Yields Steal the Spotlight: Equities Take a Breather

For the week of Aug 21, global equities lost ground as a sharp climb in long-term U.S. Treasury yields — with the 30-year reaching its highest level since 2007 — soured risk appetite and pressured technology and AI-related shares. In the U.S., the major benchmarks retreated even as August business activity accelerated and corporate earnings stayed resilient. Chinese markets diverged, with Hong Kong's Hang Seng surging on a health-care rally while mainland gauges slipped on a broad July activity slowdown. In Singapore, the Straits Times Index eased as outsized losses in a few heavyweights outweighed gains among property and offshore-marine names.

(Refer to the major indices' weekly performance tables below.)

🇺🇸 United States

Market Overview

U.S. equities finished lower across the board as elevated Treasury yields, renewed U.S.–Iran tensions, higher oil prices, and weakness in semiconductor and AI-related shares weighed on sentiment. The Nasdaq Composite (COMP) led the retreat, dropping 2.05%, followed by the S&P 500 (SPX) at -1.43%, while the Dow Jones Industrial Average (DJI) held up best, easing 0.85%. Mixed retail earnings reports added to a cautious tone that persisted even as data pointed to accelerating business activity.

Index Weekly Performance

- Dow Jones Industrial Average (DJI): -0.85%

- S&P 500 (SPX): -1.43%

- Nasdaq Composite (COMP): -2.05%

Key Highlights and Outlook

1️⃣ Treasury Yields Climb to Multi-Year Highs

Long-term Treasury yields rose sharply, with the 30-year yield reaching its highest level since 2007. Concerns over the U.S. fiscal outlook and heavy government and corporate debt issuance — including financing tied to AI capital spending — drove the sell-off, while higher oil prices amid renewed U.S.–Iran tensions added to inflation worries.

2️⃣ Treasury Buyback Offers Only Fleeting Relief

Treasuries briefly rallied after the Treasury Department said it would at least double its planned long-term debt buybacks from September, lifting purchases to at least $4 billion per operation. The 30-year yield posted its largest daily decline in over a year, but much of the move reversed as investors questioned whether the program could offset broader pressures. Edward Jones expects the 10-year yield to trade between 4.5% and 5.0% for the rest of the year.

3️⃣ Fed Minutes Underscore Inflation Uncertainty

Minutes from the Fed's July meeting showed participants generally expected inflation to moderate through year-end, but described their outlooks as "highly uncertain" with risks skewed to the upside. Officials noted that further policy tightening would likely be necessary if inflation failed to decline, reinforcing a cautious tone on the rate path.

4️⃣ Business Activity Accelerates Sharply

The S&P Global Flash Composite PMI jumped to 56.0 in August from 54.5, its highest reading since April 2022, led by strength in services. Employment rose at its fastest pace since January 2025, while the Empire State and Philadelphia Fed manufacturing gauges both beat estimates and hit their highest levels since 2021.

5️⃣ Corporate Earnings Growth Stays Robust

Per Edward Jones, S&P 500 second-quarter earnings are on pace to grow more than 48% year over year, with full-year 2026 earnings tracking a 31% gain. Strength extended beyond mega-cap technology, with small- and mid-cap earnings also expected to rise more than 20%, underpinning a constructive medium-term equity backdrop.

6️⃣ Housing Stays Soft as Rates Bite

Housing data remained weak: pending home sales fell 2.3% in July to their lowest since January, and housing starts dropped more than 12%. The NAHB homebuilder index edged up but stayed subdued, with the average 30-year mortgage rate at 6.65%. Edward Jones continues to favor equities over fixed income, preferring U.S. large- and mid-cap and emerging-market stocks.

S&P 500 Sectors in Focus

Sector performance was sharply divided, reflecting a rotation away from growth. Health Care led decisively, while Energy and Materials also finished higher as oil firmed and value-oriented pockets found support. At the other end, Technology was the weakest sector amid the pullback in semiconductor and AI-related names, with Utilities and Industrials also lagging as higher yields pressured rate-sensitive and capital-intensive groups. The wide dispersion underscored how the surge in long-term yields reshaped leadership beneath the index surface. 

(Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The S&P 500 (SPX) and Nasdaq Composite (COMP) pulled back from record territory, with the tech-heavy Nasdaq bearing the brunt of the AI-led selling while the Dow Jones (DJI) proved more resilient given its lighter growth weighting. Momentum cooled after August's run to fresh highs, leaving near-term direction closely tied to the path of Treasury yields. On the charts, the major indices appear to be entering a phase of sideways consolidation just below their recent peaks, digesting the rate-driven pullback rather than signaling a decisive trend reversal. Watch SPX pullback to where it was break-out previously, see wether it can hold at resistance-turn-support 7610-7630 area.

