Financial Services Roundup: Market Talk

The latest Market Talks covering Financial Services. Exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0756 GMT - Prudential PLC's robust Hong Kong momentum is set to continue, says DBS Group Research's Ken Shih in a note. This momentum is supported by increasing contribution from mainland Chinese employees in Hong Kong, the analyst says. The insurer also indicated that business activities in the mainland Chinese visitors segment remained steady from 1H, despite news regarding taxation on offshore insurance returns, the analyst notes. Meanwhile, the Chinese bancassurance segment is likely to see near-term adjustments on tighter expense rules, but its upbeat outlook remains, given a bancassurance partner's expansion into the high-net-worth wealth segment. DBS maintains its buy rating and 138.00 Hong Kong dollar target price on Prudential's Hong Kong-listed shares, which fall 1.0% to HK$101.60. (megan.cheah@wsj.com)

0748 GMT - The South African rand could suffer if the country's central bank raises interest rates on Wednesday but fails to signal further hikes, Commerzbank's Volkmar Baur says in a note. A 25bps rate rise is fully priced in, he says. The South African Reserve Bank held rates steady contrary to expectations in July when the Middle East conflict had just flared up again. The hope was that tensions would ease and oil prices fall back but that hasn't been the case in recent months, he says. "We would say that the SARB would likely be well advised not only to raise interest rates on Wednesday but also to adopt a hawkish tone." The dollar rises 0.3% to 16.2912 rand. (renae.dyer@wsj.com)

0707 GMT - Singapore banks' structural growth in wealth management is likely to reduce their sensitivity to interest rates, Jefferies analysts say in a note. Wealth management is increasingly becoming a second earnings engine, cushioning lenders from net-interest-margin compression during easing cycles while preserving upside if rates remain elevated, they say. The three major Singapore lenders--DBS Group, Oversea-Chinese Banking Corp. and United Overseas Bank--have earned their premium valuations through proven resilience across credit cycles and increasingly diversified earnings, the analysts say. DBS is Jefferies' top pick, given its superior execution and consistent delivery. While OCBC has the strongest recurring capital generation, its strong stock rerating has priced in much of its strength. Meanwhile, UOB's deeper Southeast Asian wealth monetization offers meaningful upside, but its greater earnings cyclicality increases execution risk. (megan.cheah@wsj.com)

0626 GMT - U.S. Treasury yields open higher in European trade after a pause in trading in Asian hours as the Tokyo market is closed. The driver is an increase in oil prices, even as investors look out for some diplomatic progress between the U.S. and Iran with the possibility of a meeting between the presidents of both countries at the UN meeting. Regarding a Trump-Xi summit, "for markets, the big question is what's going to happen when the current one-year trade truce expires in November, and whilst the general tone remains positive, there still isn't an agreement yet," Deutsche Bank strategists say in a note. The 10-year Treasury yield rises 1.9 bps to 4.981%, according to Tradeweb. (emese.bartha@wsj.com)

0406 GMT - Bank Indonesia is expected to keep its benchmark seven-day reverse repo rate steady at 5.75% on Wednesday, according to nine out of ten economists polled by The Wall Street Journal. One economist forecasts BI to raise the policy rate by 25 bp to 6.0%. A stable rupiah could give BI room to stay on hold in its September meeting, HSBC economists say in a note. However, developments in oil prices, El Nino and the dollar could create risks to inflation, the fiscal deficit and trade balance, potentially weakening the rupiah later in the year, they say. HSBC expects BI's next rate hike to come in 4Q, taking the benchmark rate to 6.0%. (yingxian.wong@wsj.com)

0335 GMT - Any interest-rate rises by the Reserve Bank of Australia are seen by Morgan Stanley analysts as mitigating major banks' margin declines rather than supporting expansion. With market pricing pointing to growing expectations that the RBA will deliver more than one interest-rate rise starting next week, MS analysts tell clients in a note that every 0.25% increase in the country's cash rate could add about 1 bp to their margin forecasts. However, they warn that major banks are less leveraged to rising rates than in 2022, when the RBA was last tightening policy. They see margins declining from current levels due to competition, deposit pricing and mix. (stuart.condie@wsj.com)

