OCBC Investment Research Private Limited
Date of Report: 18 September 2025
Global Markets React to Fed Rate Cut and Shifting Sector Dynamics: Key Equity Insights and Top Stock Picks

Market Overview: Fed Rate Cut, Sector Shifts, and Geopolitical Developments

The week saw global markets digest the U.S. Federal Reserve’s widely anticipated interest rate cut, with stocks and bonds finishing broadly lower. The S&P 500 slipped 0.1%, led by tech sector weakness, while bond prices declined modestly. The dollar recorded its seventh consecutive Fed day rise, marking its longest streak since 2001.

The Federal Open Market Committee (FOMC) voted 11-1 to lower the federal funds rate to a target range of 4%-4.25%, continuing its gradual easing cycle. Policymakers signaled two more quarter-point cuts this year, slightly upgraded growth forecasts for 2026, and expect modestly higher inflation next year. Fed Chair Jerome Powell emphasized a “meeting-by-meeting” approach amid cooling labor markets and persistent price risks.

Geopolitics played a role, as China’s internet regulator reportedly ordered Alibaba and ByteDance to halt orders for Nvidia’s RTX Pro 6000D chips—drawing U.S. political criticism. Apple reported a 6% year-over-year decline in China smartphone sales ahead of the iPhone 17 launch, while Reddit is seeking to renegotiate its data-sharing agreement with Google to capitalize on its growing importance in AI and search.

Regional Markets Roundup: Europe, Asia, and Singapore

Europe

• The Stoxx Europe 600 Index closed flat, with tech and retail stocks offsetting declines in energy and mining.
• European chip equipment makers, notably ASML, gained attention as China’s SMIC began trials of domestically produced advanced chipmaking tools.

Asia

• Asian markets traded in a narrow range, with the MSCI Asia Pacific Index little changed after its record close.
• Chinese tech giants Alibaba, Tencent, and Baidu led gains, propelled by optimism regarding AI and supportive policies.
• JD.com surged in Hong Kong as its chairman pledged restraint in hotel sector pricing. Financials, coal producers, travel-related firms, and robot stocks also saw gains on favorable policy developments.

Singapore Market Statistics

Volume and turnover saw sharp declines, with 288 gainers and 288 losers, reflecting a balanced but cautious sentiment. The 52-week range for the Straits Times Index was 3,372.4 to 4,375.3.

Global Major Indices and FX/Commodities

Featured Equity Research Ideas: In-Depth Company Analysis

Techtronic Industries Co Ltd (669 HK): Mid-Term Outlook Intact

Techtronic Industries (TTI) has experienced a share price drop of approximately 2% year-to-date, notably underperforming the Hang Seng Index’s 34% YTD surge. This underperformance is attributed to a challenging macro backdrop and ongoing tariff concerns. Despite these headwinds, TTI posted strong 1H25 results, with revenue rising 7.1% YoY to USD 7.8 billion and net profit surging 14.2% YoY to USD 628 million.

The company faces potential sales growth pressure in 2H25 due to tariff-related uncertainties and is reassessing the profitability of products shipped from China to the U.S., considering further supply chain adjustments. Notably, Milwaukee has suspended shipments of select SKUs to the U.S. in response to the tariff environment.

Looking ahead, TTI’s outlook from FY26 remains positive, supported by expected completion of capacity relocation and tariff stabilization. Demand for TTI’s power tools remains resilient, with Milwaukee targeting double-digit YoY growth and Ryobi aiming for mid-single-digit expansion. Milwaukee will continue to focus on high-growth segments such as mega projects, data centers, infrastructure, and renewable energy, alongside ongoing product innovation to boost worker productivity and safety. Management expects EBIT margin improvement, with a target of around 10% by FY27.

Anticipated Fed rate cuts could further support power tool demand by lowering borrowing costs and stimulating construction and housing activities. The research team lifted its fair value estimate for TTI from HKD136 to HKD139.

ESG Update

• TTI’s ESG rating was upgraded in August 2025 due to improved corporate governance practices.
• No director received over 10% negative votes at the 2025 AGM, indicating reduced investor opposition.
• TTI leads industry peers in cleantech initiatives but lags in staff management and business ethics compared to global averages.

Recommendation: BUY

Golden Agri-Resources (GGR SP): Supported by CPO Price Momentum

Golden Agri-Resources (GAR) continues to benefit from supportive demand dynamics for crude palm oil (CPO), though increased supply from Malaysia and Indonesia may temper further upside. CPO prices ended August 2025 at MYR 4,308/mt, up 3% from July, driven by tight supply, resilient food demand, the B40 biodiesel mandate, high substitute oil prices, and restocking ahead of major festivals.

Indonesia’s CPO consumption rose 6.9% YoY to 12.3 million tonnes in 1H25, with biodiesel uptake up 14.3% YoY to 6.2 million tonnes. However, expectations of improved supply due to favorable weather conditions in Malaysia and Indonesia may limit further price increases, with consensus projecting CPO to rise towards MYR 4,453/mt in 4Q25 before easing to MYR 4,294/mt in 2026.

GAR’s 1H25 results were boosted by stronger plantation output and CPO prices. Its upstream business grew robustly, supported by weather improvements and a higher share of mature-yielding plantations. While FFB production may soften in 2H25 due to aggressive replanting and recent dry weather, earnings are expected to be sustained by firmer CPO prices. The research team revised its fair value estimate from SGD0.27 to SGD0.30, based on 0.55x price-to-book as the valuation base rolls over to FY26.

ESG Update

• GAR’s ESG rating remained unchanged in April 2025.
• The company continues to strengthen supply chain oversight via satellite monitoring of deforestation.
• GAR lags peers on environmental management, with no disclosed carbon reduction targets and limited water usage management.
• Governance and social practices also rank lower than global peers.

Recommendation: HOLD

Latest Research Report Summaries: Top Picks and Sector Highlights

Other highlighted stocks include Singapore Post, Nanofilm Technologies, Zijin Mining Group, WuXi AppTec, Agricultural Bank of China, Bank of China, Info-Tech Systems, ST Engineering, Singapore REITs, China Tower, Hong Leong Asia, CITIC Securities, SATS Ltd, Jiangxi Copper (smelting segment), with ratings and fair value targets provided for each.

STI Stocks by Market Capitalisation: Key Metrics and Recommendations

Important Disclosures and Ratings Guide

• OCBC’s technical comments and recommendations are short-term and trading oriented.
• Fundamental views and ratings (Buy, Hold, Sell) are medium-term calls within a 12-month horizon.
• BUY: Expected returns (excluding dividends) in excess of 10% (30% for companies below S\$150m market cap).
• HOLD: Expected returns within +10% and -5% (±30% for smaller caps).
• SELL: Expected returns less than -5% (-30% for smaller caps).

Investors are advised to consult with a financial adviser regarding the suitability of any investment product, taking into account specific investment objectives and financial situations.

Conclusion: Navigating Uncertainty and Opportunity

As central banks adjust policy in response to evolving macroeconomic conditions, and geopolitical and sectoral dynamics continue to shift, investors are advised to remain vigilant, focusing on inflation data, earnings reports, and company-specific fundamentals. The latest research highlights strong opportunities in select stocks—Techtronic Industries and Golden Agri-Resources among them—while providing detailed sector and company insights across the Asia-Pacific region.

Stay tuned for further updates as market conditions evolve and new investment opportunities arise.