Market Daily

Equity Market Updates

Meta Platforms (META US)

Shares of Meta surged on Friday after it launched Muse Spark 1.1, its first paid AI model for developers. The company said the model is designed for agentic tasks and represents a major upgrade from its previous version. Meanwhile, investors also assessed reports that Meta plans to begin producing its in-house chip, code-named "Iris," in September and double its computing capacity to 14 gigawatts in 2027.

MARKET CONSENSUS: 73 BUYS, 6 HOLDS, AVERAGE TP USD817.34

Boeing (BA US)

US regulators are reportedly preparing to certify the Boeing 737 Max 7 plane later this month, clearing the smallest version of the 737 Max family to carry passengers after earlier delays. In 2019, all 737 Max planes were grounded following two fatal crashes of the larger Max 8 variant. The ban was lifted after 20 months, although issues caused a ripple effect that directly stalled the Max 7.

MARKET CONSENSUS: 26 BUYS, 5 HOLDS, 1 SELL, AVERAGE TP USD271.85

Vodafone (VOD LN)

Shares of Vodafone jumped more than 12% on Friday after French billionaire Xavier Niel agreed to buy a stake in the company from Emirates Telecommunications group for about USD6bln to become the British telecommunications company’s largest shareholder. Vega, an investment vehicle controlled by Niel’s family, will specifically acquire more than 16% of Vodafone’s shares for about GBp112.5 per share.

MARKET CONSENSUS: 7 BUYS, 7 HOLDS, 7 SELLS, AVERAGE TP GBp111.27

EasyJet (EZJ LN)

EasyJet on Friday received a fresh takeover offer from Apollo Global Management for GBP7.15, beating rival proposal from Castlelake. Apollo’s bid is subject to certain conditions, including satisfying the requirements for overseas investors to control a European airline.

MARKET CONSENSUS: 2 BUYS, 11 HOLDS, 2 SELLS, AVERAGE TP GBp575.38

Earnings Announcements

Global Indices Changes (%)

Fixed Income Market Updates

European Bank Coco (AT1)

European Bank AT1 space closed around +0.125point overall with USD-denominated AT1 bonds most actively traded. There were strong buying flows out of Asia into AT1 bonds with short call dates, as well as recently issued AT1 bonds. We think technicals will continue to be supportive in this space should rates stabilise. We also favour selected AT1 bonds with high reset spread and call dates within 5-7years as carry.  

Asia Investment Grade (IG)

While US-Iran headlines turned overall risk sentiment to the weaker side, Asia IG space remained mostly stable and credit spreads traded relatively unchanged. Korea IG space outperformed with spreads around 2-4bps tighter as corporate names were in demand from asset managers. While US IG space had seen record issuances from hyperscalers, supply out of Asia IG had been more measured, leading to Asia IG trading tighter than US IG on average.     

Asia High Yield (HY)

HY cash bonds were lower (-0.125/-0.25pt) and spreads were mostly unchanged against the wider rates move (+/- 1/2bps). US HY closed 1bp tighter in a quiet end to the week. Front end and new issues were the main sources of activity. Asia HY does feel like the wider market reaction for this round of the Iran conflict muted as S&P remains higher than where we left off on last week's close.

Forex Market Updates

USD

The US Dollar was little changed against a basket of other major currencies on Friday after a Fed monetary policy report to US Congress revealed that US inflation “stepped up further this spring”, boosting price pressures that took root last year. The report added that inflation “remains elevated” relative to the FOMC’s 2% target according to the latest reading of the US PCE Index, the central bank’s preferred inflation gauge. By contrast, the labour market was described as being stable, with “demand and supply roughly in balance”. On the whole, though, the report concluded that the US economy's potential was "rising at a solid pace as historically subdued growth in the labour force has been offset by strong growth in labour productivity". Elsewhere, US President Trump said that the US and Iran had agreed to continue talks despite the re-escalation of hostilities last week but declared that the ceasefire reached between the two sides in June was over.

Ongoing geopolitical tensions in the Middle East should see the Dollar Index continue trading above 100.20 for the time being.

EUR

The Euro edged lower at the end of the week in mostly quiet trading as inflation data out of the Eurozone’s two biggest economies, Germany and France, pointed to limited price pressures. Both German and French CPI fell 0.3% m/m in June, leading markets to slightly pare back expectations for ECB rate hikes in the months ahead. However, ECB policymaker Stournaras said that the central bank is back to square one in its fight against high inflation after renewed US-Iran hostilities caused energy prices to rise again. Stournaras added that the volatile Middle East situation highlighted the “uncertainty surrounding inflation forecasts and therefore the challenges that policy has to face". Markets are currently seeing an 85% likelihood of the ECB raising rates by 25bps before the end of this year.

The common currency’s recent recovery from 13-month lows could run into technical resistance around 1.1470.

JPY

The Japanese Yen strengthened on Friday after Japan said it plans to encourage pension funds to increase their holdings of domestic financial assets. The yen’s rally was broad based, with the Japanese currency posting intraday gains of 0.5% against both the EUR and GBP. Japanese Finance Minister Katayama said that Tokyo was pursuing measures that would include encouraging the Government Pension Investment Fund, the world's largest pension fund, to make "substantially greater investments in Japanese financial assets”. Separately, a Reuters article reported that the BoJ may revise up its economic growth forecast for fiscal 2026 and keep its focus on the risk of an inflation overshoot as rising costs from a weak yen and strong AI demand offset some of the declines in oil prices. The article added that the BoJ is likely to maintain its guidance to keep raising rates in its next quarterly report due later this month, although the central bank may stay clear of offering explicit signals on the timing of the next rate hike.

In the absence of another round of FX intervention, USDJPY is likely to remain well-supported above 160.50 moving forward.

XAU

Gold prices remained under pressure to end the week as higher oil prices linked to the Middle East conflict fuelled inflation concerns and bolstered expectations of tighter Fed monetary policy. Minutes from the June FOMC meeting released last week showed a hawkish split among policymakers as concern about high inflation mounted. With markets currently pricing in a 65% chance of a Fed rate hike in September, this week's crucial US inflation data and Fed Chair Warsh's Senate testimony should provide further clues as to the direction of US monetary policy and act as a key driver of price action in gold moving forward. Elsewhere, demand for the precious metal in China remained steady after the PBoC reported its largest monthly increase in gold reserves in more than 2.5 years in June.

Ongoing uncertainty in the Persian Gulf is likely to keep the precious metal under pressure below $4,400 in the near term.

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