This week, the global capital market encountered sharp volatility, with the Nikkei 225 index and Germany's DAX index falling by more than 4%; The U.S. dollar index fell more than 1%, and the U.S. dollar recorded its biggest weekly decline against the yen since mid-November 2022; United States' benchmark 10-year Treasury yield fell more than 40 basis points; International crude oil prices fell sharply, and Brent crude oil futures once hit the lowest in nearly seven months.
Most of the "seven sisters" of U.S. technology stocks fell, including Amazon, Tesla, Microsoft, and Google A fell for four consecutive weeks, and the market value of Amazon and Nvidia evaporated more than about one trillion yuan this week.
Priya Misra, portfolio manager at JPMorgan Asset Management, believes that investors are taking steps to counter the risk that the Fed is too slow to cut interest rates, and all asset classes should reflect this. After all, the market is forward-looking, and investors are aware of the danger that the United States economy could fall into recession.
Global financial markets are experiencing extreme volatility
This week, various assets in the global capital market have suffered wild volatility.
In equities, Wind data showed that most of the world's major indices fell this week.
Among them, the Nikkei 225 index and the Germany DAX index fell by more than 4%, 4.67% and 4.11% respectively; France's CAC 40 index and NASDAQ index have fallen by more than 3%; The Dow Jones Industrial Index, S&P 500 Index, and Korea Composite Index all fell by more than 2%, falling by 2.10%, 2.06%, and 2.04%, respectively; United Kingdom's FTSE 100 Index and Brazil's IBOVESPA Index both fell more than 1%; The Shanghai Composite Index and Australia's S&P 200 Index rose slightly, up 0.50% and 0.28% respectively. This week's performance of the world's most important indices
In terms of U.S. stocks, the S&P 500 and the Nasdaq both fell for the third consecutive week, with the latter falling more than 10% since their peaks in early July and entering a technical correction range, with the Dow ending its four-week winning streak.
In the currency market, weak United States jobs reports also dragged the dollar down. This week, the dollar index, a basket of six major currencies, fell 1.05%, and USD/JPY fell 4.71%, its biggest weekly drop since mid-November 2022, with the Bank of Japan opting to raise interest rates to 0.25% on Wednesday.
In the bond market, amid strong risk aversion, investors flocked to United States Treasuries. The yield on the benchmark 10-year Treasury note in United States fell more than 40 basis points this week, hitting an intraday low of 3.789%, approaching the bottom of 3.783% in late December 2023.
In terms of commodities, international crude oil prices fell sharply. This week, WTI and Brent crude oil futures fell by 3.91% and 3.39% respectively, of which Brent crude oil futures once hit the lowest in nearly seven months. Analysts said market fears that weak economic growth in major economies could dampen oil demand overshadowed supply concerns over tensions in the Middle East. Gold has been the "lucky one" in the financial markets this week. London spot gold once touched $2477.66 / ounce, close to the record high of $2483.60 / ounce set on July 17, London spot silver once rose above $29 / ounce integer level, the two have risen by 2.31% and 2.24% respectively this week. COMEX gold futures broke through $2,500 per ounce in one fell swoop, reaching a maximum of $2,522.5 per ounce, a new all-time high. Weaker-than-expected United States employment data once again supported expectations that the Fed will soon start cutting interest rates, and international gold prices are once again approaching the latest record high, analysts said.
Under the turmoil in the stock markets of the United States, Europe and Japan, the fear index VIX rose 42.71% this week, reaching a maximum of 29.6 points, approaching the 30-point integer psychological mark, hitting a new high since March last year.
Analysts said a weak United States July nonfarm payrolls report added to investors' fears of a further economic slowdown, with the stock market sell-off intensifying and bond yields plummeting. These concerns have disrupted global trading and triggered investors to flee riskier markets.
Looking ahead, Bank of America strategist Michael Hartnett said investors should sell stocks when the Fed cuts interest rates for the first time as the likelihood of a deeper recession in the United States increases.
