Market Daily
Macro Update:
Safe haven assets rally amid escalating Russia-Ukraine conflicts
Oil, gold and dollar rose following reports that Russia fired an intercontinental ballistic missile for the first time in history. We remain bullish on gold as it is a good hedge against geopolitical and inflation risks. We also continue to see strategic purchases from EM central banks. We keep our 12-month gold target at $3,000.
Main Upcoming Macro Indicators
Equity Market Updates
US EQUITIES
US stocks ended higher on Thursday as investors digest Nvidia’s results from the day prior, with continued optimism on the economy.
EUROPE EQUITIES
European shares closed higher on Thursday, buoyed by a rally in energy and tech stocks that ended its longest losing streak in more than two months, while geopolitical tensions underpinned demand for safe-haven assets.
HK EQUITIES
Hong Kong stocks ended lower on Thursday as investors weighed the potential impact of US tariff hikes against expectations of more fiscal stimulus from Beijing.
Alphabet (GOOGL US)
The US Department of Justice has recently proposed a partial dismantling of Google, which involves selling off its industry-leading Chrome web browser and the sharing of search data with compeitiors, after a landmark ruling determined that Google violated US antitrust law with its search business.
The Department of Justice and state antitrust enforcers also suggested that Google must consider selling its Android operating system if other measures fail. The proposals aim to regulate Google for up to 10 years.
If the above proposal is eventually implemented, Google will lose a crucial competitive advantage. This could potentially hurt revenue and thus put downward pressure to share price going forward.
MARKET CONSENSUS: 59 BUYS, 13 HOLDS, AVERAGE TP USD210.43
Starbucks (SBUX US)
Starbucks on Thursday reiterated that it is exploring strategic partnerships for its Chinese operations after a media report stated that the company is considering selling a stake in the business to a local partner.
The company, facing a decline in demand for its beverages in major markets such as the US and China, aims to revamp its US stores and gain a better understanding of its Chinese operations.
Further strategic pivots from new CEO Brian Niccol could potentially swing Starbucks’ share price to the upside going forward.
MARKET CONSENSUS: 18 BUYS, 16 HOLDS, 6 SELLS, AVERAGE TP USD101.84
Snowflake (SNOW US)
Shares of Snowflake surged on Thursday after the company issued a better-than-expected full year product revenue forecast at between USD906M to USD911M, signaling a growing demand for cloud-based data storage and analytics which could potentially support share price going forward.
The company also announced on Wednesday that it is partnering with Anthropic to build up its AI capabilities and further bolster its competitive edge.
Snowflake’s FY3Q25 results featured revenue at USD942.1M vs. USD950.5M expected, with adjusted net income at USD73.2M vs. USD60.1M expected.
MARKET CONSENSUS: 32 BUYS, 13 HOLDS, 2 SELLS, AVERAGE TP USD184.76
Mercedes-Benz (MBG GY)
German carmaker Mercedes-Benz on Thursday said that it will reduce costs by several billion Euros per year in the near future, as it faces demand headwinds in China.
The announcement came after CFO Harald Wilhelm said in October that the company was stepping up efforts to boost efficiency and cost improvements in light of the market situation.
Automakers overall have suffered as demand for electric vehicles slow and competition from local car makers in China increases. Several European carmakers have warned of falling sales and cut-profitability forecasts, while Volkswagen is considering factory closures in Germany to costs.
MARKET CONSENSUS: 15 BUYS, 9 HOLDS, 4 SELLS, AVERAGE TP EUR68.8
Baidu (9888 HK)
China internet search giant Baidu on Thursday reported less-than-expected shrinkage in adjusted 3Q24 operating profit at RMB7.01B vs. RMB6.36B expected, even as revenue came in-line at RMB33.6B.
The company’s AI model, Ernie, continued gaining traction in 3Q24, handling approximately 1.5B daily queries in November vs. 6M in August.
Although monetisation might still take time, further developments in Ernie, especially compared to rivals such as ByteDance’s Doubao, could drive upward movements in share price going forward.
