US stocks opened high but closed lower on Wednesday, failing to maintain the rebound momentum from the previous day. All three major indices closed in the red as investors continued to focus on the Federal Reserve’s interest rate cut prospects and second-quarter earnings reports.
A former top Fed official suggested a timely rate cut, predicting a possible 50 basis points cut in the September meeting.
The benchmark 10-year US Treasury yield continued to climb, rising 5 basis points to 3.94%, returning to the level seen before last Friday’s weak employment data. The non-farm payrolls report from last week had sparked recession fears.
Charlie Ripley, Senior Investment Strategist at Allianz Investment Management, stated, “In the past few days, there has been some confidence as things have calmed down. However, many uncertainties remain, such as the extent of the unwinding of yen carry trades and geopolitical headwinds.”
US Stocks
Fundamental Analysis:
Large tech stocks mostly fell, with Nvidia dropping more than 5%, Tesla down over 4%, Meta down over 1%, and Apple rising more than 1%.
The computer hardware, semiconductor, and precious metals sectors led the declines, with AMD down over 20%, Dell Technologies down over 7%, Arm Holdings down more than 5%, Newmont Corporation and Coeur Mining down over 4%, NXP Semiconductors, Intel, and ON Semiconductor down over 3%, and HP Inc. and Micron Technology down over 2%.
Popular Chinese concept stocks mostly fell, with the Nasdaq Golden Dragon China Index down 1.46%. New Oriental fell over 7% amid market misunderstanding about the “K9 subject training deregulation”; XPeng Motors dropped over 5%, Bilibili fell over 4%, Weibo fell over 3%, Nio fell over 2%, iQIYI, Futu Holdings, and Baidu fell over 1%, and Tencent Music, Vipshop, JD.com, and Alibaba saw slight declines.
Technical Analysis:
Market Trends:
- Dow Jones: Down 234.21 points, or 0.60%, to 38,763.45
- Nasdaq: Down 171.04 points, or 1.05%, to 16,195.81
- S&P 500: Down 40.53 points, or 0.77%, to 5,199.50
Hong Kong Stock Market
Fundamental Analysis:
Hong Kong stocks opened low but closed higher. Technology stocks generally rose, with Kuaishou up over 3%, Tencent up over 2%, and Alibaba and NetEase up nearly 2%.
Property stocks led the gains, with Shimao Group up over 10%. Apple concept stocks were active, with Sunny Optical Technology up nearly 4%. Education stocks saw a significant pullback, with New Oriental down over 5%. Leading food stocks fell after earnings, with Uni-President China down over 7%.
Apple concept stocks were particularly strong, with Sunny Optical Technology up nearly 4%. The company previously issued a positive earnings alert, expecting first-half profits to reach between 1.048 billion and 1.08 billion yuan, up 140%-150% year-on-year, exceeding market expectations.
CCB International pointed out that despite limited upgrades in smartphone camera specifications in 2024, strong demand from Apple and Android boosted HLS shipments. However, shipments of automotive-related products continued to slow in the first half of 2024 due to downstream inventory digestion and weakening demand.
Technical Analysis:
Market Trends:
- Hang Seng Index: Up 0.71%, to 16,998.45
- Hang Seng Tech Index: Up 0.94%, to 3,414.35
- Hang Seng China Enterprises Index: Up 0.87%, to 5,984.94
FTSE China A50 Index
Fundamental Analysis:
Mainland China’s A-shares opened higher across the board in early trading, with the ChiNext Index opening lower but rising 0.09% by midday as the broad consumer sector strengthened.
The vitamins sector led the gains, with Er-Kang Pharmaceutical, Minsheng Health, Northeast Pharmaceutical, Shengtai Bio, Guangji Pharmaceutical, Zhejiang Medicine, and Nantechnology hitting the daily limit.
The liquor sector rebounded, with Royal Thai Wine and Yantai Rock Wine hitting the daily limit, and Shanxi Fen Wine and Luzhou Laojiao following suit. The retail sector remained active, with Central Mall hitting the daily limit for the fifth consecutive day and Yonghui Superstores hitting the limit for the second day.
Technical Analysis:
Market Trends:
- Shanghai Composite Index: Up 0.38%, to 2,880.61
- Shenzhen Component Index: Up 0.49%, to 8,490.59
- ChiNext Index: Up 0.09%, to 1,621.71
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