Market Daily

Equity Market Updates

Qualcomm (QCOM US)

US chipmaker Qualcomm and Alphabet’s Google announced on Monday that they are expanding their collaboration to include AI services for automakers. The companies said they are integrating Google's Automotive AI Agent with Qualcomm's Snapdragon Digital Chassis, resulting in "enhanced, conversational, personalized agents in and around the vehicle.“

The cooperative effort also aims to reduce system development times for automakers through the use of optimized reference architecture and prebuilt capabilities, as well as allowing car manufacturers to "create branded and interactive experiences.“

The market will closely watch how this will impact both companies’ top- and bottom-line going forward.

MARKET CONSENSUS: 25 BUYS, 19 HOLDS, 1 SELL, AVERAGE TP USD180.71

Bank of America (BAC US)

Bank of America said on Monday that it expects investment banking fees to increase between 10% and 15% YoY in 3Q25 as the global mergers and acquisitions market reached USD2.6tln, the highest for the first seven months of the year since the 2021 pandemic-era peak.

The bank also expects trading revenue from its markets division to rise by mid-single-digit percentage points, while consumer finances remain healthy as credit card spending accelerates and fewer borrowers have longer-term delinquencies.

MARKET CONSENSUS: 23 BUYS, 7 HOLDS, AVERAGE TP USD53.55

BBVA (BBVA SM)

Spanish bank BBVA on Monday formally launched a EUR14.8bln hostile takeover bid for smaller rival Sabadell. Combining the two lenders would create the second largest Spanish bank in terms of domestic assets worth around EUR1tln, behind Caixabank. Further developments surrounding this takeover will likely impact BBVA’s share price in the near term.

Sabadell shareholders now have until 7 October to tender their shares, with the results of the offer expected by 14 October. BBVA now offers one newly issued ordinary share and EUR0.7 in cash for every 5.55 ordinary Sabadell share, the equivalent to about EUR14.76bln euros for the Sabadell in its entirety, based on Friday's closing prices.

MARKET CONSENSUS: 13 BUYS, 8 HOLDS, 2 SELLS, AVERAGE TP EUR16.01

Stellantis (STLAP FP)

Automaker Stellantis announced on Monday that it will no longer pursue a target of producing only electric vehicles by 2030, adding that other goals in its upcoming strategic plan known as 'Dare Forward" may remain. The market will closely watch how this will impact the company’s top- and bottom-line going forward.

Speaking during a roundtable at the Munich car show, Stellantis head of enlarged Europe Jean-Philippe Imparato said that the European Union's carbon emissions targets for 2035 are no longer achievable for any carmaker.

MARKET CONSENSUS: 6 BUYS, 23 HOLDS, 5 SELLS, AVERAGE TP EUR9

BYD (1211 HK)

Chinese automaker BYD said on Monday that it wil make its electric vehicles (EVs) for sale in Europe locally within three years, helping it avoid EU tariffs, while plug-in hybrids should dominate its European sales in the short term. Lower impact from tariffs should be supportive for the company’s bottom-line and thus its share price going forward.

The EU imposed tariffs on Chinese-made EVs last year because it believed China's automakers benefited from government subsidies.

BYD is currently building a factory in Hungary that should commence output this year and is due to start production in Turkey in 2026.

MARKET CONSENSUS: 35 BUYS, 2 HOLDS, 3 SELLS, AVERAGE TP HKD136.36

Earnings Announcements

Global Indices Changes (%)

Fixed Income Market Updates

EUROPEAN BANK COCO (AT1)

Performance of European Bank AT1 space was mixed, with cash prices moving within a range of +/-0.125 points. GBP-denominated AT1s underperformed, with prices 0.25-0.5point lower due to lingering concerns around a potential windfall tax on UK banks. Meanwhile, new issuances in USD-denominated AT1s saw strong demand, particularly from Asian private banks, with bonds trading higher. Despite political uncertainty in France, technicals remain supportive, and we expect further issuance in the coming weeks.

ASIA INVESTMENT GRADE (IG)

Asia IG space was relatively quiet, with trading volumes muted due to Typhoon 8 in Hong Kong. Credit spreads widened by 1-2bps, with more sellers taking profit following the rates rally. Chinese IG names such as Tencent and Alibaba saw light selling pressure, while new issues underperformed slightly. Despite the softer tone, we maintain a constructive outlook on Asia IG and see current levels as an attractive entry point for long-term investors.

