Equity Market Updates
Morgan Staley (MS US)
Shares of Morgan Stanley rose more than 6% on Wednesday after a results beat that showed a bumper 3Q24 for investment banking, providing further evidence to the revival of M&A and IPO activity that had also buoyed rivals in the past several days.
Morgan Stanley’s 3Q24 revenue was at USD15.4B vs. USD14.3B expected, while adjusted EPS stood at USD1.88 vs. USD1.59 expected.
MARKET CONSENSUS: 8 BUYS, 15 HOLDS, 2 SELLS, AVERAGE TP USD114.81
Intel (INTC US)
The China Cyberspace Security Association recommended on Wednesday to initiate a cybersecurity review of Intel products as multiple vulnerabilities in Intel CPUs, such as Downfall and Reptar, exposed sensitive data and security risks, adding uncertainty to the growth prospects of the company in the world’s second largest economy.
According to relevant documents, Intel allegedly failed to address the above issues quickly, despite being aware of the flaws.
MARKET CONSENSUS: 7 BUYS, 37 HOLDS, 6 SELLS, AVERAGE TP USD25.01
Amazon (AMZN US)
Amazon announced on Wednesday that it has signed three agreements on developing small nuclear modular reactors with X-Energy, becoming the latest big tech company to push for new sources to meet surging electricity demand from data centres.
Under the agreement, Amazon will have the right to purchase electricity from up to 12 modules, resulting in a total capacity up to 960 MWs.
MARKET CONSENSUS: 76 BUYS, 5 HOLDS, AVERAGE TP USD219.98
Stellantis (STLAP FP)
Stellantis said on Wednesday it is recalling 54,000 hybrid crossover SUVs worldwide due to brake pedals in its vehicles that could disengage and stop working.
The recall includes some 2024 through 2025 model-year Alfa Romeo Tonale plug-in hybrid SUVs and some 2024 model-year Dodge Hornet plug-in SUVs that are based on the same platform, concerning more than 21,000 vehicles in the US, around 2,200 in Canada, and more than 30,000 outside North America.
MARKET CONSENSUS: 13 BUYS, 17 HOLDS, 3 SELLS, AVERAGE TP EUR15.86
China Life Insurance (2628 HK)
China Life announced on Wednesday that net profit for 1Q-3Q24 is expected to range between RMB101.1B to RMB108.8B marking a YoY spike of around 165-185%.
The insurer attributed the upbeat forecast to the optimization of equity investment structure and the rebound in the stock market during the third quarter, according to a filing with the Hong Kong Exchange.
MARKET CONSENSUS: 22 BUYS, 3 HOLDS, AVERAGE TP HKD16.31
Earnings Announcements
Global Indices Changes (%)
Fixed Income Market Updates
Moody’s has changed Stellantis’s outlook from stable to negative while affirming its Baa1 rating. We have been cautious on the European Autos sector given worsening inventory levels and increasing competition. We recommend switching out of the autos sector into financials.
European AT1
It was an active session in the AT1 space with flows skewed to renewed buying in recent new issues. The AT1 space was around 0.25-0.375 point higher on the day. Short call AT1 bonds are still seeing demand from accounts looking to park cash with some of these bonds trading around 30-40bps tighter since the start of the month.
ASIA INVESTMENT GRADE (IG)
Investors were kept busy trading new issues. Korea Land & Housing Corporation traded around 2-3bps wider than reoffer while the rest of the Korean IG space was unchanged. Cancellation of Hybrid Renewables (Adani) 20Y new issue led to some selling in the other Adani names which traded 0.25 point lower. Otherwise, Indian IG space was relatively unchanged. With where 10-year Treasury yield is at currently, we prefer to extend duration into the 7-10-year bucket and remain selective on credit picks.
ASIA HIGH YIELD (HY)
China HY property survivors such as Vanke, Longfor, Shui On, traded 0.5-1 point higher with asset managers and hedge funds buying on the back of higher equities prices. Markets will be waiting for the press briefing at 10am today from China’s housing minister for more clues on supportive measures for the property sector. Distressed names also started to see some renewed demand. Outside of China, asset managers sold Vedanta after S&P downgraded the secured bond rating to CCC+.
Forex Market Updates
USD
The US Dollar continued its bullish run on Wednesday, climbing to 10-week highs against a basket of other major currencies as markets ruled out any prospect of a hefty rate cut by the Fed next month while also pricing in a potential victory for Trump in the US presidential election. Trump’s proposals to implement tax cuts, looser financial regulation and higher tariffs is viewed as being a positive for the greenback.
Buoyed by strong bullish momentum, the Dollar Index could see more near term gains towards 103.90.
JPY
The Japanese Yen posted modest losses within a tight 0.6% intraday trading range against the USD after BoJ policymaker Adachi said that the central bank ought to take a cautious approach to rate hikes in light of various economic uncertainties. Following the recent dovish comments by BoJ Governor Ueda, Adachi also stated his preference to wait at least until the start of 2025 before raising rates again.
USDJPY could see some near term consolidation below the 151.00 handle.
GBP
Sterling weakened yesterday after data showed that UK inflation slowed more than expected in September, with the headline CPI figure recording its lowest reading since April 2021. Markets are now pricing in close to 40bps worth of interest rate cuts by end-2024 in the UK, especially as BoE Governor Bailey also signaled his openness to “a bit more aggressive” approach to monetary easing earlier this month.
Sterling is likely to remain under pressure and looks poised to head lower towards 1.2935.
XAU
Gold prices advanced towards record highs yesterday as the allure of bullion was enhanced by weakness in US and UK bond yields as well as expected monetary policy easing by the Fed, ECB and BoE at their next respective meetings. Additional support for the yellow metal came in the form of safe haven demand amid the ongoing Middle East conflict and US presidential election uncertainty.
Bullion is likely to remain well-supported above 2600 moving forward.
