Hang Seng Index, ASX 200, Nikkei 225: Nikkei Declines on the Yen; Tech Stocks Slide

US Equity Markets: Earnings Hit Tech Stocks

On Wednesday, August 7, the US equity markets closed in negative territory. The Nasdaq Composite Index slid by 1.05%, while the Dow and the S&P 500 declined by 0.60% and 0.77%, respectively.

Super Micro Computer Inc. (SCMI) released a disappointing report, raising concerns about chip companies. The weak report impacted demand for riskier assets ahead of Thursday’s crucial US jobless claims data.

The US labor market data could materially impact the US and global equity markets.

Expert Commentary

The Kobeissi Letter commented on the Fed rate path and the US equity markets, stating,

“The Fed is in a lose-lose situation: If the Fed cuts rates aggressively right now, markets tank further and they risk a resurgence of inflation. Cutting US rates will only make the Yen carry trade unwinding WORSE, likely sending the Nasdaq into bear market territory. If the Fed doesn’t cut rates right now, recession fears will continue to mount. No rate cuts means more worry about rising unemployment which is now at a 3-year high.”

Japanese Yen Trends Crucial

The USD/JPY fell to a Thursday, August 8, morning low of 145.422, impacting the Nikkei and the broader Asian equity markets.

Notably, USD/JPY trends could serve as a proxy for market risk sentiment. A drop toward 140 could fuel another Yen carry trade unwind and a broad-based global equity market sell-off.

On Thursday, the Bank of Japan’s Summary of Opinions contributed to early Yen gains. The report reminded investors of the possibility of a sharp narrowing in interest rate differentials between the US and Japan and the likely impact on the markets.

While the Fed eyes multiple rate cuts, the BoJ is looking for policy normalization in 2025.

Hang Seng and Mainland China Markets Rise

The Hang Seng Index was up 0.03% on Thursday morning. However, real estate and tech stocks limited the gains.

The Hang Seng Tech (HSTECH) Index declined by 0.21%, with Alibaba (9988) and Baidu (9888) down by 0.13% and 1.60%, respectively. Tencent (0700) advanced by 1.80%.

Mainland China’s equity markets joined the broader equity markets in negative territory. The CSI 300 and the Shenzhen Composite Index saw losses of 0.42% and 0.93%, respectively.

Nikkei Index Falls on Yen Strength

The Nikkei Index was down 1.07% on Thursday morning. Tech stocks and a stronger Yen contributed.

Softbank Group Corp. (9984) slid by 3.63%, while Tokyo Electron Ltd. (8035) fell by 1.81%.

ASX 200 Tracks Overnight US Market Losses

The ASX 200 Index declined by 0.40% on Thursday morning, tracking the overnight US equity market losses. Gold and mining stocks faced strong selling pressure.

Mining giants BHP Group Ltd (BHP) and Rio Tinto Ltd. (RIO) were down 2.10% and 2.17%, respectively, on falling iron ore prices. Gold-related stocks Northern Star Resources Ltd. (NST) and Evolution Mining Ltd. saw losses of 2.47% and 3.63%, respectively. Gold spot prices declined for the fifth consecutive session on Wednesday.

Investors should remain alert amidst economic growth fears and shifting monetary policy expectations. Closely monitor the news wires, real-time data, and expert commentary to manage trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.