Investment Insights

CIO Viewpoints

Fed hikes on the radar, EM bonds outperformed

Daily Insights

Focus of the Day

  • Industrial metals drive sharp AUD-NZD divergence

Other Commentaries

  • Brent crude nears US$100 a barrel; AI demand keeps China exports growing strongly; South Korea 2Q GDP grows 3.7% y/y, in line

Market Analysis

FX Markets Analysis

Latest Technical Highlights

NZD - Uptrend↗

Support / Resistance

vs HKD 4.5484 / 4.7052

vs USD 0.58 / 0.60

After last week’s RBNZ rate hike, the New Zealand dollar saw profit-taking. However, the RBNZ still signals further tightening, while New Zealand’s fiscal position remains solid and its debt-to-GDP ratio is low versus other G10 peers. These factors may support NZD towards USD 0.60

 

Legends

Uptrend ↗  Sideways →  Downtrend ↘

*Pertaining to historical technical trend analysis only and do not reflect any forecasts or any forward looking views

Provided by Hang Seng Investment Services Limited

Stock Markets View

  • Shifting rate-hike expectations continue to drive US stocks. AI demand remains resilient, but performance within the tech sector is increasingly bifurcated. Near term, focus is on how CPI reshapes policy expectations and equity valuations
  • Europe’s macro backdrop remains steady and corporate earnings resilient, providing fundamental support for equities. That said, markets are watching for the impact of further ECB tightening and changes in the French presidential race
  • With bond yields and oil prices elevated, flows may continue rotating toward regional markets with cheaper valuations and lower sensitivity to US Treasury yields. A diversified allocation across Asian markets can help mitigate risk
  • Moves in the US dollar index and commodity prices, alongside evolving Middle East geopolitics, are likely to continue shaping risk appetite and positioning toward emerging markets
  • Markets are monitoring China’s trade, inflation and credit data. Hong Kong equities remain range-bound amid a cautious wait-and-see sentiment. Near-term Hang Seng Index resistance and support are seen at 26,400 and 24,500, respectively
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

Bond Markets View

  • US nonfarm payrolls significantly beat expectations, prompting markets to lift the implied probability of a September rate hike to around 60%. Attention now turns to August CPI due this week
  • As of 4 September, long-end US Treasury yields rose week-on-week. US investment-grade credit edged down 0.3% on the week, with spreads widening by 2bp
  • China may accelerate bond issuance in coming months, with supply expected to pick up. This could prompt the PBoC to step up liquidity injections to help the market absorb incremental issuance
  • Hawkish rhetoric from Warsh and the nonfarm payroll data surprise weighed on risk assets, dragging global high-yield lower. However, elevated carry remains supportive, with modest positive returns over recent months and year-to-date
  • China’s RMB800bn policy financing tool has begun deployment, which could support investment activity and corporate funding conditions, underpinning regional credit fundamentals
  • Rising oil prices are increasing pressure on importers such as India, although the RBI has attracted USD FX inflows. Meanwhile, cooling Fed rate-hike expectations are improving the broader EM backdrop
Legends

Positive - Expect that the particular asset class potentially may perform well relative to the relevant major global benchmark(s) in the long run
Neutral - Expect that the particular asset class potentially may perform in line relative to the relevant major global benchmark(s) in the long run
Cautious - Expect that the particular asset class potentially may not perform well or in line relative to the relevant major global benchmark(s) in the long run

Provided by Hang Seng Investment Services Limited

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