The U.S. stock market experienced a collective decline on Tuesday. Moody’s downgrade of credit ratings for 10 small and medium-sized banks and its warning about risks related to commercial real estate reignited the selling wave that started in August.
U.S. Stocks
Fundamental Analysis:
Bank stocks saw a general decline as Moody’s rating agency lowered credit ratings for 10 small and medium-sized banks, including prominent regional banks like Manufacturers and Traders Bank and Pinnacle Financial.
The agency stated that the U.S. banking industry is facing “multiple pressures” and issued a warning regarding risks associated with commercial real estate. Moody’s also initiated downgrade reviews for Bank of New York Mellon and Deutsche Bank.
In response to the news, bank stocks like Goldman Sachs and JPMorgan Chase declined overall. The SPDR S&P Regional Banking ETF, which tracks a group of small bank stocks, fell by 1.28%.
Most large tech stocks experienced declines, with AMD dropping over 3%. ASML and Micron Technology fell over 2%, while NVIDIA, Amazon, Meta, and Microsoft fell over 1%. Netflix, Google, and Tesla saw slight decreases, while Apple had a small increase.
Popular Chinese concept stocks generally declined, with the Nasdaq Golden Dragon China Index dropping by 2.37%. Li Auto fell over 8%, while XPeng Motors, NIO, and Futu Holdings fell over 5%. Manbang Group, Bilibili, Alibaba, JD.com, Pinduoduo, and Baidu dropped over 2%, and iQiyi, Weibo, and NetEase fell over 1%. Vipshop had a minor decrease, while Tencent Music saw a slight increase.
Technical Analysis:
(S&P 500 Index, 1-day chart)
Market Trends:
- Dow Jones Industrial Average dropped by 158.64 points, or 0.45%, closing at 35,314.49 points.
- Nasdaq Composite fell by 110.07 points, or 0.79%, closing at 13,884.32 points.
- S&P 500 Index declined by 19.06 points, or 0.42%, closing at 4,499.38 points.
Hong Kong Stocks
Fundamental Analysis:
Hong Kong’s three major indices exhibited mixed trends. After opening lower and widening the losses in the morning, there was a rebound of 86 points, but eventually, they closed with a slight drop of 10 points.
The afternoon session continued to show weakness, with further widening of losses and occasional small rebounds. The Hang Seng Index (HSI) declined for a second consecutive day, showing continued vulnerability, influenced by negative external news and lackluster data.
Several blue-chip companies announced earnings during the week, with unremarkable results and no significant surprises. Some real estate stocks were downgraded due to underwhelming performance.
On the market front, technology-related stocks rose collectively, with Kuaishou gaining over 3%, and Alibaba, Tencent, Meituan, JD.com, and Baidu following suit. Automotive stocks performed poorly, led by an over 5% drop in Li Auto, and declines in XPeng and NIO.
The biopharmaceutical sector rebounded significantly, with Kanghong Pharmaceutical surging by 15%. Property stocks showed signs of recovery, with China Jinmao and Greentown China rising over 4%, while Country Garden’s decline narrowed.
July excavator sales declined by 29.7% year-on-year, leading to a general drop in heavy machinery stocks, including a more than 6% decline in China National Heavy Duty Truck. Sectors such as catering, energy, and entertainment experienced active gains.
Technical Analysis:
(Hang Seng Index, 1-day chart)
Market Trends:
- Hang Seng Index rose by 0.32%, closing at 19,246.03 points.
- Hang Seng Tech Index dropped by 0.01%.
- Hang Seng China Enterprises Index rose by 0.39%.
FTSE China A50 Index
Fundamental Analysis:
In the early trading session, all three major A-share indices opened lower. The Shanghai Composite Index (SHCOMP) and the Shenzhen Component Index (SZCOMP) experienced narrow fluctuations, while the ChiNext Index rose briefly and then fell. In the afternoon, all three indices slightly declined.
The market lacked strong focal points, with the healthcare sector showing resilience against the trend. Sectors like culture and media, artificial intelligence, real estate, and consumption collectively weakened.
The total trading volume of the Shanghai and Shenzhen stock markets reached 736.577 billion yuan, with a net outflow of 1.332 billion yuan from northbound funds. Among the listed stocks, 30 experienced limit-up (including ST stocks), and 2 hit limit-down.
In terms of sectors, medical services, biopharmaceuticals, chemical pharmaceuticals, medical equipment, and pharmaceutical commerce showed the most significant gains.
On the other hand, gaming, culture and media, communication equipment, education, and automotive services led the declines. Conceptually, CRO, innovative drugs, traditional Chinese medicine, and medical information technology received relatively strong attention.
Technical Analysis:
(SSE Composite Index, 1-day chart)
Market Trends:
- Shanghai Composite Index fell by 0.49%, closing at 3,244.49 points.
- Shenzhen Component Index fell by 0.53%, closing at 11,039.45 points.
- ChiNext Index fell by 0.01%, closing at 2,228.73 points.
- SSE STAR 50 Index fell by 0.85%, closing at 957.37 points.
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