📊 Weekly charts:

- DJI weekly chart

- SPX weekly chart

- Nasdaq weekly chart

 

🇨🇳 China / Hong Kong

Market Overview

Chinese equities diverged sharply, with Hong Kong sharply outpacing the mainland. Hong Kong's Hang Seng Index (HSI) jumped 3.55%, powered by a strong rally in health-care and pharmaceutical names, while the Shanghai Composite (SSE) slipped 0.56% and the CSI 300 fell 1.01% as a broad July activity slowdown and a pullback in semiconductor and robotics shares weighed on the mainland. (Refer to the major indices' weekly performance tables above.)

Index Weekly Performance

- CSI 300: -1.01%

- Shanghai Composite (SSE): -0.56%

- Hang Seng Index (HSI): +3.55%

Key Highlights and Outlook

1️⃣ Hong Kong Diverges on Health-Care Rally

The Hang Seng Index surged 3.55%, driven by a broad advance in health-care and biotech names including Sino Biopharm, WuXi Bio, Innovent and BeOne Medicines. The rotation into Hong Kong-listed large caps lifted the benchmark even as mainland indices lagged, marking a clear divergence in regional sentiment for the week.

2️⃣ July Activity Data Disappoint Broadly

China's July data softened across the board: industrial output grew 4.5% year over year (down from 5.3%), retail sales rose just 0.6%, and fixed-asset investment contracted 6.7% for the first seven months. Maybank KE likewise flagged the softening momentum, strengthening the case for further fiscal and monetary support.

3️⃣ Property Slump Persists as Policy Support Expands

Real estate investment shrank 19.2% year over year through July, while new home prices dipped 0.1% month on month. Authorities rolled out fresh support: from September 20, residents may withdraw Housing Provident Fund savings for more purposes, and Shanghai further eased down-payment requirements for second-home purchases beyond the outer ring.

4️⃣ Embodied-AI Fervor Grips the IPO Market

Humanoid-robot maker Unitree Robotics closed 460% higher on its Shanghai debut, having earlier spiked over 600%, with the offering more than 8,000 times oversubscribed. The listing — following memory-chipmaker CXMT's blockbuster July IPO — highlighted intense appetite for "embodied AI," even as chip and robotics stocks pulled back globally during the week.

5️⃣ Maybank KE Favors Structural-Priority Names

Maybank KE prefers companies aligned with China's structural priorities: Shanghai Biren for domestic AI-computing exposure, Sunny Optical for its "Optics + AI" strategy and smartphone premiumisation, Kuaishou for AI-driven monetisation despite mixed 2Q26 results, and Galaxy Entertainment for a Macau recovery ahead of National Day Golden Week.

Technical Snapshot

The Hang Seng Index (HSI) broke sharply higher, back to its 2-month high, powered by health-care leadership and a rotation into Hong Kong-listed large caps, extending its recovery even as mainland benchmarks stalled. The Shanghai Composite (SSE) and CSI 300 stayed rangebound-to-soft, pressured by weak macro data and profit-taking in chip and robotics names. Near-term, the HSI's momentum looks constructive provided policy support follows through, though mainland gauges may remain capped until activity data stabilise.

(Refer to the Hang Seng Index constituents' weekly performance table below.)

📊 Weekly charts:

- SSE weekly chart

- HSI weekly chart

 

🇸🇬 Singapore

Market Overview

Singapore's Straits Times Index (STI) eased 0.95% for the week, pulling back from near record levels. Declines were concentrated in a handful of heavyweights — most notably SATS, alongside the local banks UOB and OCBC and industrial name ST Engineering — while property and offshore-marine counters such as Sembcorp Industries, UOL and Yangzijiang Shipbuilding advanced. The benchmark nonetheless held on to a year-to-date gain of 22.44%. (Refer to the STI weekly performance table below.)

Index Weekly Performance

- Straits Times Index (STI): -0.95%

Key Highlights and Outlook

1️⃣ STI Eases from Elevated Levels

The Straits Times Index slipped 0.95% over the week, with decliners outnumbering gainers among the index heavyweights. Despite the pullback, the benchmark retained a robust year-to-date gain of 22.44%, keeping it among the region's stronger performers in 2026.

2️⃣ SATS Leads Decliners with a Steep Drop

SATS was by far the week's weakest STI constituent, tumbling 13.22% and dwarfing every other index move. Even after the sharp decline, the ground-handling and in-flight-catering group remained modestly positive year-to-date at +6.82%.

