Daily Brief Macro: India Equities: Stocks to Watch After Deep Underperformance and more

• India reversed its entire relative gain against EM. The near 50% relative drawdown is the deepest and longest since 2012, so we’re positioning for improvement.
• Bottom-Decile losses in India have historically preceded strong rebounds. Although relative washouts offer no comparable evidence. We can scale up on an absoute basis.
• Opportunity in the middle of the index. We built a tiered watch list from the middle cohort, scaling toward equal weight as confirmation arrives.

• In its recent Investment Strategy Insights publication, UBS makes the case for expanding commodity exposure beyond traditional safe-haven assets such as gold and the more familiar energy and industrial metals segments.
• The underlying argument is that commodities can provide additional sources of return, portfolio diversification, and protection against inflation, geopolitical disruptions, and structural supply constraints – something we argue for a couple of years now
• UBS identifies several structural trends supporting commodity markets. 

• BoJ’s rate hike failed to lift the yen, as cautious guidance kept markets unconvinced that a faster tightening cycle was coming.
• Record FX intervention has bought the yen some breathing room, but narrowing the yield gap will require a sustained hawkish BoJ stance.
• Options still flag downside risk, yet institutions are building bullish exposure, creating a notable divergence in yen positioning worth watching closely.

• This week’s macro calendar is fairly light after last week’s blockbuster US interest rate move.
• The standout release stateside is Wednesday’s S&P Global flash manufacturing and services PMIs for September, which will give investors a good understanding of how growth is holding up post-hike.
• Thursday brings weekly jobless claims and new home sales, but the bigger story that day is the scheduled Trump-Xi summit in Washington.

• The Fed raised its policy rate expected. Chairman Warsh is seeking to speed up inflation’s decline towards 2%. Interest rate futures are discounting more hawkish policy compared to FOMC members.
• The Fed’s policy rate will remain higher for longer. Higher productivity growth from artificial intelligence raises the neutral policy rate due to high prospective returns on future capital spending outlays.
• Concerns about US equities have risen due to higher Treasury yields after many years of suppression by the Fed but a repeat of the 2022 equity market correction is unlikely.  

Highlights

• Natural rubber exports rose 10.7% MoM to above 110,000 tons in June

• Export earnings jumped 17% as higher prices offset lower shipments

• China shipments surged 36.4%, the strongest growth among major destinations

• Weather and geopolitical risk are compounding across agricultural origins this edition, from West Africa to the Black Sea.
• Treefera’s own stress readings show West Africa’s current cocoa crop in much better shape than feared even as a firming El Nino clouds the 2026/27 outlook, while Black Sea strikes choke wheat exports and positioning and import-driven swings add further volatility in corn and sugar.
• Ghana’s cocoa drought stress has fallen 87% year on year, even as the 2026/27 main crop remains a Watch under a firming El Nino, per Treefera Market Intelligence’s current stress read.

• Saudi’ GDP contracted by 4.7 % y/y in Q2 2026. CPI stable.

• Qatar’s fiscal deficit the largest in ten years.

• Kuwait, Cabinet allows the Future Generations Fund to be tapped. None of these headlines impact markets.

• Yesterday’s selloff was apparently catalyzed by a combination of optimism regarding the restart of the East-West Pipeline and a possible U.S.-Iran “deal.”                 
• In terms of any U.S.-Iran “deal” that has any degree of substance, as we have said several times, we will believe it when we see it.
• In this context, whenever funds felt a “deal” was in the offing, it presented an attractive buying opportunity.           

• Crude oil futures were slightly softer late Friday after paring most of the early losses on Friday, amid reports that major disruptions on Saudi oil supplies were set to continue through October.
• Nov26 ICE Brent futures were 1.1% lower at  $103.66/b (1830 BST), versus an intraday low of $101.92/b, while Oct26 NYMEX  WTI was at $100.88/b , down 1% versus Thursday’s settle.
• It left Brent slightly lower on the week after crude pulled back when Saudi Arabia indicated it could restore about half the capacity of its East-West pipeline within days by bypassing a damaged section, with full flows potentially returning by the end of October.