Market Daily

Equity Market Updates

Oracle (ORCL US)

Shares of Oracle jumped more than 4% during after-market hours on Thursday as it announced FY1Q cloud sales that grew 121% YoY to USD7.4bln, topping market expectations. The company’s quarterly adjusted EPS also stood at USD1.92 vs. USD1.75 expected. Additionally, Oracle reported USD28.5bln in capex and booked more than USD30bln in additional AI could contracts in FY1Q, raising its remaining performance obligations to USD664bln.

MARKET CONSENSUS: 40 BUYS, 8 HOLDS, 1 SELL, AVERAGE TP USD245.04

Microsoft (MSFT US)

Microsoft is reportedly planning to build out its data centre capacity to about 38 gigawatts by 2032, more than triple its current footprint. According to the report only about 2 gigawatts of the company's current 12-gigawatt capacity is centered on AI-specific chips, a share expected to grow to about a third of the 38 gigawatts it plans to have online..

MARKET CONSENSUS: 67 BUYS, 4 HOLDS, AVERAGE TP USD573.69

Adobe (ADBE US)

Shares of Adobe fell during after-market trading as it provided an outlook for sales that missed market estimates at between USD6.8bln and USD6.85bln, adding fuel to concerns that AI is hurting its business. In terms of overall FY3Q results, Adobe's adjusted EPS stood at USD6.13 vs. USD6.08 expected, while revenue was at USD6.76bln vs. USD6.70bln expected.

MARKET CONSENSUS: 13 BUYS, 26 HOLDS, 6 SELLS, AVERAGE TP USD265.97

Novartis (NOVN SW)

A major shareholder in Novartis called for a shake-up of the drugmaker’s board to improve corporate governance after its shares suffered a record fall this week following back-to-back trial setbacks. On Tuesday, a muscle-wasting disorder drug acquired through Novartis’ USD12bln takeover of US firm Avidity failed a late-stage study, sending the company's shares tumbling more than 10% and wiping nearly USD30bln off its market value.

MARKET CONSENSUS: 10 BUYS, 17 HOLDS, 2 SELLS, AVERAGE TP CHF127.19

Earnings Announcements

Global Indices Changes (%)

Fixed Income Market Updates

European Bank Coco (AT1)

It was an active trading day in European Bank AT1 space. Prices of AT1 bonds were down 0.625-0.875point on average. Trading flows were skewed towards selling but there were Asian investors buying selectively into longer-call dates AT1 bonds. EUR-denominated AT1 bonds of french banks such as BNP and Credit Agricole outperformed. We still see selected AT1 bonds with shorter call dates as favourable for carry and prefer those with high reset spreads.  

Asia Investment Grade (IG)

Asia IG space traded on a weak tone amid macroeconomic uncertainties and higher US Treasury yields. Credit spreads widened 1-3bps overall with Japanese names seeing more sellers and Japanese life insurers' hybrid bonds traded down 0.125-0.25point. However, newly issued Olympus bucked the trend and was around 2bps tighter from reoffer. China IG space traded weak, led by selloff in Technology, Media and Telecom names. We are seeing more value in selected US hyperscalers in terms of risk reward compared to some Asian technology names. 

Asia High Yield (HY)

Prices of Asia HY bonds traded mostly lower on the day driven by continued selling from asset managers. Vedanta's tap started trading and the 2032/2034 bonds traded below reoffer. In South East Asia space, Genting perpetuals were down around 0.5point on heavy selling into thinning liquidity. Given broader geopolitical and macroeconomic uncertainties, we prefer to trim our risk exposure and stay within the IG space.   

Forex Market Updates

USD

The Dollar index rebounded firmly on Thursday, reclaiming the 99.00 barrier after the hot August PPI print of 5.4% year-on-year, a 0.1 percentage point above consensus hardened expectations for a Fed rate hike at next week's September 16 FOMC meeting. The month-on-month PPI came in at 0.4%, in line with the Dow Jones consensus, driven by truck transportation, airline passenger services, and hospital inpatient care. Markets now look towards the August CPI report as the session's pivotal event before the Fed's meeting.

The Dollar may trade higher to 99.50 in the near term if CPI comes in hotter.

JPY

The Yen traded at 154.50 on Thursday as the yen continues to benefit from three simultaneous structural supports. First, US Treasury Secretary Bessent warned traders against betting on a weaker yen earlier this week, saying he has "pretty good insight" into the BOJ's actions, adding a credible intervention threat from Washington that goes beyond the MoF's own verbal guidance that materially raises the cost of rebuilding yen short positions. Second, the GPIF allocation debate continues to be a live structural yen positive as Health Minister Kenichiro Ueno confirmed this week that GPIF oversees approximately ¥318 trillion ($2.1 trillion) and is still considering whether a review of its asset allocation is needed, following Finance Minister Katayama's call for pension funds to make substantially greater investments in Japanese financial assets. Third, the BOJ September 18 hike is priced at 98% probability following Deputy Governor Himino's hawkish remarks last week that the central bank would raise rates if conditions were appropriate with the yen also benefiting from the broader unwinding of carry trades and expectations of greater capital repatriation.

The Yen may see near term strength as market awaits Ueda’s press conference language on the pace of further tightening.

EUR

The European Central Bank raised its key interest rates by 25 basis points on Thursday taking the deposit facility rate to 2.50%, driven by surging energy prices from the ongoing US-Iran conflict and eurozone inflation rising back above 3% in August. The hike was fully priced and the initial EUR/USD reaction was muted, with the pair holding near 1.1635 above its 200-day moving average. The dominant market moving development was the post decision where the ECB is expected to further tighten monetary policy in the months ahead and could raise rates in October, according to Reuters sources. With a prolonged US-Iran war and the Russia-Ukraine war having sent energy prices soaring and prompting ECB members to take preemptive action to stop inflation from spreading to other goods and services. ECB President Lagarde's press conference reinforced the cautious tone that the bank recognised that inflation risks are tilted to the upside while growth risks are tilted to the downside, repeating the "data dependent, meeting by meeting, no precommitment" mantra without offering explicit October guidance.

The Euro Dollar may trade above the 1.1600 handle in the near term.

XAU

Gold traded lower to $4,320 on Thursday, caught in a hot PPI print and the most serious escalation in the Hormuz shipping war since the conflict began six months ago. The Middle East situation deteriorated sharply this week as the US has now destroyed 10 Iranian tankers under a "tanker-for-tanker" policy approved by President Trump, following repeated IRGC attempts to strike US naval vessels. US Central Command confirmed it struck five Iranian oil tankers linked to the Revolutionary Guard on Wednesday in response to attempted Iranian missile attacks on a US Navy warship. Iran retaliated with its largest declared wave of shipping attacks since the war began, claiming strikes on 10 vessels near the Strait of Hormuz. Brent crude breached $100 a barrel for the first time since July as attacks widened across the Arabian Gulf, Strait of Hormuz, and Gulf of Oman. The hot PPI at 5.4% year-on-year is a near-term headwind as it reinstates Fed rate hike expectations and lifts Treasury yields, raising the opportunity cost of holding the non-yielding metal and Middle East tensions keep supply risks elevated, with the prolonged disruption around the Strait of Hormuz remaining an important driver for energy markets.

Gold may consolidate near the 4,200 and 4,400 handle in the near term as the market awaits for US CPI print.

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