Market Daily

Equity Market Updates

Amazon (AMZN US)

Amazon reportedly canceled funding for Fermi’s massive AI data center in West Texas. The media outlet cited Fermi’s CEO as saying Amazon is the prospective tenant that withdrew funding from the project.

Fermi’s stock plummeted 46% on Dec 12 after it said in a filing that an investment grade tenant terminated a deal that would have provided $150M to fund construction costs.

Fermi’s disclosure added to worries about a potential bubble in the AI driven power boom. 

MARKET CONSENSUS: 82 BUYS, 3 HOLDS, AVERAGE TP USD297.47

Ford (F US)

Ford canceled a KRW9.6T battery agreement with LG Energy Solution after the US automaker rolled back its EV ambitions.

Ford notified LG of the canceled order on Wednesday, LG Energy said in a regulatory filing. The amount is equivalent more than a third of LG’s total revenue last year.

Ford’s announcement this week was one of 2 major signals the EV era is entering a more uncertain, more contested phase. The European Commission backed away from an aggressive timeline for phasing out internal combustion engines, granting manufacturers and consumers more time to move off gasoline.

MARKET CONSENSUS: 3 BUYS, 18 HOLDS, 3 SELLS, AVERAGE TP USD13.09

UOB (UOB SP)

UOB is exploring options for its asset management arm, including a possible sale, according to people familiar with the matter.

UOB AM may draw interest from other industry players as well as insurers and private equity firms, the people said. Considerations are currently preliminary.

UOB last month set aside a provision of S$615M, its biggest ever, citing commercial real estate risks in the US and Greater China.

MARKET CONSENSUS: 6 BUYS, 11 HOLDS, AVERAGE TP SGD35.8

Lululemon (LULU US)

Activist investor Elliott Investment Management has built a stake of more than $1B in Lululemon, according to a person familiar with the matter, as the struggling retailer faces a strategic overhaul amid its CEO’s exit.

The firm’s growth has slowed in recent quarters and that trend is expected to continue.

Shares have fallen 43.75% year to date but have rallied about 11.5% since last Friday, attributable to its boosted full year outlook, announcement of McDonald’s departure and amid reports of Elliott’s stake. Sentiment around the stock is likely to turn more positive following a string of positive developments. 

MARKET CONSENSUS: 5 BUYS, 29 HOLDS, 3 SELLS, AVERAGE TP USD212.12

Meta (META US)

Meta is preparing to introduce a new AI system for images and video called Mango, The Wall Street Journal reported, citing Meta chief AI officer Alexandr Wang.

During an internal Q&A with Meta chief product officer Chris Cox, Wang said that the company also plans to release a large language model named Avocado in the 1H26. Wang noted that Avocado will emphasize coding improvements and added that Meta is exploring early work on world models, AI that learns by processing visual input.

The news comes after Meta reorganized its AI division over the summer, creating Meta Superintelligence Labs under Wang's leadership.

MARKET CONSENSUS: 74 BUYS, 6 HOLDS, 1 SELL, AVERAGE TP USD832.68

Earnings Announcements

Global Indices Changes (%)

Fixed Income Market Updates

European Bank Coco (AT1)

We expect an active primary market in the first few months of next year as banks front load their refinancing and capital requirements. AT1 bond issuances in AUD-denominated space still has scarcity value as Australian banks are not allowed to issue AT1 bonds, allowing European banks to issue AUD-denominated AT1 bonds more cheaply than if they were to issue in USD.  

Asia Investment Grade (IG)

Although we prefer IG over HY, credit spreads are near historical tights and we expect modest widening in credit spreads. Hence, credit selection will be key going forward. We prefer going down the capital structure of companies with solid credit fundamentals for yield pick-up.    

Asia High Yield (HY)

We remain highly selective in the HY space. For the relatively stable HY names, credit spreads are too tight and we do not see favourable risk-reward. With idiosyncratic and contagion risks abound, risks are skewed to the downside in the Asian HY space in general.  

Forex Market Updates

USD

The US Dollar lost ground against the Japanese yen and Swiss franc on Thursday after data showed a lower-than-expected rise in U.S. inflation, while the euro eased after the European Central Bank held interest rates steady. The U.S. Consumer Price Index rose 2.7% year-on-year in November, according to Labor Department data, compared with a 3.1% increase forecast by economists. The longest federal government shutdown in U.S. history had impacted data collection for the inflation report. The Federal Reserve tracks the Personal Consumption Expenditures Price Index for its 2% inflation target. President Donald Trump said on Wednesday the next Fed chair will be someone who believes in lower interest rates "by a lot". All of the known candidates - White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Chris Waller - advocate for interest rates to be lower than they are now.

The Dollar Index should remain in consolidation between 98.00 and 100.0 for now.

GBP

The British Pound reversed an earlier fall and gilt yields turned higher even though the Bank of England cut interest rates on Thursday, as policymakers remained divided and hinted there was limited space for more easing. The BoE's rate-setting Monetary Policy Committee voted 5-4 to lower borrowing costs by a quarter-point to 3.75%, its fourth rate cut this year, but it signalled it would continue to cut rates gradually, despite a slowdown in inflation and signs of a weakening labour market. UK government bond yields climbed after the decision, with the benchmark 10-year gilt yield rising 3.5 basis points to 4.515%. 

The Sterling looks to be trading within a range, fluctuating between 1.3300 and 1.3450.

CAD

The Canadian Dollar strengthened against its U.S. counterpart on Thursday but the move was limited ahead of domestic retail sales data and after Canadian Prime Minister Mark Carney played down the chances of sectoral trade deals. Carney said a planned trade deal with the United States on key sectors was unlikely, saying the issue would be covered in a review of the United States-Canada-Mexico trade pact expected next year. Canadian retail sales data for October, due out later today, is expected to show a flat reading compared with September. The nation's most recent GDP data, for the third quarter, showed an annualized gain of 2.6% but growth was driven by a drop in imports, with household consumption disappointing. The price of oil, one of Canada's major exports, rose 0.9% to $56.43 a barrel as investors assessed the likelihood of further U.S. sanctions against Russia and the supply risks posed by a blockade of Venezuelan oil tankers.

The Loonie could post further gains against the US Dollar in the near term, with USDCAD testing the support level of 1.3700.  

XAU

Gold edged lower on Thursday as markets digested softer-than-expected U.S. inflation data, reducing the yellow metal's appeal as an inflation hedge, while support from a higher November unemployment rate limited further losses. U.S. consumer prices rose 2.7% year-on-year in November, data showed, falling short of the 3.1% increase forecast by economists polled by Reuters. Futures on the federal funds rate factored in a slightly increased chance of the Federal Reserve trimming interest rates at its January meeting, after the data. Non-yielding assets like gold thrive in a lower-interest-rate environment, and is a reputed inflation hedge.

Bullion may continue to test the resistance level of 4380 before breaking higher.

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