The U.S. stock market closed lower, with major indices sliding for a second consecutive trading day. The minutes from the July monetary policy meeting of the Federal Reserve indicated a need for further policy tightening due to inflation risks, implying the possibility of continued interest rate hikes.
U.S. Stocks
Fundamental Analysis:
The Federal Reserve released the minutes from its July monetary policy meeting. In that meeting, the Federal Reserve raised interest rates to their highest level in over 22 years.
The minutes stated that inflation risks might require further policy tightening. Only two Federal Reserve officials were inclined to keep rates stable in July, with most officials noting “significant” upward risks to inflation.
Several participants warned of the risks of inadvertently tightening policy too aggressively. Some participants felt that economic risks had become more balanced.
The minutes indicated that economic activity seemed to be gradually slowing. Federal Reserve staff no longer projected an economic recession and expected a slight increase in the unemployment rate.
All three major U.S. stock indices recorded declines, with the Nasdaq and S&P 500 dropping by 6.1% and 4% respectively, while the Dow fell by 2.2%.
Large technology stocks declined across the board, with Tesla dropping over 3%, Meta down over 2%, Amazon and Netflix down over 1%, and Apple, Microsoft, and Google posting slight declines.
Chip stocks declined, with the Philadelphia Semiconductor Index dropping 2%, falling below 3500 points for the lowest level since June 7th. AMD fell nearly 4%, Intel dropped over 3%, and Nvidia declined by 1%.
The “big four” U.S. banks collectively fell by about 1%, with Bank of America dropping over 2%. Among key regional banks, Wells Fargo and Ally Western Bank both fell by about 2%, while Zions Bancorporation and Keycorp dropped by 1%.
Vietnamese electric car manufacturer VinFast (VFS) plummeted over 18%, following a more than 250% surge in its stock price the previous day.
Technical Analysis:
(S&P 500 Index, 1-day chart)
Market Trends:
- Dow Jones Industrial Average closed down 180.65 points, or 0.52%, at 34,765.74.
- Nasdaq Composite closed down 156.42 points, or 1.15%, at 13,474.63.
- S&P 500 Index closed down 33.53 points, or 0.76%, at 4,404.33.
Hong Kong Stocks
Fundamental Analysis:
Hong Kong stocks followed the sharp decline in U.S. stocks and opened lower, breaking below 18,000 points. The drop extended to a low of 17,900 points, down by as much as 428 points. It later narrowed, rising above 18,000 again.
Tencent Holdings Limited (0700.HK), a major domestic tech giant, reported its Q2 performance, with quarterly revenue of 149.21 billion RMB, up 11.3% year-on-year, slightly below the expected 152 billion RMB. Adjusted profit was 37.55 billion RMB, up 33.4% year-on-year, surpassing the expected 36.98 billion RMB.
In the market, Tencent and JD.com, Inc. (9618.HK) announced their Q2 results.
Among tech companies, Kuaishou Technology (1024.HK), Tencent, and Alibaba Group Holding Limited (9988.HK) rose, while JD.com, NetEase, Inc. (9999.HK), and Baidu, Inc. (9888.HK) declined.
Automotive stocks saw a significant rebound, with XPeng Inc. (9868.HK) leading the way with over a 5% increase, followed by Li Auto Inc. (2015.HK), Zhejiang Leapmotor Technology Co., Ltd. (9863.HK), and NIO Inc. (9866.HK).
Real estate stocks struggled, with Country Garden Services Holdings Company Limited (6098.HK) falling over 3%.
Expectations of improved duty-free policies boosted China International Travel Service Corp., which rose by 4.77%.
Sectors like film and entertainment, and defense showed gains, while brokerage and banking stocks declined.
Technical Analysis:
(Hang Seng Index, 1-day chart)
Market Trends:
- Hang Seng Index (HSI) declined by 0.12%, closing at 18,308.06
- Hang Seng Tech Index (HSTECH) rose by 0.93%.
- Hang Seng China Enterprises Index (HSCEI) rose by 0.24%.
FTSE China A50 Index
Fundamental Analysis:
In early trading, the three major A-share indices opened lower. The market further dipped initially, with the Shanghai Composite Index hitting a new low in over 7 months. The Shenzhen Component Index fell over 1%, and the ChiNext Index hit a new low for the year.
Subsequently, sectors like brokerage and defense gained strength, leading to a rebound in A-shares. The three major indices turned positive, but it’s worth noting that the securities industry experienced a morning pullback.
The total trading volume of the Shanghai and Shenzhen markets was 471.136 billion RMB, with a net outflow of 1.109 billion RMB from northbound funds.
Among the listed stocks, 65 hit the daily limit up (including ST stocks), while 3 hit the limit down.
In terms of industry sectors, aerospace, electric motors, auto parts, special equipment, and general equipment performed well, while insurance, banking, securities, gas, and real estate services declined.
In thematic areas, concepts like robotics, aerospace, high-voltage fast charging, Beidou navigation, and Kirin batteries were more active.
Technical Analysis:
(SSE Composite Index, 1-day chart)
Market Trends:
- Shanghai Composite Index (SHCOMP) rose by 0.01%, closing at 3,150.29.
- Shenzhen Component Index (SZCOMP) rose by 0.46%, closing at 10,628.26.
- ChiNext Index (CHINEXT) rose by 0.66%, closing at 2,147.07.
- SSE STAR Market 50 Index (SSE50) rose by 1.18%, closing at 912.43.
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