On the morning of August 5th, the Asia Pacific stock market experienced a significant decline.
In terms of the Japanese stock market, both the Tokyo Stock Exchange Index and the Nikkei 225 Index fell sharply after opening, with a drop of over 6% at one point. Subsequently, the decline of the Nikkei 225 index narrowed, while the Japan Eastern Stock Exchange index continued to widen its decline, triggering a circuit breaker mechanism. Mitsubishi UFJ Bank's decline widened to 21%, and its stock price hit a historic low. In addition, Japanese treasury bond bond futures triggered the circuit breaker mechanism.
In terms of the South Korean stock market, as of press time, the South Korean KOSPI50 index fell more than 4%, the South Korean KOSPI index fell 3.95%, and the South Korean KOSDAQ index fell 3.61%.
The main indices of the Australian stock market also fell by over 2%.
In addition to the Asia Pacific stock market, major stock index futures in the US also fell, with the Nasdaq 100 index futures experiencing a drop of up to 2% at one point.
On Monday, the US dollar fell below the 146 mark against the Japanese yen, marking the first time since February this year, and the intraday decline widened to 0.39%.
Last week, the Bank of Japan announced a rate hike, raising the policy rate by 15 basis points to 0.15% to 0.25%, and gradually reducing the monthly bond purchase scale to 3 trillion yen, exceeding market expectations in terms of tightening.
At that time, after the announcement of interest rate hikes, the Japanese stock market experienced a rebound, with the Nikkei 225 Index and the Tokyo Stock Exchange Index closing up 1.49% and 1.45% respectively on the same day. But in just the past trading day, both major indices have experienced significant declines on Thursday and Friday.
Zhang Ming, Deputy Director of the Institute of Finance at the Chinese Academy of Social Sciences, and others stated that there is a clear correlation between the rise of the Japanese stock market index and the depreciation of the Japanese exchange rate against the US dollar in the past period of time. There may be two potential explanations for this. Firstly, the depreciation of the Japanese yen can help improve the exports of Japanese companies, thereby boosting the fundamentals of some Japanese listed companies. Secondly, the depreciation of the Japanese yen can help improve the global business and investment performance of Japanese multinational corporations.
In other words, if in the future, with the adjustment of Japan's monetary policy, the exchange rate of the Japanese yen against the US dollar shifts from depreciation to appreciation, then the rise of the Japanese stock market index driven by the depreciation of the yen may be difficult to sustain, "said Zhang Ming et al.
However, some analysts believe that as Japan normalizes after years of negative interest rates, the pricing power of companies and the increase in worker wages will stimulate economic growth, thereby supporting the market. The long-term underlying fundamentals remain strong, "said Wilfred Sit, Chief Investment Officer of Hang Seng Investments." Looking ahead to next year, the Japanese economy may show more signs of gradual recovery
In addition, Bitcoin also experienced a significant drop of over 6%, falling below $57000. According to CoinGlass data, over 110000 people have liquidated their positions in the virtual currency market in the past 24 hours, with a total liquidation amount of $380 million.
On August 5th, the offshore Chinese yuan surged over 450 points against the US dollar, recovering from the 7.12 mark and now trading at 7.1130.
Due to the latest non farm payroll data falling significantly short of expectations, recession fears have intensified. The three major US stock indices fell last Friday, with the Dow Jones Industrial Average falling 1.51% as of the close; The S&P 500 index fell by 1.84%; The Nasdaq fell by 2.43%. Large tech stocks generally fell, chip stocks fell across the board, Intel fell more than 26%, and its total market value fell below $100 billion. The company's Q3 performance outlook is disappointing, and it will lay off 15000 employees and suspend dividends; Micron Technology and ASML fell over 8%, TSMC fell over 5%, and Nvidia fell nearly 2%. Amazon fell nearly 9%, with lower than expected operating profit guidance for the third quarter; Tesla fell more than 4%. Most popular Chinese concept stocks fell, with the Nasdaq China Golden Dragon Index falling 1.84%, Tencent Music falling over 5%, and Ctrip and Futu Holdings falling over 4%. The three major European stock indexes fell across the board on the same day: the average price index of 100 stocks in the Financial Times of the London Stock Exchange fell by 1.31%; The CAC40 index of the Paris stock market in France fell by 1.61%; The DAX index of the Frankfurt stock market in Germany fell by 2.33%.
According to the summary of securities firms, the specific heavyweight news overseas is as follows:
1. On July 31st, the Federal Reserve announced after the FOMC meeting of the monetary policy committee that the target range for the federal funds rate remains between 5.25% and 5.50%, which is in line with market expectations, but at the same time released signals of a possible interest rate cut in September, indicating that the Fed has further confirmed progress in reducing inflation and has begun to emphasize its focus on avoiding employment risks in addition to inflation.
2. On the same day, the Bank of Japan announced its latest interest rate decision, raising the policy rate by 15 basis points to 0.15% -0.25%, exceeding market expectations; At the same time, the Bank of Japan announced a plan to shrink the balance sheet. The purchase scale of treasury bond decreased by 400 billion yen every quarter. Instead of providing a range of bond purchases, it will provide a designated amount. This was not as expected as a monthly reduction of 1 trillion yen. The Nikkei index fell sharply the next day, while the yen exchange rate soared.
3. The ISM manufacturing index of the United States in July was 46.8, expected to be 48.8, and the previous value was 48.5. This was the worst data since 2009 during the non COVID-19 epidemic, and new orders were also lower than expected.
4. The US non farm payroll report for July surprised the market, with 114000 new non farm jobs added in July, the lowest record since December 2020, far below the expected 175000, a significant decrease from the previous value of 206000 (revised down to 179000); The unemployment rate has risen to 4.3%, setting a record high since October 2021 and exceeding expectations by 4.1%; Wage inflation continues to cool down, with hourly wages increasing by 0.2% month on month in July, slightly lower than the expected and previous values of 0.3%, a year-on-year increase of 3.6%, an expected 3.7%, and a previous value of 3.9%. The unemployment rate triggered a recession indicator with an accuracy rate of up to 100% - the Sam rule (meaning that the economic recession has already begun). After the data was released, the yields of the three major stock index futures, the US dollar index and treasury bond bonds fell rapidly, and panic spread faster. Traders have started betting on the possibility of a 50 basis point rate cut in September and predict that this year's rate cut will exceed 110 basis points.
5. In the second quarter, Intel's revenue did not increase but decreased by 1% year-on-year, and the highest decline in the third quarter guidance was 11%. The EPS guidance unexpectedly turned from profit to loss; Intel plans to cut costs by $10 billion by 2025 and lay off approximately 15000 employees, with the majority to be completed within this year; Starting from the fourth quarter, dividends will be suspended for the first time since 1992; After the data was released, Intel plummeted by 26%. Coincidentally, Amazon's revenue and operating profit growth slowed down to 10% and 91% respectively in the second quarter, still higher than expected. However, its revenue guidance for the third quarter is expected to increase by a minimum of 8%, which will be the lowest growth rate in more than a year and a half. The operating profit guidance has significantly slowed down beyond expectations, with a minimum increase of less than 3%. The market's concerns about the impact of its AI service investment exceeding expectations on profits have increased.
6. Last Thursday, the Bank of England announced a 25 basis point cut in interest rates to 5%, in line with market expectations. This is the first time since early 2020 that the Bank of England has lowered interest rates.