ASIA HIGH YIELD (HY)

Asia HY space had a soft session, with China HY credit spreads widening by 2-4bps. Profit-taking emerged in Chinese property bonds, which were 0.25-0.5 points lower, as weaker sentiment persisted ahead of key US inflation data later this week. Outside of China, the broader HY market also faced pressure from new supply and cautious risk sentiment. We expect near-term volatility and remain highly selective in this space.

Forex Market Updates

USD

The US Dollar extended losses against a basket of other major currencies at the start of the week as markets continued to digest Friday’s data that showed further cracks in America’s labour market. Analysts say that the disappointing US employment statistics for August have all but guaranteed that the Fed will resume cutting rates next week, and even “encouraged expectations that they could begin with a larger 50bps rate cut similar to last September”, although markets are at present pricing in only a 10% probability of the latter scenario coming to fruition. Elsewhere, while US Treasury Secretary Bessent called for renewed scrutiny of the Fed, including its power to set interest rates, as the Trump administration intensifies its efforts to exert control over the central bank, White House economic advisor Hassett, who is on President Trump’s shortlist to be the next Fed Chair, said that the central bank and monetary policy “need to be fully independent of political influence, including from President Trump”.

USD bears could pressure the Dollar Index towards the July low of 97.11 ahead of this week’s crucial US inflation data.

JPY

The Japanese Yen recovered from early losses to close higher against the USD on Monday after Japanese PM Ishiba announced his resignation over the weekend, ushering in a potentially lengthy period of policy uncertainty for the world's fourth-largest economy. Markets now see a good chance of Ishiba being replaced by an advocate of looser fiscal and monetary policy, such as LDP veteran Sanae Takaichi, who has criticised the BoJ's interest rate hikes. Analysts say that while the probability of a rate hike in September was never seen as high to begin with, outcomes from October onward will “depend on the next prime minister, so the situation should remain live". The political uncertainty, according to market observers, is likely to see a higher JGP term premium and a softer JPY until the profile of Ishiba’s successor is clear. Elsewhere, data showed that Japan’s economy expanded much faster than initially estimated in 2Q2025, driven by upward revisions in private consumption and inventories, giving policymakers some assurance as they navigate political and trade uncertainty. However, analysts warn that Trump's tariffs could trigger a sharp slowdown in exports in the current quarter and undermine the economy's positive momentum.

Near term price action in USDJPY looks poised to remain range-bound between 146.00 and 149.00, with a slight upside bias.

EUR

The Euro consolidated Friday’s post-NFP gains against the USD, trading within touching distance of six-week highs, even as France headed into a confidence vote amid mounting pressure on the government to repair the country’s finances. French PM Bayrou said that France's fiscal woes put its "very survival" at risk as he faced a defeat in the confidence vote that would tip the Eurozone’s second-largest economy further into crisis, especially with last year's deficit nearly double the EU's 3% limit of economic output and public debt reaching 113.9% of GDP. Data out of Germany painted a bleak outlook for Europe’s largest economy as well, as German exports unexpectedly fell in July thanks to a sharp decline in US demand due to Washington's tariffs on European imports, while a separate survey or Eurozone investor confidence indicated that investor morale plunged to its lowest level since April with a particularly steep decline in Germany.

Despite the largely pessimistic European economic outlook, the common currency is likely to remain well-supported above 1.1610 heading into Thursday’s ECB meeting.

XAU

Gold prices ascended to new peaks on Monday, breaking convincingly above the 3600 handle thanks to Friday’s US jobs data that reinforced expectations of a Fed rate cut next week. Analysts say that despite technical indicators pointing to bullion being firmly in overbought territory, the fundamental backdrop remains supportive of more near term gains, “with any brief pullbacks likely seen as buying opportunities”. Markets are now awaiting key US inflation reports later this week, in the form of PPI data on Wednesday and CPI figures on Thursday, for further clues on the Fed's policy path. Separately, data released over the weekend showed that the PBoC extended its gold-buying streak to a tenth straight month in August, while global physically-backed gold ETFs saw their third consecutive month of inflows even as gold market trading volumes remained broadly unchanged at USD 290bn per day. Silver also added to last week’s strong performance, posting intraday gains of more than 1% to touch a high of 41.67.

Strong bullish momentum should see gold prices remain well-supported above 3500 moving forward.

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