Investment Insights

CIO Viewpoints

US Equities Face Greater Near-Term Volatility

Daily Insights

Focus of the Day

  • Hang Seng Tech Index tests June lows

Other Commentaries

  • Eurozone Sep ZEW economic sentiment index slips; China Aug industrial output beats, retail and FAI miss; Hong Kong Aug visitors hit 5.46m, post-pandemic high

Market Analysis

FX Markets Analysis

Latest Technical Highlights

GBP - Uptrend↗

Support / Resistance

vs HKD 10.5114 / 10.7467

vs USD 1.34 / 1.37

UK data on Tuesday (15th) pointed to ongoing labour market softness: wage growth is near a six-year low, vacancies are at their lowest since 2021, and hiring continues to ease. Markets now lean towards the Bank of England holding rates on Thursday (17th), capping sterling’s upside

 

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

  • Inflation and expectations for further rate hikes are weighing on US stocks, while AI-related demand and solid earnings provide support. Focus is on the upcoming FOMC meeting, where rate guidance is likely to be a key driver of valuations
  • The ECB has raised rates again and its inflation forecasts. A hawkish policy stance may keep pressure on equity valuations. That said, if macro conditions remain stable, downside for European equities may be limited
  • Elevated bond yields and oil prices are influencing risk sentiment and capital flows. Near term, markets will watch signals from multiple central bank meetings. A diversified allocation across Asia could help mitigate risk
  • Earnings expectations across several emerging markets continue to be revised higher, which may offset headwinds from USD strength and commodity price moves, as well as volatility and risk stemming from shifts in Middle East geopolitics
  • This week’s FOMC meeting, China monetary data and the potential for a US–China leaders’ meeting are adding uncertainty to Hong Kong equities. 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 August core CPI rose more than expected on a month-on-month basis. Coupled with a strong non-farm payrolls print and the Fed Chair’s reaffirmed commitment to fighting inflation, the probability of a 25bp hike this week has risen to around 90%
  • Following more than USD70bn of fundraising in a single day on 8 September, global corporates have continued to accelerate issuance. Sticky inflation and market uncertainty over whether rates will rise this month are prompting issuers to front-load supply
  • Markets are pricing in roughly a 90% probability of a 25bp hike by the BoJ this Friday. With upside inflation risks building, the policy outcome is likely to push JGB yields higher
  • Geopolitical tensions have lifted oil prices, stoking inflation concerns. Markets have priced in higher odds of a Fed hike in September, pressuring HY; both yields and spreads have widened
  • Oil above USD100/bbl is intensifying Indonesia’s fiscal subsidy burden. Rising inflation risks could keep the central bank on a tighter bias; the market is expected to favour resource-export issuers
  • Higher global yields are increasing volatility. However, real rates in parts of EM—such as Brazil—remain attractive. Bond market continued to see net fund inflows in August, underscoring resilient allocation demand.
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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