Recession fears in the United States are looming
After the Fed's latest interest rate decision chose to keep interest rates unchanged for eight consecutive times, a series of economic and employment data released by the United States raised market fears of a possible recession in the United States, leading to an increase in the risk of a hard landing for the United States economy and triggering large-scale risk aversion.
Data released on Thursday showed that the United States ISM manufacturing PMI for July was 46.8, the lowest since November 2023, with an expectation of 48.8 and a previous value of 48.5. Data released late Friday showed that United States nonfarm payrolls fell sharply to 114,000 in July from 179,000 in the previous month, and significantly lower than expectations of 175,000, the unemployment rate rose to a three-year high of 4.3%, and triggered the Sam rule, a recession indicator with an accuracy rate of almost 100%. The weak data sharply raised investors' fears of a recession in the United States, arguing that the Fed was wrong to cut interest rates too slowly and sparked massive risk aversion.
The market is calling for the Fed to act more aggressively. Markets expect the Fed to cut rates by the equivalent of four 25bps each of its three meetings for the remainder of 2024, totaling around 108bps, suggesting that one of them is expected to be 50bps. For some time now, traders have been betting that the Fed will cut interest rates in September. Looking at the performance of US stocks, the United States stock market has risen in anticipation of interest rate cuts in the past few months. Interest rate cuts tend to boost the stock market because they reduce the cost of borrowing for businesses, helping to boost profits. Recently, however, the market has begun to feel fear, fearing that the Fed may not act quickly enough to maintain the good condition of the United States job market.
Despite the current market calls for United States interest rate cuts, some economists have a different view. They believe that if the Fed cuts interest rates by 50 basis points, it will cause panic, believing that the market is too far ahead of the market to expect a large rate cut, and that the United States employment data is not yet severe enough to require urgent action by the Fed.
The "Seven Sisters" of technology stocks have lost $1.66 trillion in market value in the past month
This week, most of the "seven sisters of technology stocks" in the U.S. stock market fell, among which Amazon, Tesla, Microsoft, and Google A fell for four consecutive weeks.
Amazon has fallen 8% this week, down 2.76%, 5.84%, and 0.34% in the previous three weeks, respectively, and the operating profit guidance for the third quarter fell short of expectations, and the investment bank TD COWEN lowered the target price of Amazon Inc. from $245 to $230; Tesla followed, falling 5.52% this week, and the weekly line fell for four consecutive weeks; Nvidia fell 5.12% this week, falling for three consecutive weeks, as the company faced an antitrust investigation by the United States Department of Justice over a competitor complaint; Microsoft fell 3.95% this week, falling for four consecutive weeks; Google A fell 0.2% this week, falling for the fourth consecutive week.
This week, the cumulative rise and fall performance of the "Seven Sisters of Technology Stocks" in U.S. stocks
Meta and Apple rose against the trend, with Meta rising 4.82% this week, ending the previous three-week losing streak; Apple rose 0.87% this week after beating expectations in revenue and earnings for six consecutive quarters, after two consecutive weeks of declines.
From the perspective of market value changes, the market value of Amazon, Nvidia, and Microsoft evaporated by more than $100 billion this week, respectively by $153.154 billion (about RMB 1097.87801 billion), $142.434 billion (about RMB 1021.03214 billion), and $124.726 billion (about RMB 894.09309 billion), respectively, and the market value of Tesla and Google A evaporated by $38.751 billion and $3.850 billion respectively; The market capitalization of Apple and Meta increased by $28.922 billion and $56.769 billion respectively.
Up to now, the total market value of the "Seven Sisters of Technology Stocks" has accumulated to 14.74 trillion US dollars, compared with 16.40 trillion US dollars on July 3, and the market value has evaporated by 1660.582 billion US dollars (about 11.9 trillion yuan) in the past month.
(All pictures in the article are from Wind)
Reviewer: Wang Chao
Editor: Zhang Nan Wang Yin Proofreader: Jiao Yuanyuan Issued: Sun Hong