Market Daily
Macro Update:
Fed’s Lisa Cook expects more rate cuts
Fed Board of Governors member (and FOMC voter) Lisa Cook stated that the disinflationary trend remains intact and labour market is cooling. She highlighted that it will be appropriate to move policy rate to a neutral stance over time. As the potential Republican policies are more inflationary, we expect a higher terminal rate of 3.75% by September 2025 (vs our previous forecast of 3.25% by March 2026).
Nvidia reported revenue nearly doubled in 3Q on strong AI demand and slightly beat consensus estimates. However, market was unimpressed with Nvidia shares declined in after-hour trading.
Main Upcoming Macro Indicators
Equity Market Updates
US EQUITIES
US stocks ended almost unchanged on Wednesday.
EUROPE EQUITIES
Shares in Europe were also flat on Wednesday as investors remained on edge over geopolitical tensions in the region.
HK EQUITIES
Hong Kong stocks continued its move up on Wednesday as hopes of supportive measures from the government kept markets afloat.
Nvidia (NVDA US)
Shares of Nvidia slid after US market hours on Wednesday as its revenue forecast failed to exceed the most optimistic of market estimates, despite the company delivering a solid overall beat. This shows how high market expectations are for the company, and how its momentous growth in the past couple years will likely reach its limit at one point. Elevated market expectations can inject uncertainty to the company’s share price going forward.
Nevertheless, the share price reaction does not take away from the fact that Nvidia’s results are great in FY3Q25, with revenue at USD35.1B vs. USD33.3B expected, and adjusted EPS at USD0.81 vs USD0.74 expected.
MARKET CONSENSUS: 68 BUYS, 6 HOLDS, 2 SELLS, AVERAGE TP USD158.9
Apple (AAPL US)
Apple reportedly sold fewer smartphones during this year’s Singles’ Day shopping festival in China as it faced increasing pressure from rival handsets launched around the event.
The increased competition could put notable downward pressure to Apple’s top line in the long run considering how China is one of the company’s most significant revenue source.
Apple reportedly saw its Singles’ Day sales decline YoY by double digit percentages, while its main rival in China, Huawei, recorded a 7% sales growth, fuelled by price cuts on its Pura 70 and Mate 60 models.
MARKET CONSENSUS: 40 BUYS, 18 HOLDS, 3 SELLS, AVERAGE TP USD244.96
Comcast (CMCSA US)
Comcast is reportedly moving forward with the spinoff of its cable networks such as MSNBC and CNBC after the company last month told investors that it was evaluating the move, shedding a once core part of the business that has been a casualty of the streaming video revolution. If executed well, this could well be a positive turnaround for the company as it adapts to changing viewer preferences.
Comcast’s NBC broadcast network and Peacock streaming TV business will remain with the parent company, while the networks being separated produce around USD7B in revenue annually.
MARKET CONSENSUS: 20 BUYS, 12 HOLDS, 1 SELL, AVERAGE TP USD48.52
Target (TGT US)
Shares of Target slid more than 21% on Wednesday after the company cut its holiday quarter sales forecast. This is in contrast to main rival Walmart, which raised its annual sales and profit forecast for the third consecutive time a day earlier, as it took market share in groceries and merchandise.
Target also announced an overall miss in FY3Q25 results, with revenue at USD25.2B vs. USD25.7B expected, and net income at USD854.0M vs. USD1.06B expected.
Investors are likely starting to lose patience with the retailer’s turnaround plan as Walmart continues to gain ground. The absence of further positive developments may put downward pressure to share price going forward.
MARKET CONSENSUS: 21 BUYS, 18 HOLDS, 1 SELL, AVERAGE TP USD154.21
Unilever (ULVR LN)
Unilever reportedly abandoned plans to sell its EUR15B ice-cream division, which features brands like Ben & Jerry's, Magnum, and Wall's, and will now focus on spinning it off by listing it independently. The decision to separate the ice cream segment, which makes up roughly 16% of the company’s total sales, is part of CEO Hein Schumacher's strategy for revitalization, which involves the reduction of 7,500 positions.
Initially, Unilever considered selling its ice cream division to private equity firms, but challenges stemming from the intricate supply chain involved and the scale and complexity of such a transaction along with the outspoken political views associated with the Ben & Jerry's brand contributed to the decision to pursue a different path.
