Broker: OCBC Investment Research
Date of Report: 18 September 2025

Global Market Insights: Fed Rate Cut, Sector Highlights, and Key Equity Picks for 2025-2026

Market Overview: Mixed Global Reactions to Fed Rate Cut and Geopolitical Developments

The global financial markets exhibited measured reactions following a highly anticipated U.S. Federal Reserve interest rate cut, with key indices posting minimal moves and sector-specific volatility framing the day. Investors remain laser-focused on inflation data, earnings reports, and evolving geopolitical events as the primary catalysts for future market direction.

Key U.S. Market Movements and Fed Policy Update

• The S&P 500 slipped 0.1%, weighed down by weakness in the technology sector.
• Bonds experienced modest declines, reflecting investor caution amid the Fed’s ‘no surprise’ stance.
• The Federal Open Market Committee (FOMC) reduced the federal funds rate target range to 4%-4.25%, voting 11-1 in favor.
• The Fed signaled two more quarter-point cuts in 2025, alongside an improved outlook for 2026 economic growth and modestly higher inflation expectations for next year.
• Fed Chair Jerome Powell emphasized a “meeting-by-meeting” approach, citing a cooling labor market and ongoing price risks. The U.S. dollar strengthened for the seventh consecutive Fed day, a streak not seen since 2001.

Corporate News and U.S.-China Tech Tensions

• China’s internet regulator reportedly instructed major tech firms (Alibaba, ByteDance) to halt orders for Nvidia’s RTX Pro 6000D chips. This move drew criticism from U.S. policymakers, underlining persistent U.S.-China tech tensions.
• Apple reported a 6% year-over-year decline in China smartphone sales ahead of the iPhone 17 launch.
• Reddit began early talks with Google to renegotiate its content-sharing agreement, aiming to capitalize on the growing value of its user data for AI and search applications.

European and Asian Market Recap

• European equities finished flat, with gains in tech and retail offset by declines in energy and mining. Chip equipment makers like ASML drew attention as China’s SMIC began trials of domestically produced advanced chipmaking tools.
• Asian stocks traded in a narrow range, maintaining recent highs. The MSCI Asia Pacific Index was little changed after a record close. Chinese tech giants (Alibaba, Tencent, Baidu) outperformed on optimism over AI and supportive policies.
• JD.com surged in Hong Kong on strategic sector guidance. Chinese financials, coal, travel, and humanoid robot stocks all benefited from favorable policy developments and positive analyst outlooks.

Singapore Market and Global Indices Table

Research Focus: Key Stock Picks and Analysis

Techtronic Industries Co Ltd (669 HK): Resilient Mid-Term Prospects Despite Tariff Headwinds

• Current Share Performance: Down ~2% YTD, lagging the Hang Seng Index (+34% YTD), mainly due to macro weakness and tariff concerns.
• 1H25 Results: Revenue rose 7.1% YoY to USD 7.8bn; net profit up 14.2% YoY to USD 628m.
• 2H25 Outlook: Sales growth may slow due to tariff-related uncertainties. The company is reassessing U.S.-bound product profitability and considering further supply chain shifts. Milwaukee brand suspended some SKU shipments to the U.S. in response to tariffs.
• 2026 and Beyond: Growth trajectory remains intact as supply chain relocations complete and tariffs stabilize. Both Milwaukee and Ryobi brands are expected to sustain expansion, targeting double-digit and mid-single-digit YoY growth, respectively. Focus areas include mega projects, data centers, infrastructure, renewables, and continuous product innovation to lift productivity and safety.
• Profitability Targets: Management aims for ~10% EBIT margin by FY27, supported by product upgrades and mix optimization.
• Interest Rate Impact: Expected Fed rate cuts could boost demand for power tools as lower borrowing costs revive industrial, commercial, and housing construction.
• Valuation Update: Fair value estimate raised from HKD 136 to HKD 139.
• ESG Rating: Upgraded in August 2025 due to improved corporate governance. TTI leads peers in cleantech initiatives but trails in staff management and business ethics is average among global peers.
• Recommendation: BUY.

Golden Agri-Resources (GGR SP): CPO Price Momentum Supports Earnings

• Crude Palm Oil (CPO) Prices: Ended August 2025 at MYR 4,308/mt, up 3% from July. Strength fueled by tight supply, robust staple food demand, and sustained high prices of substitutes like soybean oil.
• Indonesia’s CPO Demand: Rose 6.9% YoY to 12.3m tonnes in 1H25, with biodiesel demand (+14.3% YoY) under the B40 mandate reaching 6.2m tonnes.
• 2025-2026 Outlook: Improved supply from Malaysia and Indonesia (due to favorable weather) may limit further price upside. Bloomberg consensus expects CPO to peak at MYR 4,453/mt in 4Q25, then ease to MYR 4,294/mt in 2026.
• 1H25 Results: Strong plantation output and CPO price supported upstream business growth. Expect softer output in 2H25 due to aggressive replanting and recent dry weather, but earnings likely to remain resilient due to firm CPO prices.
• Valuation Update: Fair value estimate lifted from SGD 0.27 to SGD 0.30, based on 0.55x price-to-book for FY26.
• ESG Rating: Unchanged since April 2025. GAR has enhanced supply chain oversight via satellite monitoring of deforestation but lags global peers in environmental and governance practices, especially carbon management and water usage.
• Recommendation: HOLD.

Summary Table: Latest Equity Research Ratings & Fair Values

Singapore Blue-Chip Snapshot: STI Stocks by Market Cap and Key Metrics

Conclusion: Investors Remain Cautious Yet Optimistic

Global markets are in a state of cautious optimism, with the U.S. Fed’s gradual easing, ongoing sectoral shifts, and geopolitical crosscurrents shaping investor sentiment. Equity picks like Techtronic Industries and Golden Agri-Resources present varied opportunities, supported by resilient business models, sector tailwinds, and prudent management strategies. Monitoring inflation, central bank moves, and sector-specific developments will be crucial for market participants in the quarters ahead.