3️⃣ Banks Diverge as UOB and OCBC Retreat

The local lenders traded unevenly: UOB fell 3.04% and OCBC declined 2.55%, while DBS bucked the trend with a 0.62% gain. Year-to-date, the trio stayed firmly higher, led by OCBC at +56.78%, DBS at +34.85% and UOB at +15.60%.

Singapore Spotlight — UltraGreen.ai (ULG)

The week's standout SGX move came from outside the STI. Fluorescence-guided-surgery play UltraGreen.ai (ULG) collapsed roughly 49% after Zydus secured 180-day FDA competitive-generic exclusivity for a generic indocyanine green (ICG) dye on 4 August, with Provepharm's Zyogreen also advancing toward the U.S. market. DBS downgraded the stock to HOLD from BUY and cut its 12-month target to USD0.80 (from USD1.95), noting the shares now discount its "Bear 1" scenario of a 20% ASP decline and 5% volume decline. Not all houses are as cautious — some argue new entrants need years to build supply and hospital/GPO relationships, leaving UltraGreen's long-established regulatory dossier and imaging platform as a durable moat. The split view keeps the stock an overhang until competitor pricing and commercial traction become clearer.

Technical Snapshot

The Straits Times Index (STI) pulled back after trading near multi-year highs, with the retreat driven largely by outsized losses in a few heavyweights rather than broad-based selling. Breadth was mixed, as gains in property and offshore-marine counters offset weakness in the banks and SATS. Near-term, the index's elevated year-to-date position leaves it sensitive to profit-taking, though the broader uptrend remains intact absent a wider risk-off shift.

📊 Weekly charts:

- STI weekly chart

🌐 Beyond Equities — Cross-Asset Watch

The same rates catalyst that pressured equities rippled across other assets this week, with gold the standout beneficiary.

- Gold: Spot hit a three-month high near US$4,540–4,600/oz on Friday, up ~4–5% on the week — a third straight weekly gain.

- WTI Crude: Held above US$85/bbl as renewed U.S.–Iran tensions and Strait of Hormuz risk kept energy prices bid.

- US Dollar: Softened broadly, with the Treasury's buyback-driven liquidity signal weighing on the greenback.

- Treasury Yields: The 30-year spiked to ~5.34%, its highest since 2007, before the buyback expansion pulled the long end back.

Gold in Focus

The rally's fuel has shifted from the earlier Singapore/Hong Kong gold-hub and PBOC-buying narrative to U.S. rates plumbing. The Treasury's move to double long-dated buybacks — with Secretary Bessent signalling further support if needed — pushed yields and the dollar lower and reignited bullion. A softer dollar makes gold cheaper for non-USD buyers, lifting the whole precious-metals complex. Singapore investors can track the move via GLD (SPDR Gold Shares) and its SGX-listed lines O87 (US$) and GSD (S$), or COMEX futures (/GC), with the December contract trading around US$4,620.

 

📌 Analyst Calls This Week

Notable rating, target-price and house-view changes across the coverage universe:

- DBS — UltraGreen.ai (ULG): Downgrade to HOLD from BUY; 12-month TP cut to USD0.80 from USD1.95 on rising generic-competition risk to ASPs.

- Maybank KE — China structural plays: Reiterates preference for Shanghai Biren, Sunny Optical, Kuaishou and Galaxy Entertainment as beneficiaries of China's policy priorities.

 

📅 Week Ahead (24–28 Aug 2026)

The U.S. calendar is unusually heavy. Nvidia reports fiscal Q2 results after the close on Aug 26 — a key barometer for the AI complex following the week's semiconductor weakness — alongside the July PCE price index, the Fed's preferred inflation gauge. The Jackson Hole symposium (Aug 27–29) then takes center stage, headlined by Chair Kevin Warsh's first keynote as Fed chief.

In China, markets will look for fresh policy signals after the soft July activity and property data, with industrial-profits figures also due. Sentiment in Hong Kong will hinge on whether the health-care-led rally can broaden, while momentum in "embodied-AI" and technology IPOs remains a focal point.

Locally, investors will monitor Singapore's July inflation and industrial-production prints for a read on the domestic economy. Regional markets will otherwise take their cue from Jackson Hole and the Nvidia print, both of which could set the tone for Asian risk appetite into month-end.

🗓️ Overarching Watchpoint

The single biggest binary risk is Chair Warsh's Jackson Hole debut. With long-term yields at multi-year highs and the July FOMC minutes flagging upside inflation risks, any hawkish or dovish tilt in his address on the rate path could drive an outsized move across equities, rates and currencies heading into September's policy meeting.

Source: Some content and data are excerpted from publicly available market reports.