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The three major equity index futures collectively fell, with S&P futures falling by more than 4% and Nasdaq futures falling by more than 6%.
The volatility index of the US stock market has reached the highest level since 2020, and concerns about economic recession have intensified.
The VIX index, a volatility index of the US stock market, rose 180% at one point, the largest increase since February 2018, and touched the highest intraday level in four years due to growing concerns about the US economic recession, causing a sharp decline in global stock markets. As of press time, the VIX index reported 65.7, the highest level since October 2020.$CBOE Volatility S&P 500 Index (.VIX.US)$Once rose by 180%, reaching the highest level in four years, with VIX index at 65.7 as of press time, the biggest rise since October 2020 due to concerns over the US economic recession and the intensified fall of global stock markets in recent days.
US chip stocks fell sharply before the market, with Nvidia falling by more than 14%.
$NVIDIA (NVDA.US)$fell by more than 14%,$Arm Holdings (ARM.US)$fell more than 13%,$Taiwan Semiconductor (TSM.US)$fell by more than 11%.
Previously, in response to news that the AI chip release was postponed, [Nvidia] responded that the demand for Hopper is very strong, and the sample trial of Blackwell has already begun widely, and production is expected to increase in the second half of the year. In addition, no comment was made on the rumor.$NVIDIA (NVDA.US)$In response, it stated that the demand for Hopper was very strong, Blackwell's sample trials have begun widely, and production is expected to increase in the second half of the year. In addition, no comments were made on rumors.
Bitcoin fell below $50,000, and the concept of cryptocurrencies fell across the board, with declines exceeding 26% [for some stocks].
As of press time,$MicroStrategy (MSTR.US)$fell by more than 26%,$Marathon Digital (MARA.US)$,$Coinbase (COIN.US)$fell by more than 19%.
Petroleum stocks fell before the market, with Shell falling by nearly 4%, due to concerns about demand leading to a drop in international oil prices. Crown LNG (CGBS.US) fell by 4%, 3.77%, and more than 3%.
$Crown LNG (CGBS.US)$fell by 4%,$Shell (SHEL.US)$fell by 3.77%, and was trading at $200.67 before market opening. On the evening of August 3, Berkshire Hathaway, which is owned by Buffett, released its Q2 2024 financial report, showing that the company reduced its holdings of Apple shares from 0.789 billion shares in Q1 to about 0.4 billion shares, a nearly 50% shareholding reduction amounting to over $80 billion. $BP PLC (BP.US)$,$Equinor (EQNR.US)$Despite a significant escalation of geopolitical tensions in the Middle East this week, concerns about the US economic recession have dominated market sentiment, and investors are worried about the demand side. As a result, crude oil prices have plummeted, with Brent crude oil prices hitting new lows for half a year.
Apple fell nearly 9% before the market due to Buffett's shareholding reduction. On the evening of August 3, Berkshire Hathaway, owned by Buffett, released the financial report for the second quarter of 2024, which showed that the company's holding of Apple shares in the second quarter was reduced by nearly 50% from the first quarter's 0.789 billion shares to about 0.4 billion shares, with a reduction amount of more than 80 billion US dollars.
$Apple (AAPL.US)$Before the market opened, it fell nearly 9% to $200.67. On the evening of August 3, Berkshire Hathaway, a subsidiary of Buffett, released its second quarter 2024 financial report, which showed that the company's shareholding in Apple, from 0.789 billion shares in the first quarter, was reduced to about 0.4 billion shares in the second quarter, a reduction of nearly 50%, with a reduction amount of more than $80 billion.
Tesla fell by more than 9% before the market, and the market demand slowed down, and the expansion plan for the Berlin factory is uncertain.
$Tesla (TSLA.US)$Before market opens, Tesla's stock had dropped over 9%. Tesla's Berlin factory manager, Andre Thierry, said, "If there is no clear signal from the market indicating that we need to expand production, we will not spend billions of dollars to expand the factory." The expansion permit for the Tesla Berlin factory has been divided into several parts, with the approval of the second part postponed last month. Thierry pointed out that another factor Tesla must consider when expanding the Berlin factory is the sales volume of electric cars.
Apple put options surged! Suffered a large reduction of holdings from Warren Buffett.
Last Friday, the trading volume of Apple options almost doubled to 2.15 million contracts, with the proportion of put options rising to 51%, the highest level in almost four months. On the options chain, the bears are in the lead with the most active put contracts having an expiry date of last Friday and a strike price of $220, with a turnover of 1.404 million contracts. Among the contracts that have not yet expired, the put contracts with the largest trading volume are two contracts with a strike price of $110/125, which expire on August 16th, with a volume of 636,000 contracts and 64,100 contracts, respectively. The latter has increased by 200%.
