Latest / ausbiz a.m / 22.09.26 Kai Chen, MPC Markets
Transcript
- nadine: Well, good morning to you. It is the 22nd of September 2026, and I'll just put it out there right at the beginning. ASX futures are pointing higher. It's looking like we're going to have a very solid open here after what was a pretty spectacular session on Wall Street through the overnight period. Look, I've got a guest coming up with me, and we'll cover a lot of what helped drive sentiment, but I can point you in one direction, and that is AI. That is semiconductors, and in particular, it is Meta. So I think that would have piqued your interest. But ⁓ look, we had shares of Meta up nearly twelve percent at their highs. We saw the S P 500 gain one and a half percent, the Nasdaq up significantly, heading for its first record close since June. And the Dow added about 388 points. That's after finishing off its worst week since March last week. So quite a turnaround in sentiment. Of course, interest rates continue to dominate the conversation. We saw the FOMC hike last week. We've got all four of the big banks expecting an interest rate hike here in Australia now. But ⁓ you know, look Getting good as we head toward this open here locally. Yesterday the ASX 200 was pretty flat. It was down early, recovered as US futures improved throughout the session. The banks did the heavy lifting yesterday. Financials were up nearly eight-tenths of a percent. Healthcare and energy were also positive. Tech was a big laggard, which fell by 1.4% or round about there. It was the worst sector. But we'll see if that changes today, of course. Let's get some analysis. Joining me from MPC Markets is Kai Chen. Kai, good morning to you. Well, were you surprised as surprised as I was when you woke up this morning? Kai Chen: Good morning, Nadine. Yeah, no, I I think what a what a spectacular rally in the Nasdaq last night. You know, as you said, ⁓ led by the tech stocks. ⁓ so we saw a resurgence of ⁓ a lot of the tech' the chip stocks last night. So AMD and Intel's done incredibly well, as well as Meta. So, you know, ⁓ definitely a bit of risk on. ⁓ we did see ⁓ oil kind of fading away into the background ⁓ as it falls below ninety-two dollars. ⁓ yeah, so so you know, ri risk on in general last night, very positive sentiment. nadine: ⁓ what was the story with Meta, by the way? Kai Chen: Yeah, you know, Meta's really interesting because I mean in this whole AI race ⁓ in the Frontier labs over the last two years, it's really one of the ones that should have done really, really well, ⁓ but has fallen behind, right? So, just to give a bit of background context into Meta, ⁓ they did the lab was led by one of the the godfathers of AI, Jan Lakoon. ⁓ but of course, you know, ⁓ They really didn't come out of the gates very strong with their frontier models. ⁓ but ⁓ they they ended up hiring ⁓ Alex Wang and ⁓ basically he's leading the charge in terms of creating the new LLM. ⁓ you know, they Meadow naturally does have a advantage in terms of having the compute and custom ⁓ rack setup. So, you know, it should it should actually be in a position of strength ⁓ in this AI race. ⁓ and and you know, it seems like the mark it that they are taking steps in the right direction. So with that risk on sentiment I think people are looking at meta again. nadine: Yeah, ⁓ apparently it's the number one. Meta Muse is the number one on the Apple App Store, which helped inspire some of the enthusiasm. Kai, do you hold Meta on behalf of clients, if you don't mind me asking? Kai Chen: Mm-hmm. We we do have ⁓ for some clients Meta. ⁓ you know, we we actually had that on a while ago. ⁓ it we we always saw saw that Meta was in a really strong position to take advantage of this just with their their ⁓ hardware computer as well as you know ⁓ resource and talent that they have at Meta. So yes, we do have it for clients. nadine: Okay. So risk on to start the session. ⁓ we also, as we saw equities rally, we saw bond yields lower. was that a significant move? I mean, we've got the US 10-year treasury yield back below five percent. Does that give you some sort of comfort or is it cold comfort when you still consider some of the big risks out there, particularly in relation to the fiscal position in the US? Kai Chen: Hmm. Yeah, you know, it it's a really tricky situation at the moment because there's there's there's two big themes pulling out the seams where you know, you know ⁓ treasury yields have come below five percent, but ⁓ on the backdrop you still got rate hike, you know, prospects in the US, maybe potentially two more hikes. ⁓ but the biggest issue is that the inflation, ⁓ in my opinion, is still gonna be sticky. ⁓ and this is really what the the bond markets are really worried about, right? So I I don't think that's gonna dissipate, but on the other end of the spectrum, you know, you've got AI ⁓ that for in just any reason it will rally. And you know what, we are mi in the midst of quite a revolutionary ⁓ time. So ⁓ very two very opposing themes, I guess, ⁓ tugging at each other. ⁓ but today it seems to be the tech story that's driving it. nadine: Yeah, I mean, if you look at AMD, for example, or Intel overnight, just incredible gains. And to your point, it comes even as we have ⁓ you know, the Chicago Fed President Goolsby warning that, you know, persistent supply shocks can't be ignored. He goes on to say, once supply shocks to inflation become persistent, some of the logic behind looking through no longer holds. We've