TikTok Win-Win Deal Seen, but Fed Rate Decision Keeps Markets on Edge

Here’s your quick read to start the day: a chatty, no-fuss look at overnight moves, the big story, what’s on the docket, and the tickers you need to watch.

GLOBAL MOOD: Risk-on
Drivers:  US-China agreement on Tik-Tok, US-UK Tech pact, US Fed rate cut hopes

Markets remain cautious as the US-China TikTok deal signals easing tensions, but investors await the Federal Reserve’s policy decision. Strong retail sales, inflation concerns, and labour market weakness keep risk sentiment mixed despite expectations of a rate cut.

TODAY’S WATCHLIST
 - US Interest Rate Decision
 - Bank of Canada Interest Rate Decision

THE BIG STORY
President Donald Trump on Tuesday announced an agreement between the US and China to keep TikTok operating in the US, with sources indicating the deal mirrors earlier discussions from this year. The agreement mandates that TikTok's American assets be transferred from China’s ByteDance to US ownership, potentially resolving a saga that has lasted nearly a year. China described the framework deal reached in Madrid as a “win-win,” noting it will review TikTok’s technology exports and intellectual property licensing.

Investors on both sides of the Pacific are awaiting a confirmation call on Friday between US President Donald Trump and Chinese President Xi Jinping. Meanwhile, the US and Britain have signed a “Tech Prosperity Deal” to strengthen cooperation in AI, quantum computing, and civil nuclear energy, with leading US firms, led by Microsoft, pledging £31 billion ($42 billion) in UK investments. The pact aims to advance AI models for healthcare, expand quantum computing capabilities, and streamline civil nuclear projects, supporting economic growth, scientific research, and energy security in both countries.

Data Spotlight 
US retail sales rose 0.6% in August, following an upwardly revised 0.6% gain in July, surpassing expectations of a 0.2% increase. On a year-over-year basis, sales grew 5.0%, although adjusted for inflation, the monthly rise was only 0.2%. The increase reflected broad-based spending on goods and dining out, signalling resilient consumer activity.

However, rising import prices went up 0.3% in August after a revised 0.2% increase in July highlight higher costs for capital and consumer goods, suggesting domestic inflation pressures could intensify in the near term. Despite solid retail activity, a weakening labour market and elevated tariffs remain key risks to sustained consumer spending.

Takeaway:
US consumer demand remains firm, but inflationary pressures and labour market softness could challenge continued retail strength.

WHAT HAPPENED OVERNIGHT

• US stocks pull back ahead of anticipated Fed rate cut
  • US stocks ended lower in choppy trading on Tuesday, S&P 500 dipped 0.1%, Dow Jones fell 0.27%, and Nasdaq closed slightly below flat.
  • Investors booked profits ahead of the Federal Reserve’s two-day policy meeting, widely expected to deliver a 25-basis point rate cut. 
  • Strong August retail sales indicated resilient consumer spending despite sticky inflation and a softening labor market.

 

• US treasury 10-Year yield held at nearly five-month low
  • The yield on the 10-year US Treasury fell below 4.05% on Tuesday, remaining near five-month lows.
  • Markets are focused on the Federal Reserve’s policy decision expected tomorrow.
  • Weakness in recent payroll reports has increased expectations for a 25 basis point rate cut.
  • Investors will watch the Fed’s Summary of Economic Projections for guidance on balancing inflation risks against rising unemployment.

• US dollar hits four-year low on Fed rate cut bets
  • The US dollar weakened across the board on Tuesday amid rising expectations for a Federal Reserve interest rate cut this week.
  • The euro surged 0.9% to $1.1867, its highest level since September 2021.
  • The US Dollar Index fell 0.7% to 96.636, its lowest since July 1.

• Crude oil prices rise on Ukrainian drone threats
  • Brent crude oil surged over $1 a barrel on Tuesday amid concerns that Ukrainian drone attacks could disrupt Russian supplies.
  • Brent crude rose 1.5% to $68.47 a barrel, US WTI crude gained 1.9% to $64.52 a barrel.
  • Investors also awaited the Federal Reserve’s upcoming interest rate decision, adding to market caution.

 

Day’s Ledger

Economic Data

• UK Aug CPI
  
• EU Aug Harmonised CPI

 Corporate Actions

• 3i Infotech to consider rights issue
• Knowledge Marine to consider fund raising
• Managalam Industrial to consider rights issue
• Mangalam Organics to consider fund raising
• Ugro Capital to consider fund raising

Policy Events

• Bank of Canada Interest Rate Decision
• US Interest Rate Decision

Tickers to Watch 

• India Ratings upgrades ADANI GREEN ENERGY's long-term rating to AA
• AMBER ENTERPRISES to launch QIP on Tuesday; sets floor price at ₹7,790.88 a share
• APOLLO TYRES inks three-year deal with BCCI as lead sponsor of Team India
• Authum Investment to pick up 3% stake in SEROVIA PHARMA by Sept 20
• BHARAT ELECTRONICS books ₹7.12 billion in new orders since Sept 1
• CCI approves JSW PAINTS’ acquisition of up to 75% in Akzo Nobel India
• COAL INDIA selected as preferred bidder for Andhra Pradesh rare earths block
• DR. REDDY’s rolls out gastrointestinal drug ‘Tegoprazan’ in India
• HCLTech debuts AI-powered marketing platform HCL Unica+ in India
• HERO MOTORS gets Sebi nod to float ₹12 billion IPO 
• Ola Electric tops 1 million units produced at Tamil Nadu plant in four years
• Railtel wins ₹1 billion contract to set up smart classrooms in Bihar
• Spicejet to add eight Boeing 737 aircraft under new agreements
• Zomato parent ETERNAL hits ₹3.16 trillion market cap, overtakes ONGC, Adani Ports 

Must Read:

• India targets 1,800 GW non-fossil fuel power capacity by 2047
• DGFT should consider re-credit of advance authorisations in some cases
• Appeals Court Rejects Trump Request to Remove Fed Governor Lisa Cook
• One Voice, Many Questions, And a Test for Leadership
• Trump, LTSE and the Fight to Slow Capitalism’s 90-Day Clock
• India–US Talks: Breakthrough Unlikely Unless Trump Drops Extra 25% Tariffs
• India’s Households Signal Fragile Revival, Rural Tilt
• India’s Easing Joblessness Masks a Deeper Gender Divide in Employment
• Senate Panel Backs Miran Fed Pick as GOP Moves for Fast Approval
• JPMorgan’s Kelly Warns Fed Cuts Risk Hurting Stocks and Bonds

  

---

See you tomorrow with another edition of The Morning Edge.

Have a great trading day.

Europe’s Stalled Gaze Risks Losing India’s Market

Former trade negotiator Sangeeta Godbole writes,  Two decades of India–EU FTA talks tell a sobering story: what began as a chance for Europe to secure privileged access to one of the world’s fastest-growing economies is now drifting into a cautionary tale of regulatory overreach and lost leverage.

India’s stance is clear: the BTIA must be balanced and mutually beneficial. Unless Brussels realigns its priorities, the deal may arrive too late to matter.