1% after forecasting second-quarter profit well ahead of Wall Street expectations.

• US Treasury yields stays near three-month lows as AI fears and trade turmoil sustain
  • The 10-year Treasury yield held below 4.05%, remaining near its lowest level in nearly three months as investors continued to seek safety in fixed income.
  • AI displacement concerns kept pressure on software services and payments valuations, pushing funds toward Treasuries as uncertainty around tech sector disruption deepened.
  • Reports that major European and Asian economies are considering suspending recently struck US trade deals added a fresh wave of geopolitical and trade risk, amplifying the flight-to-safety bid.
  • The potential suspension comes in response to Trump's move to reintroduce tariffs via a balance-of-payments emergency, adding yet another legal and diplomatic layer to an already complex trade landscape.

• US Dollar recovers above 97.8 as trade uncertainty lingers and Iran talks loom
  • The US dollar index climbed back above 97.8, recovering from Monday's pressure as investors continued to navigate an uncertain trade policy landscape.
  • FedEx filed a lawsuit seeking a full refund following the Supreme Court's strike down of Trump's emergency tariffs, potentially opening the floodgates for similar corporate claims and adding to the $170 billion refund uncertainty hanging over US finances.
  • Markets remain focused on US-Iran nuclear talks scheduled for Thursday, with the outcome seen as a key catalyst for both geopolitical risk sentiment and the dollar's near-term direction.
  • Japanese media reported that US authorities led rate checks last month to support the yen, adding an interventionist dimension to currency markets and signalling Washington's comfort with a stronger yen at current levels.

• Crude oil prices slip 1% as Iran signals readiness to strike nuclear deal with US
  • Brent crude prices settled at $70.77/barrel, down 1%, while WTI fell to $65.63/barrel, also off 1%.
  • Prices eased after Iran signalled it was prepared to take all necessary steps to reach a nuclear agreement with the US, reducing near-term supply disruption fears.
  • The diplomatic shift marks a notable softening in tone after weeks of escalating US military deployment in the Middle East that had kept geopolitical risk premium firmly embedded in crude prices.
  • Despite the pullback, both contracts remain elevated relative to recent months, with markets watching the next round of talks closely for signs of a durable de-escalation.

Day’s Ledger

Economic Data

• Euro CPI Data
• India Money Supply and Reserve Money Data

 Corporate Actions

• Almondz Global board to consider fund raising 
• Esaar India board to consider fund raising 
• Finkurve Fin board to consider fund raising 
• Gravity India board to consider fund raising 
• Shakti Press board to consider rights share issue
• Vedanta board to consider NCDs issue

Policy Events

• Trump’s State of the Union Address
• Fed Barkin Speech
• Fed Collins Speech

Tickers to Watch

• Tata Group defers decision on Chandrasekaran's reappointment as chairman
• IDFC First Bank pays ₹5.83 billion to Haryana govt after detecting fraud
• Tax and GST cuts among govt steps boosting consumption, says ITC's Puri
• Balkrishna Ind enters consumer tyre market; eyes ₹230 billion topline by FY30
• Dixon evaluating Gwalior to set up telecom devices mfg unit
• Voltas expects 25% rise in AC sales as early summer boosts demand
• LTM bags $100 million deal from European medtech firm for 7 years

Must Read

• EAC-PM Chairman underlines 3 development goals for vision 2047
• Norms on investments from China can be eased in calibrated way: Goyal
• Banks step up CD borrowing as deposits lag credit growth: RBI data
• Bullion imports may widen current account deficit in Q4FY26
• Inflation to stay benign as growth momentum strengthens: RBI's Poonam Gupta
• US imposes new 10% global tariff from Tuesday after court ruling
• TRAI seeks FY27 spectrum auctions, urges DoT to reclaim airwaves under IBC
  
  
  

See you tomorrow with another edition of The Morning Edge.

Have a great trading day

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