had RBA assistant governor ⁓ Sarah Hunter. Kai Chen: Mm. nadine: On a podcast this morning, actually I guess it wasn't this morning, but it was released today, she does say that the board remains very concerned about inflations where risks remain to the upside. And if those risks manifest, then the board will be considering whether they have to tighten the cash rate again. So as I said, yesterday we had ANZ, CBA falling in line, all expecting a hike to come next week when we have the Reserve Bank meet. I mean Now that we have that on the table, does that change any way that you guys are thinking about strategy at MPC? Kai Chen: ⁓ I mean, we've we've always had that at the back of our minds. You know, I think the inflation story is gonna be sticky. and you know, the central banks are gonna be forced to raise rates, right? So, perhaps maybe AI will solve the ⁓ inflation problem. But ⁓ no, if ⁓ you know, really I I I think this is gonna be a persistent theme in the background. And you know, going on that as well last night we saw Bitcoin ⁓ kind of break through ⁓ its level. So It's had a very good recovery in the last couple of days. and you know, I think the market really sees this that, you know, this inflation story is going to be very, very sticky. yeah, so very likely that ⁓ RBA will hike next month and ⁓ you know, ⁓ probably another two rate hikes to come. nadine: Okay. So we will be watching oil. As you mentioned, we've seen Brent delivering its fourth consecutive daily decline. So that's perhaps a little positive. We've also got a little bit of, I guess positive sentiment around US-China relations. We do have a big state dinner between the US President Donald Trump and his administration and China's president Xi Jinping. So that is something that we'll be watching for any headlines coming from as well. Kai Chen: Mm. nadine: There's not a lot of economic data today. We do hear from RBA Mish ⁓ Governor Michelle Bullock. So she's got a fireside chat at a CEDA event. ⁓ we've got a bunch of Fed speakers tonight, but I guess we've got to wait for any really meaningful economic data here locally until Thursday when we get the jobs data. So, Kai, what will you be watching for when this market opens at ten AM local time here in Sydney? Kai Chen: Yeah, for sure. I think ⁓ I I mean I think some of our tech names have been ⁓ really, really ⁓ undervalued for a for a while. ⁓ I'm hoping to see a little bit of pickup in the tech sector today. ⁓ well, the Australian tech sector today. In the US, I think it's gonna continue that trend, right? So ⁓ it looks like the NASDAQ is gonna break out of that range. So ⁓ I I think the story in terms of AI will continue. And you know, with especially in the chip sector as well. ⁓ you know, we've talked about it before where I think this is a supply chain problem, right? So the demand for AI is not gonna die down. It is ⁓ you know, when you look at token usage, you look at demand side, AI is here to stick around and it is growing the usage. ⁓ so you know, they need the chips and compute to actually serve it. So that's why you're seeing this di massive rally in all the AI tech stocks. And I think this is likely to continue until that that HP, well, especially for the chip stocks, the the the prices will remain very elevated until their supply ⁓ resolves, right? So I don't ⁓ but I don't think they're gonna resolve that anytime soon. ⁓ so yeah, so that's a continued rally in the US. ⁓ I think oil w will continue to consolidate. ⁓ and it it might be just 10 people taking profit. Look, I think the underlying theme in the the Middle East is still very unstable. ⁓ you know, things could change very quickly. ⁓ but I I I do think w given the current ⁓ backdrop, oil will kind of consolidate a bit more. nadine: Yeah. Okay. And so when it comes to, you know, local stocks, we've got a few ⁓ company reports out this week. One that comes to mind is Washington H Sol Pats. We also hear from Premier Investments. I was on the call yesterday with your colleague Mark Gardner from MPC Markets. And I know I hope you don't mind me saying I sort of think of you as the real deep sort of AI tech guy at MPC. But Mark was telling me he's getting a little bit tempted by some of these bottomed out Kai Chen: Mm-hmm. Mm-hmm. nadine: Or yeah, really sort of decimated retailers. What would it take to convince you to get into some of these Aussie retailers? Kai Chen: Yeah. ⁓ I think no absolutely. I think from a valuation standpoint, you know, you've definitely got some bargains on the on the board, that's for sure. ⁓ you know, like the and and you know, like the thing is you've got quality retailers really ⁓ at decent valuations, right? Like JP Hi Fi, Harvey Norman. ⁓ two years ago or well, like a year and a half ago, you would have been kicking to buy it down at sixty six for JB. So you know, obviously with the economic backdrop, people are still doing it pretty tough with the cost of living. ⁓ but again, you know, they th these are the times that the opportunity presents itself, right? So, ⁓ it's yeah, I I think, you know, from a valuation standpoint, it is definitely worthwhile keeping it on the watch list. ⁓ you know, you you can refine the timings and so on, but ⁓ they they do definitely represent a good opportunity. nadine: Well, Kai Chen, look, I hope you have a good day's trade. And just a good day in general. Thanks so much for joining us on Osbiz AM this morning. Kai Chen: Likewise, thank you, Nadine. Thank you. nadine: Take care, Kai.