Broker: OCBC Investment Research
Date of Report: 16 September 2025

Global Markets Surge as Fed Rate Cut Anticipation Lifts Sentiment: Full Analysis of Key Stocks and Sectors

Market Overview: Investors Eye Federal Reserve’s Next Move

Markets across the globe began the week on a high, with investor optimism driven by the expectation of resumed interest rate cuts by the Federal Reserve. Technology shares led the rally, while positive developments in US-China trade relations and a framework agreement to keep TikTok operational in the US further improved sentiment. The S&P 500 broke new ground, closing above 6,600 for the first time, propelled by major moves in stocks like Tesla and Alphabet.
Meanwhile, the Federal Open Market Committee (FOMC) is set to begin a pivotal two-day meeting, with markets fully pricing in a quarter-point reduction in the Fed’s benchmark rate. Investors are now keenly watching for guidance on future monetary easing, which could further underpin risk assets, particularly in tech and growth sectors.

United States: Tech Titans Power Market Gains

• S&P 500: Rose 0.47% to close at 6,615.3, a historic high.
• Tesla: Shares jumped 3.6% after Elon Musk’s US\$1 billion stock purchase, viewed as a strong endorsement. The company is pivoting toward robotics amid fierce EV competition.
• Alphabet: Soared 4.5%, joining the exclusive US\$3 trillion market cap club, driving the communication services sector up 2.33%.
• Consumer Discretionary Sector: Rose 1.1%, its highest in nearly nine months, buoyed by Tesla’s rally.

Europe: Equities Supported by Dollar Weakness and Rate Expectations

• Stoxx Europe 600 Index: Gained 0.42%, led by consumer products and banks. Healthcare lagged.
• CAC 40: Advanced 0.9% despite Fitch’s downgrade of France’s credit rating due to rising debt and fiscal concerns.
• Falling US rates and a weaker dollar are making European equities more attractive from a risk-reward perspective.

Asia: Tech Stocks Lead Modest Gains

• MSCI Asia Pacific Index: Rose 0.2%, led by Alibaba Group and Samsung Electronics.
• Improved confidence in emerging-market assets as Fed easing is anticipated.

Singapore Market Snapshot

Key highlights:
Market turnover was S$1,338.4 million (-1.7%).
320 gainers vs. 239 losers.
52-week range for STI: 3,372.4 – 4,375.3.

World Indices Performance

FX & Commodities Snapshot

Featured Research: Shanghai Pharmaceuticals Co. Ltd. – Driving Innovative Transition

Ticker: 2607 HK / 601607 CH
Rating: BUY
Fair Value: HKD 17.50 / CNY 24.40
Shanghai Pharmaceuticals (SPH) reported a mixed set of 1H25 figures amid an industry-wide squeeze from volume-based procurement (VBP) and policy reforms. While total revenue increased 1.6% year-on-year to CNY 141.6 billion, the manufacturing segment declined, offsetting distribution (+2.2% YoY) and retail (+3.4% YoY) growth. Gross profit margin contracted to 10.1% from 11.0% a year earlier, with medical device turnover weakness further pressuring results.
A notable highlight was a 51.6% YoY net profit surge to CNY 4.5 billion, primarily due to a one-off gain from reclassifying Hutchison Pharmaceuticals from JV to subsidiary. Excluding this, net profit would have fallen 22.4% YoY to CNY 2.1 billion.
SPH’s distribution revenue outpaced major peer Sinopharm (1099 HK), which saw a 3.5% YoY distribution revenue decline. This was attributed to SPH’s value-added distribution for innovative drugs, contract sales organization (CSO) business, and the 2018 acquisition of Cardinal Health’s China business. SPH now counts 44 innovative drugs in clinical stages, with the Hutchison Pharmaceuticals acquisition set to accelerate its innovation. The retail segment also shows positive momentum.

Financial Summary: Shanghai Pharmaceuticals 1H25

ESG Developments

• SPH’s ESG rating was upgraded in August 2025, led by improvements in corporate governance and business ethics.
• Related-party transactions with the controlling shareholder dropped from ~CNY620m in FY23 to ~CNY606m in FY24.
• The board now includes a female director as of July 2025.
• SPH leads peers in environmental and social scores but lags in governance.
• All suppliers are required to have anti-corruption policies, but detailed internal anti-corruption practices are less comprehensive than leading peers.

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Conclusion: A Market Poised for Volatility and Opportunity

With the Federal Reserve poised to cut rates and global trade tensions easing, equity markets are riding a wave of optimism. Technology, consumer discretionary, and communication services sectors are set to benefit most. In Asia, strong performance from innovative drug leaders like Shanghai Pharmaceuticals and robust blue-chip names in Singapore underpins the region’s appeal. However, investors are advised to monitor policy changes, especially in China’s healthcare sector, as well as the outcome of the crucial Fed meeting for cues on the next phase of the market cycle.
OCBC Investment Research continues to provide timely insights and actionable ideas for navigating these dynamic markets.