Weekly: Fed's rate cut looms as markets hover at record high

Last Week's Recap

U.S. Market - Indexes at Record Highs

• The S&P 500 (+1.6%) and Nasdaq (+2%) logged another perfect week, both closing at record highs alongside the Dow, which topped 46,000 for the first time. The Russell 2000 also hit a nine-month high, underscoring broad market strength.

• Economic data reinforced Fed cut expectations: August CPI (+0.4% m/m, +2.9% y/y; core +0.3% / +3.1%) showed steady inflation, while PPI unexpectedly fell -0.1% m/m (+2.6% y/y). Core PPI eased to +2.8% y/y.

• Labor data surprised: jobless claims surged +27k to the highest since Oct 2021, concentrated in Texas; BLS revised down payroll gains through March by -911k, cutting monthly average growth nearly in half.

• Futures markets now price a September Fed cut with near certainty—mostly for 25 bps, according to the CME FedWatch tool. Some even hopeful for a jumbo 50bps.

• Lower rates can turbocharge stock market. However, risks on the economic front — particularly in the labor market — are becoming more apparent. Those worries are starting to show up elsewhere, such as in the bond market or in the rise in gold. Yield curve moves (short end up, long end down) could start weighing on equities if sustained.

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U.S. Sectors & Stocks — Tech/AI Power, IPOs Active

• Sectors: Tech led markets higher on cloud/AI momentum (MSFT, NVDA, ORCL), while Healthcare and Consumer Defensive lagged amid rotation. Oracle's upbeat guidance also helped sentiment across software and cloud ecosystems.

• Oracle (ORCL): Surged 41% (best since 1992) despite mixed Q1 results, but raised cloud guidance. Cloud backlog hit $455B (+359% y/y) in contracted revenue, with reports of a $300B ChatGPT deal. Shares +75% YTD. Lifted broader cloud/AI stocks.

• Tesla (TSLA): Rose nearly 13% this week, extending recent gains on talk of a $1T Musk pay package tied to performance milestones and possible xAI investment.

• Apple (AAPL): Stock -2.3% on lack of upside surprises. An ultraslim handset - iPhone Air launched. The standard and Pro models of the iPhone 17 received improved processors, cameras, displays and battery life. Save for live language translation on the AirPods Pro and iPhone, Apple kept its talk of artificial intelligence capabilities to a minimum.

• Alphabet (GOOGL): New high with an 2.5% weekly rise, supported by impressive growth in its Google Cloud division, which reported a backlog of $1.06 trillion in orders. The company's cloud revenue surpassed $500 billion annual run rate, showcasing its rapid expansion and strong market position.

• Adobe (ADBE): Beat-and-raise quarter. Nearly 90% of its top 50 enterprise accounts have adopted one or more of Adobe's AI-first innovations. Shares bounced but still in a broader downtrend.

• Synopsys (SNPS): Tumbled 35% after it badly missed its fiscal Q3 EPS targets. The electronic design automation software firm delivered a mixed guidance. Synopsys blamed the miss on weakness in its intellectual property business. Peer Cadence Design Systems (CDNS) aslo fell.

• Gemini (GEMI): Closed its first trading day at $32 with a 14% rise, valued at $3.8 billion. The digital asset company initially priced its stock at $28 per share, peaked near $41 intraday.

• Klarna (KLAR): priced its IPO at $40 per share, raising $1.37 billion. The "buy now, pay later" payments firm jumped as high as $57.20 in Wednesday's debut, settling for a near-15% gain to 45.82.

• UnitedHealth (UNH): Rose by 11.8% as the company reaffirmed its full-year adjusted EPS guidance and reported stable quality ratings for its Medicare plans.

• Nebius Group (NBIS): Skyrocketed 38% on a multiyear AI cloud-computing deal with Microsoft (MSFT) worth up to $19.4 billion. boosting peer Coreweave (CRVW) - another Nvidia-related companies to rally 25%.

• Warner Bros Discovery (WBD): Soared 55% on reports Paramount-Skydance may prepare a takeover bid.

Hong Kong Market - HSI rose 1.4%

• The Hang Seng Index (HSI) jumped 3.8%, its strongest weekly gain since March, closing at the highest since August 2021 as softer U.S. inflation data reinforced rate-cut bets.

• Alibaba (9988.HK) soared nearly 15% to HK$151.10, driven by the announcement of a $3.2 billion convertible bond issuance to enhance its cloud capabilities and the launch of new AI models, leading the tech rally. Baidu (9888.HK) surged 7% to HK$101.96, while Tencent Holdings (0700.HK) gained more than 6%.

• NIO Inc. (9866.HK) announced a proposed equity offering of 181,818,190 Class A shares to support its long-term development in the global smart electric vehicle market.

• JD.com (9618.HK) rose by 7.9% last week. The company announced new strategic initiatives at its 11th-anniversary press conference, aiming to increase its user base from 300 million to 500 million within three years.

Singapore Market - STI hit a record high

• Singapore shares hit a record high this week supported by optimism over local market efforts after after the US rate cut. The Straits Times Index (STI) climbed 0.86% to a new record 4,344.24.

• DBS (D05.SI) was up nearly 2% for the week, and reached to a new record high of S$53.24 on Thursday. Charu Chanana, chief investment strategist at Saxo, noted that beneficiaries of rate cuts, such as real estate investment trusts, are starting to appear more attractive, with reduced funding costs paving the way for distribution increases.

• SGX (S68.SI) advanced 2.0% for the week, buoyed by news of a new index launch to monitor non-STI constituents, showcasing the exchange's commitment to innovation and market expansion.

• IRAS reported FY2025 tax revenue of S$88.9B (+10.7% y/y), boosted by solid economic growth and consumer spending.

Australian Market - ASX 200 pullback from new high

• ASX 200 closed flat, as energy stocks fell, despite lower interest rates in the US helped to push the Australian share market optimism.

• The big miners lagged while the gold stocks shone the brightest once again. BHP (ASX: BHP) was down nearly 2% 1, while Rio Tinto (ASX: RIO) was down 1.5%. Energy stocks also fell with crude oil prices.

• Gold stocks were even firmer, thanks to gold price hit a new high ofUS$3,639 an ounce. Regis Resources (ASX: RRL) up a stunning 15% for the week while shareholders in Bellevue Gold (ASX: BGL) did also a 15% rise.

• ANZ Group Holdings Ltd. admitted to violating fair trading regulations in New Zealand, resulting in a penalty of NZ$3.3 million. Despite this, ANZ's stock showed resilience, ending the week with a minor decline of 0.3%.

The Week Ahead

Macro Factors - Fed rate cut in focus

• Investors are now gearing up for the Fed's decision on whether it will lower its benchmark interest rate on Sept. 17. Futures markets are pricing in a quarter percentage point cut with near certainty, according to the CME FedWatch tool.

• The question on investors' minds is how many more rate cuts they can expect through the end of this year and into next year. Chair Powell’s press conference and the updated dot plot will guide expectations on the pace and extent of cuts into 2025. The policy challenge remains clear: move too slowly and risk labor market weakness, move too quickly and risk reigniting inflation.

• Other central banks — including Canada, Norway, the UK, and Japan — are also set to announce decisions, making it a pivotal week for global monetary policy.

• Beyond the Fed, the August retail sales report (Tue) will provide a read on consumer demand. Investors will also watch weekly jobless claims and fresh manufacturing data for further signals on U.S. economic momentum.

• FedEx (FDX) set to release earnings, as results from the delivery giant are often viewed as a proxy for the health of global trade and the broader US economy.