Global macro
Wall Street's new script for interest rate cuts: Will the Federal Reserve come to the rescue?
Market risk sentiment is rapidly changing, and the call for the Federal Reserve to urgently cut interest rates is growing. Traders believe that there is a 50% chance that the Federal Reserve will cut interest rates by 25 basis points within a week. The expectations of Wall Street investment banks for a rate cut by the Federal Reserve are also rapidly heating up. JPMorgan and Citigroup both expect the Federal Reserve to cut interest rates by 50 basis points in September and November respectively; Morgan Stanley believes that the Federal Reserve will cut interest rates three times by 25 basis points this year; Bank of America has brought forward its expectations for the first rate cut by the Federal Reserve from December to a 25 basis point cut in September.
Goldman Sachs raises the probability of 'shallow recession' in the US to 25%, expecting five interest rate cuts this year.
On Monday, Jan Hatzius, chief economist of Goldman Sachs, raised the probability of a recession in the United States over the next year from 15% to 25% in his report. Goldman Sachs expects the Federal Reserve to cut interest rates by 25 basis points in September, November, and December. In addition, Goldman Sachs said that if its prediction is wrong and the August employment report is as weak as July's, there is a high likelihood of a 50 basis point rate cut in September. Meanwhile, traders expect the Fed to cut interest rates five times before the end of the year, which means the market expects 50 basis points of rate cuts in the next three meetings, the largest rate cut since the pandemic or credit crisis.
Fed's Gulsby: If the economy deteriorates, the Fed will take measures to repair it.
Fed's Gulsby: (When asked about emergency rate cuts) Options, including rate hikes and cuts, have always been on the table. If the economy worsens, the Fed will take steps to repair it. The Fed will respond to the economic situation. Our level of restriction on actual interest rates is the highest in decades. The Fed still maintains a balanced risk posture. The Fed must focus on the weakness of the job market.
Institutions evaluate global stock market crash: The market may have overreacted.
George Boubouras, head of research for K2 Asset Management, said the market is clearly concerned about recent weak economic data. However, the reaction to last Friday's employment figures seems excessive, since it is only monthly data. Rolling data for three months will provide better guidance. Despite the high volatility in the market and concerns that recent weak economic data will persist, overall profitability and credit conditions remain very good. Given the futures market's expectation that the Federal Reserve will begin an interest rate cut before the US election (November 5), this may exacerbate some of the volatility before the election.
JPMorgan: The stock market is likely to continue under pressure, and the Federal Reserve is likely to ease policy in a passive manner.
JPMorgan strategists said stocks may continue to be under pressure due to slowing economic activity, declining bond yields, and lowered earnings expectations. They remain cautious on the stock market. The Fed will begin to ease policy, but will do more passively, responding to weaker growth; 'this may not be enough to stimulate recovery'.
The Japanese yen soared by over a thousand points in five days! Revealing the hidden pusher behind the global stock market crash: arbitrage trade that is disappearing.
From breaking through the level of 154 last Tuesday to dropping below the milestone of 143 today, in just five trading days, the USD/JPY fell sharply by over 1000 points. For many traders, if they had previously financed their investments with cheap yen and invested in high-yielding markets to capture high returns, they would now have to suffer the decline in high-yielding assets (such as US stocks, etc.) and the appreciation of the yen exchange rate (they need to return yen when the transaction ends). This stunning turnaround has triggered a 'big liquidation' of global arbitrage trading.
The toughest day in the history of the Japanese stock market! Analysts warn that the volatility will continue until October.
As of Monday's close,$Nikkei 225 (.N225.JP)$The index has fallen by 12.4%, the TSE has fallen by 12.23%, and the volume of large certificate intraday experienced 2 circuit breakers, breaking the historical record of plunges. This is also the largest drop in the Nikkei 225 index since October 1987, with the largest single-day decline in points in history. Consulting and intelligence company.$TOKAI (9729.JP)$ Seiichi Suzuki, chief stock market analyst for Tokyo, said the Japanese stock market will not stabilize until October, but he is inclined to buy stocks on dips, because the fundamental factor that drives the Japanese stock market upward remains, namely, governance reform of Japanese stock companies.
Bilibili rose more than 3% pre-market trading and was upgraded to "buy" by UBS, which raised its EPS estimate per share.
Reminder for US Macro Events
(All in Peking Time)
20:30 FOMC voter and Chicago Fed President, Charles Evans, gave an interview with CNBC.
21:45 US July S&P Global Services PMI final.
22:00 US July ISM non-manufacturing PMI.
05:00 2024 FOMC Committee, San Francisco Fed President Daly delivers a speech.
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