At 4:30pm, US stock markets continued the session in negative territory. The Dow Jones lost 2.6%, the S&P 3.1% and the Nasdaq 3.7%. The Vix, on the other hand, the volatility index measured based on the performance of the S&P, jumped 81.8%, returning to the levels of the pandemic years,
What triggered today’s decline is the speculative phenomenon of bring trades yen/dollar. Many traders borrow securities using the currency at lower rates: over the years, many yen leveraged operations have been made to buy dollar-denominated stocks. If the Bank of Japan raised interest rates, as it did, and in perspective the fed it will cut, close loan operations because the market is getting more expensive. And if large operations are formed in this way, the margin calls, meaning that loans are automatically closed because shares fall. This creates too much downside that, according to some operators, could trigger an emergency rate cut by the Fed if the fall in the prices of risky assets should be prolonged significantly.
Continental to spin off the automotive division
The German multinational, manufacturer of components for cars and other transportation vehicles, is evaluating the spinoff and subsequent Frankfurt listing of its automotive unit. The decision will also affect the company’s Contract Manufacturing division, along with shareholders of Continental which will be a direct shareholder of the new automotive group.
Based on the assessment, the board of directors is expected to decide on the spin-off in the fourth quarter, with the spin-off to be submitted for approval at the next annual shareholders meeting on April 25, 2025. If given the green light, the The goal is to finalize the spinoff by the end of 2025.
3:30 p.m. US stock markets open in deep red: Nasdaq -6%. Five stocks to track
Wall Street opened the August 5 session short in the wake of bad macro data last week, fueling market concerns. At 3.30pm the Dow Jones lost 2.9%, the S&P -3.5%, and the Nasdaq 5.6%.
“Equity volatility has risen to levels not seen since the start of the Covid pandemic in March 2020, while government bonds are rising amid a flight to safety,” said Morgane Delledonne, head of European investment strategy at Global According to CME’s FedWatch, investors are pricing in a higher than 86% probability that the Fed will cut interest rates by at least 125 points by the end of the year, an amount five times higher than to the FOMC forecast.
“This massive disconnect in market expectations from the Fed’s indications is a real test for stock markets”, added Delledonne. “Investors seem to be increasingly worried about future growth due to a weakening of the US labor market, while the Fed’s position remains stable because so far the latest economic data does not give reason to fear the risk of recession. The differing readings of the US economy by the market and the Fed are likely to keep stock market volatility high, favoring strategies with buffers that allow you to manage risk while remaining invested,” he concluded.
In an interview with CNBC, the president of the Chicago Federal Reserve, Austin Goolsbeesaid the central bank is ready to respond to signs of economic weakness, indicating that current interest rates may be too restrictive.
“The job of the Fed is very simple: maximize employment, stabilize prices and maintain financial stability. So if conditions collectively begin to present themselves like this across the line, if there is a breakdown in any of these areas, we will address it.”
The ISM services index is expected later today and in the next few days we will see the semi-annual report of some other major stocks. Caterpiller’s accounts will be released on Tuesday the 6th, which will help the markets understand a bit more about the country’s industrial picture. On Wednesday we will find out from Disney how the second quarter went and finally on Friday from pharmaceuticals Eli Lilly will give results.
Treasury yields fell amid widespread panic. The financing cost of the US 10-year bond is 3.69%. The euro-dollar exchange rate remains stable at 1.097. Oil prices, however, fell despite heightened tensions between Iran and Israel. Brent fell 1.7% to 75.5 dollars a barrel and WTI lost 1.9% to 72 dollars.
1. Buffett sells Apple
At 3:30 pm the sharing of Apple they lost 8.3%. Berkshire Hathaway has sold nearly half of the tech giant’s shares on his property, in a move that shocked the market. This choice happens after that Berkshire Hathaway it already reduced its holdings in the Cupertino company by 13% in the first quarter.
2. Crypto stocks fall
At 3.30 pm the title of the cryptocurrency platform Coinbase down 18.5% under pressure from the digital currency market. The Bitcoin loses 13% and drops below $55,000 at 52,394, after the worst week since the Ftx crash. In the last three days the cryptocurrency market has seen 313 billion dollars go up in smoke. In fact, the cryptocurrency drags everything else with it: the fall of ethereum (-19% to 2,343 dollars, the lowest price since January) and litecoin (-12.51% to 55.40 dollars) is more marked.
3. BioNTech’s poor quarterly results
The actions of BioNTech they were down 5% at 3.30pm. The Nasdaq-listed German biotech widened its loss in the second quarter to 807.8 million euros, against a red of 190.4 million in the same period of 2023, and saw revenue fall by 23% to 128.7 million EUR. due to lower demand for his Covid vaccine developed with Pfizer.
4. Crowdstrike denies Delta’s accusations
The title of Crowdstrike lost 5.3% at 3.30pm. The cybersecurity firm has denied charges filed by Delta Air Lines, which says the cybersecurity firm must be held responsible for the disruption of thousands of flights following the release of a faulty software update on July 19.
5. Tesla continues to fall
At 3:30 pm the sharing of Tesla was down 10.7%, continuing the negative trend after closing in the red by 4.2% on Friday 2 August. Elon Musk’s automaker sold 74,117 electric vehicles in China in July, marking a 15.3% increase from last year.
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