Investment Insights

CIO Viewpoints

Fed resumes cuts, which sector may benefit more?

Daily Insights

Focus of the Day
  • Russell 2000 outperformed the major US indices as funds may be accelerating into US small-mid caps

Other Commentaries

  • National holiday consumption subsidies exceed 330 million RMB; US and UK established a Tech Prosperity Deal; Bank of England held rates steady and maintained a cautious stance

Market Analysis

FX Markets Analysis

Latest Technical Highlights

AUD - Uptrend↗

Support / Resistance

vs HKD 4.9777 / 5.2888

vs USD 0.64 / 0.68

Australia's unemployment rate remained unchanged at 4.2% in August. This strengthens expectations that the Reserve Bank of Australia will be cautious in cutting interest rates, which is expected to support the Australian dollar. AUD/USD resistance at about 68 US cents.

 

Legends

Uptrend ↗  Sideways →  Downtrend ↘

Pertaining to historical trend technical analysis only and do not reflect any forecasts.

Provided by Hang Seng Investment Services Limited

Stock Markets View

  • Amid rate cut optimism, US stocks reached new highs as recession risk outlooks significantly declined and wage pressure eased. Small caps are likely to outperform large caps
  • The ECB likely ended its rate cut cycle, and France's political uncertainty, along with rising regional tensions, capped recent gains in European stocks
  • US rate cut expectations fueled capital inflows into Asia, providing room for regional easing to stimulate economies and enhance market outlook
  • US inflation data bolstered Fed rate cut hopes, driving Latin American equities and currencies higher, but risks from commodity volatility and regional political instability remain
  • HSI broke 26,000 amid sector divergence. Elevated P/E ratio above the ten-year average and RSI divergence suggest near-term pullback risks
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

  • ECB President Lagarde noted eurozone disinflation had ended with no preset rate path, likely increasing volatility in European government bonds
  • US investment-grade bond index reached its highest since 2022, with market focus shifting to the Fed's September 18 policy decision
  • China’s August new loans missed expectations, but accommodative policy is expected to continue. Markets await more supportive data and catalysts 
  • Fed cut expectations boosted demand for higher-risk assets like US high-yield bonds, though near-historic tight spreads indicate stretched valuations
  • Asian high-yield bonds extended gains. Tier-one cities eased property policies after Guangzhou, supporting China property bonds
  • Dollar weakness supported emerging market assets. Despite country-specific political risks, Fed cuts are expected to attract yield-seeking flows
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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