Overseas Strategy Weekly: Strong Payrolls Lift Rate-Hike Expectations; US Equity Valuation Pressures Persist
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Ping An Securities' overseas strategy weekly argues that the US–Iran conflict's escalation from economic sanctions to military strikes lifted oil prices, while unexpectedly strong August payrolls raised rate-hike expectations, extending valuation-side pressure on US equities. Nonfarm payrolls rose 162,000 versus 56,000 expected, unemployment held at 4.1%, and hourly earnings grew 3.1% YoY. Per CME data as of September 5, the implied probability of a September hike rose to 59.4% from 57.0% on August 29. MSCI's global index gained 0.04%; the S&P 500, Nasdaq and Dow moved +0.09%, +0.40% and -0.27%. The 10-year Treasury yield climbed 5bp to 4.78%, ICE Brent jumped 8.56%, the dollar index fell 0.53% to 99.16, and COMEX gold eased 0.60%. The Hang Seng and Hang Seng Tech moved +0.26% and -0.77%, with southbound inflows narrowing and some foreign outflows. The report expects hike expectations to recede only slowly—geopolitics remain unsettled and high oil prices could disrupt disinflation—leaving post-earnings profit catalysts limited and valuations rate-capped, so US equities likely stay rangebound; Hong Kong faces external liquidity pressure and share-unlock disturbances. Allocation favors value-dividend sectors, the AI mid- and downstream application chain, and Chinese innovative drugs as globally scarce assets.
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