MARKET CONSENSUS: 26 BUYS, 8 HOLDS, AVERAGE TP HKD116.89
Earnings Announcements
US Market
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European Market
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HK - China Market
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Global Indices Changes (%)
Fixed Income Market Updates
Indian High Yield (HY) market caught a chill as US prosecutors charged Gautam Adani on counts of bribery, and two issuers pulled out of planned issuances pending further consideration due to the weak sentiment. We have been selective on HY names and prefer Investment Grade bonds.
EUROPEAN AT1
Overall tone in the European AT1 space improved but were still down slightly in general. The space was marked -0.125-0.25point lower by dealers. It does seems like the dealers are long inventory with buying sentiment remaining tepid from global asset managers and hedge funds.
ASIA INVESTMENT GRADE (IG)
In China IG space, appetite for duration was weak with better selling in long duration bonds. Technology, media and telecom names traded 1-3bps wider on mixed flows. Korea IG space was quite active with buyers in KT Corporation and Import-Export Bank of Korea and selling in Shinhan Bank. In South-East Asia IG space, the tone was stable with Singaporean Banks' Tier 2 bonds in demand. We do think some of the Tier 2 bonds in this space looks favourable in terms of valuation and would be looking to add in this space. Overall we still prefer 5-10 year Investment Grade bonds in this current rates environment.
ASIA HIGH YIELD (HY)
Finally a day when China HY market was not the weakest. Adani bonds were back in the limelight. This time, US prosecutors are charging Gautam Adani with helping drive a US$250million bribery scheme. Adani bonds were hit hard, with the complex falling 5-15points at one point before hedge funds moved in to buy the dip, bringing the complex to -3 to -10points towards market close. The weak sentiment spread to Indonesia HY space, with the space marked 0.5-1point lower in general.
Forex Market Updates
The US Dollar was the strongest in over a year as jobless claims dropped to a seven-month low, hinting at a job growth rebound.
USD
The US Dollar rose to a 13-month high in choppy trading on Thursday as investors assessed the latest labor market data and comments from Federal Reserve officials for the path of interest rates, while bitcoin continued its march toward the $100,000 level. Weekly initial jobless claims dropped 6,000 to a seasonally adjusted 213,000, a seven-month low, and below the 220,000 estimate of economists polled by Reuters, indicating job growth rebounded after being disrupted by hurricanes and labor strikes last month.
USD could see some consolidation around the 107.00 level, with some investors taking profit.
GBP
The British Pound eased modestly against the dollar, which held firm on Thursday, as investors remained laser-focused on who President-elect Donald Trump's Treasury Secretary pick might be and what that might mean for his policies on growth, trade and taxes. The pound got a brief lift the day before from data that showed UK consumer inflation staged an unwelcome pickup in October, confirming the belief in the market that the Bank of England will be one of the slowest among the big central banks to lower rates meaningfully over the coming year. Even against that backdrop, sterling has fallen by close to 2% against the dollar this month and turned negative on the year.
While Sterling’s immediate outlook remains bearish, the 1.2500 handle should provide some support for now.
JPY
The Japanese Yen rose on expectations of a December rate hike after Bank of Japan Governor Kazuo Ueda said the central bank will scrutinise various data ahead its rate review next month, and "seriously" take into account the impact yen moves could have on the economic and price outlook. In an appearance closely watched by markets for clues on whether the BOJ could hike interest rates next month, Ueda said the central bank will reach a decision "meeting by meeting" on the basis of information that becomes available.
USDJPY looks to be range-bound between 152 and 157 as investors wait and see more developments that provide a clearer direction.
XAU
Gold prices rose for a fourth consecutive session on Thursday, hitting an over one-week high as safe-haven demand soared following AI bellwether Nvidia's lackluster revenue forecast and intensifying Russia-Ukraine tensions. Investors flock to safe-haven assets during global crises, and gold has soared to multiple record highs since the Middle East conflict erupted in October last year. With the United States vetoing a U.N. ceasefire resolution in Gaza and renewed Russia-Ukraine tensions, geopolitical risk premiums remain elevated, ensuring gold's enduring appeal.
The precious metal could see more near term gains towards technical resistance around 2683.