MARKET CONSENSUS: 15 BUYS, 8 HOLDS, 4 SELLS, AVERAGE TP GBp4992.49
Earnings Announcements
US Market
Deere & Co., Intuit Inc
European Market
Subsea 7, CTS Eventim
HK - China Market
Baidu, iQIYI
Global Indices Changes (%)
Fixed Income Market Updates
China Vanke was downgraded to B+ by S&P and outlook remains negative. We expect the property sector in China to remain challenging with idiosyncratic risks abound. We prefer to stick to high quality Investment Grade names and would view companies with solid domestic demand more favourably.
EUROPEAN AT1
European AT1 space was weaker on the back of higher rates and weak equity markets. The space was down 0.125-0.25point in general across all currencies with only selected short-call AT1 bonds seeing some demand. For the relatively newly issued AT1 bonds, they were down 0.125-0.375point. We still prefer going down the capital structure of banks with solid fundamentals for yield pick-up and would be buyers on dips for selected AT1 bonds.
ASIA INVESTMENT GRADE (IG)
Focus in China IG space was on the new Alibaba bonds. The 5-year traded around reoffer, 10-year traded around 5bps wider while the 30-year outperformed and traded around 7bps tighter from reoffer. The CNH bonds performed worse and was lower than reoffer across. Flows were mainly buying from private and Chinese banks against selling from global asset managers. Meituan and TSMC bonds saw demand. In Chinese financials, front-end bonds were in demand as cash alternative. Outside of China, it was a slower session for Korea IG space with spreads broadly unchanged to slightly wider. Hyundai Capital and LG Energy Solution were around 1bp wider in spread.
ASIA HIGH YIELD (HY)
China HY space traded on a weak tone after headlines on a potential liability management exercise for Dalian Wanda's 2025 bond emerged. Dalian Wanda curve dropped 1-5points but saw a rebound late in the day on short-covering. We expect the property sector in China to remain challenging. India HY space was relatively stable compared to previous days. A couple of names traded higher such as Greenko, Sammaan Capital and UPL Corporation. Notably, UPL bonds were around 0.5-1point higher on the back of rights issue approval.
Forex Market Updates
The US Dollar strengthened on Wednesday as market sentiment remained shaky on Russia-Ukraine tensions.
USD
The US Dollar advanced on Wednesday, resuming its post-election rally after a brief three-day slide as markets awaited more clues on incoming US President Trump’s key government appointments, with his pick for the high profile Treasury Secretary position overseeing the country’s financial and economic policies still yet to be named. On the central bank front, Fed funds futures are currently pricing in a 59% chance of an FOMC rate cut in December. However, some analysts say that there is a strong likelihood of a pause if upcoming US data comes in stronger than expected, especially since Fed Chair Powell’s recent comments that the central bank is in no hurry to lower interest rates.
USD bulls look poised to target a retest of the recent high around 107.00 in the Dollar Index.
GBP
The British Pound edged lower yesterday, although losses were capped by data showing that UK consumer inflation accelerated faster than expected in October. Services inflation, which has been of major concern to the BoE in recent months due to its persistent stickiness, also rose by 5%, supporting the view that the BoE will pursue a gradual pace of rate cuts moving forward. The data also reinforced the case made earlier this week by BoE policymaker Greene, who said that UK inflationary pressures are easing but the battle to sustain the downtrend is not yet won.
While Sterling’s immediate outlook remains bearish, the 1.2600 handle should provide some support for now.
EUR
The Euro returned almost all of its past three days’ gains against the USD after the ECB’s November 2024 Financial Stability Review said that economic growth is still fragile and the prospect of US tariffs under a Trump presidency adds to the uncertainty, especially with vulnerabilities among member countries in the single market economy remaining elevated. Addressing this concern, ECB policymaker De Guindos remarked that the central bank is “not almighty” in reviving the Eurozone’s weak growth prospects as they are mostly due to structural issues, while his colleague Panetta called for an expansionary monetary policy stance due to the “sluggishness of the real economy”.
A near term break below the 1.0500 handle could see the common currency test 14-month lows around 1.0450.
XAU
Gold prices rose for the third straight day as ongoing geopolitical tensions continued to boost the allure of the safe haven precious metal. Bullion gains were capped, however, after Russian Foreign Minister Lavrov said that while his country would respond to Ukraine’s use of long-range US missiles against Russian territory, it would also “do everything possible” to avoid the onset of nuclear war, hours after Moscow announced it would lower its threshold for a nuclear strike.
The precious metal could see more near term gains towards technical resistance around 2683.
