[True Zoom Finance] July 25 Market Daily: How the Japanese Yen Can Extend Its Gains
"Other headlines: Reasons behind the decline in Macau casino stocks | Reasons for the plunge in Asian chipmaker stocks"
Market Highlights
l Due to waning confidence in the AI outlook, the S&P 500 suffered its biggest drop since December 2022, with Japan leading the decline in Asian markets. U.S. futures rose. WTI fell.
l $Hang Seng Index(00HSI.HK) The Hang Seng Index opened 0.8% lower, down 143.63 points to 17,167.42, marking the third consecutive day of decline for Hong Kong stocks. $MEITUAN(03690.HK) Meituan contributed the most to the index's decline, dropping 3.6%. In early trading, 64 out of 82 stocks fell, while 12 rose; 2 out of 4 sectors declined, with commercial and industrial stocks leading the losses.
Options Summary
l New World Development and CNOOC are among the Hang Seng Index stocks with lower put/call ratios.
l The open interest in Hong Kong and China Gas's calls is 2.08 standard deviations above its 20-day average, while Budweiser Brewing's call open interest is 2.79 standard deviations above its 20-day average.
l Call and put trading increased for Tencent, Xiaomi, and Meituan.
l CITIC Limited trades 18 call options for every 100 put options, while Bank of China trades 11 call options for every 100 put options.
Key News
Sands China led the decline among Macau casino operators after its parent company, Las Vegas Sands, reported Q2 net revenue below analysts' average expectations.
Asian chipmaker stocks plunged, following a pullback in U.S. markets, as disappointing earnings cast doubt on the AI frenzy. In South Korea, SK Hynix fell 8.6% despite solid earnings; Samsung Electronics dropped 2.2%, Hanmi Semiconductor fell 7.6%, and Soulbrain declined 2.9%.
Asian stocks fell to a four-week low, with tech stocks dropping after their U.S. peers tumbled overnight, while Japanese stocks were hit by a stronger yen.
The yen extended gains, briefly breaking through 153. MLIV wrote that traders seem to believe the Bank of Japan will raise rates next week, making the view of rates reaching 150 by the July 31 meeting less aggressive.
Following this week's surprise cut in key short-term lending rates, the People's Bank of China lowered the one-year policy loan rate from 2.5% to 2.3%.
Ford's adjusted EPS fell far short of expectations, sending its shares tumbling after hours.
Lineage raised about $4.4 billion in this year's largest IPO.
The NBA reached a long-term deal with Amazon Prime Video.
The Bank of Canada cut rates for the second consecutive time and noted that downside risks are becoming increasingly important for policy decisions. Bond markets rallied.
U.S. new home sales unexpectedly fell in June due to high asking prices and mortgage costs. One bright spot: luxury homes, with properties valued over $1 million being the only price category to see rising sales.
South Korea's Q2 GDP growth slowed sharply to 2.3% YoY, shrinking 0.2% QoQ. Both figures missed expectations.
BlackRock suggested the Bank of Japan may keep rates unchanged for longer, which would be positive for Japanese stocks.
ServiceNow President CJ Desai resigned following an investigation into government contracts and the hiring of a former U.S. Army leader.
Bank of America approved another $25 billion in stock buybacks.
More earnings: Kering ADR plunged after warning of potential profit declines in H2. IBM shares rose after hours due to a surge in AI orders. Chipotle gained as sales beat expectations.
People news: Quant hedge fund veteran Nick Bird is launching a new Japan strategy. UBS private banking executive Jenny Su has left, according to sources.
Chart of the day: The two-year U.S. Treasury yield fell 3 bps on Wednesday, while the 10-year yield edged higher—pushing their spread to the narrowest since October 2023. This suggests investors believe the Fed may cut rates sooner and more aggressively than previously expected, possibly as early as next week.
Today's Forex and Commodity Focus
l On Wednesday, the USD/JPY fell to its lowest in over two months as yen short carry trades unwound ahead of next week's BOJ meeting, with investors bracing for hawkish policy tightening.
l Oil prices fell during Asian trading on Thursday, with little sign of improving sentiment in China, the largest crude importer, as focus turned to upcoming U.S. growth and inflation data for further economic clues.
Source: Goldhorse Capital Extramile
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