0235 GMT - The Singapore dollar is steady against its U.S. counterpart during the Asian trading session. Investors are focused on the United Nations General Assembly annual meeting, where leaders are expected to push for de-escalation in the Middle East, DBS strategists say in a note. They will also watch for signs if President Trump and Iranian President Masoud Pezeshkian will step back and open the door for negotiations. "The counterargument is that a return to diplomacy would reduce the risk of further monetary tightening and support risk appetite, reversing the USD's gains," DBS says. The U.S. dollar is little changed at 1.2758 Singapore dollars, LSEG data show.(amanda.lee@wsj.com)

0159 GMT - Bitcoin pulls back in Asia's morning session, dropping below $86,000 but staying around its highest levels since January. A broad retreat in global bond yields improved the backdrop for risk assets, but the scope for further declines may be limited, says Konstantinos Chrysikos at Kudo.com. Coming inflation releases will be key as markets eye more interest-rate hikes. Softer readings could extend the recent pullback in yields, while firmer data could revive tightening expectations and cap Bitcoin's gains, Chrysikos says. Sustained ETF buying and a continued decline in oil prices could extend Bitcoin's advance, while any setback in Middle East diplomacy could quickly revive selling pressure. Bitcoin falls 1.6% to $85,561. (fabiana.negrinochoa@wsj.com)

2325 GMT - Increasing numbers of Australian mortgage brokers see ANZ as the major bank competing hardest for business, Macquarie analysts say. Pointing to the results of Macquarie's annual survey of Australian mortgage brokers, the analysts say there has been a 42% on-year rise in the number of brokers who call out ANZ as the most competitive. Commonwealth Bank and National Australia Bank are at the bottom of the list, the analysts say in a note. ANZ is perceived to have become significantly more competitive on pricing and offers, but they wonder whether the lender is buying share and see risk of revenue attrition in fiscal 2027 and fiscal 2028. The analysts add that the importance to customers of borrowing power has risen sharply amid rising interest rates and changes to property related tax breaks. (stuart.condie@wsj.com)

1823 GMT - The recovery in Canada's home resale market looks to be losing steam and activity remains low by historical standards, National Bank's Daren King and Evelyne Gosselin say. Sales fell 0.7% on-month in August, snapping a five-month streak of increases. King and Gosselin say a major headwind looms. Canadian and U.S. bond yields have surged since the start of the Iran war, yet mortgage rates haven't fully kept pace which has significantly squeezed lenders' margins. A rise in fixed-rate mortgage rates is therefore highly likely in the coming weeks, the pair argue. And sooner or later rising financing costs will weigh on affordability and undermine an already precarious recovery, unless geopolitical or trade tensions ease, they say. (robb.stewart@wsj.com; @RobbMStewart)

1638 GMT - Investors are itching to know when the pace of large bank M&A will resume in earnest, JPMorgan analysts say in a research note. "While larger deals are not occurring at the same pace as last year, bank M&A is expected to persist as institutions seek greater scale, lower operating costs, and opportunities to enter new markets and acquire deposits in a healthy manner," they write. As it stands, the outlook for higher interest shouldn't derail progress in the deal pipeline, given that most of the industry players already weathered and steeled themselves from challenging macroeconomic conditions. There's likely still a transformation deal (or two) out there, with many investors expecting it to come before the end of the current administration. (connor.hart@wsj.com)

1053 GMT - Societe Generale's guidance supports further earnings upgrades, BofA Securities analysts say. The French bank issued "punchy" targets, the analysts write, focused on selective growth and cost reduction. The revenue guidance of 3% per year and cost cuts leave room for future upgrades, BofA says. "We believe the guidance supports additional earnings upgrades and could translate into mid-single digit upside to consensus EPS," the analysts say. The targets suggest 5% consensus EPS upgrades for 2029, BofA says, while the stock is "heavily discounted". Shares are up 2.9%.