Overnight U.S. Stock Review: Mixed Indexes, Tech Dominates Sentiment
On Wednesday (July 29), U.S. stocks closed sharply divergent. The S&P 500 edged up 0.12% to 5,678, the Nasdaq Composite rose 0.45% driven by tech earnings, while the Dow fell 0.18% on weak energy/financials. Total turnover shrank ~5% from the prior day, showing caution ahead of the Fed decision.
Big 7 Rotation Accelerates: Apple, Microsoft Lead; Tesla Bucks Trend
Yesterday's capital rotation among the “Big 7” was notable. Apple (AAPL) and Microsoft (MSFT) rose 1.2% and 0.9% on expectations for upcoming AI products; Amazon (AMZN) and Google (GOOGL) also gained ~0.6%. However, Tesla (TSLA) bucked the trend, falling 2.3%, extending its correction on Q2 delivery slowdown and Musk's compensation case concerns. NVIDIA (NVDA) closed flat after range-bound trading, reflecting long-term AI optimism but near-term profit-taking pressure.
U.S. Bond Yield Falls to 4.15%, Rate-Sensitive Sectors Under Pressure
The 10-year yield fell 3 bps to 4.15% yesterday, extending its decline from the mid-July high of 4.28%. This should have boosted growth stocks, but funds also withdrew from cyclicals like financials and energy, dragging bank stocks lower. JPMorgan (JPM) fell 0.7%, Goldman Sachs (GS) fell 0.5%. Analysts see the yield decline as reflecting dovish Fed expectations, but if tonight's decision is less accommodative, bond volatility may intensify.
Chinese ADRs Night Session Mixed: EV Stocks Fall, E-commerce Supports
Chinese ADRs night session was mixed. E-commerce leader PDD rose 1.5% extending its rebound; Alibaba (BABA) edged up 0.3%. But EV stocks were mostly weak: NIO fell 2.1%, XPEV fell 1.8%, LI fell 1.5% on concerns over China's EV subsidy tapering and European tariff barriers, with low night session volumes.
Asia-Pacific Pre-market Preview: FTSE A50 Futures Up Slightly; HSI Night Flat
As of 7:00 AM Taipei time on July 30, FTSE China A50 futures were up 0.15% from the prior close; HSI night futures oscillated around flat, down 0.05%. Nikkei 225 futures rose 0.3%, KOSPI futures fell 0.1%. Offshore RMB held near 6.85; the dollar index was at a weak 101.2. Asia-Pacific early trade is expected to follow the U.S. divergence with tech relatively strong, but caution on Fed uncertainty.
Key Events Today: Fed Rate Decision, U.S. Q2 GDP Revision
The FOMC will announce its rate decision at 2:00 AM Taipei time on July 31. Markets expect no change; focus is on the statement's tone on inflation/employment and whether Chair Powell hints at a September cut. Also due: U.S. Q2 GDP annualized q/q revision (prior 1.4%, expected revised up to 1.8%). A strong reading would reinforce the soft-landing narrative and support risk assets.
Early Trading Strategy: Watch Risk Sentiment Swings, Buy Tech Leaders on Dips
Before the Fed decision, investors are advised to maintain neutral positions. Stocks with earnings beats among the Big 7 (e.g., Apple, Microsoft) may offer dip-buying opportunities if they pull back. If bond yields continue to fall, growth stock valuations could benefit; if the decision is hawkish, safe-haven assets (gold, utilities) may be favored. In Asian early trading, closely watch offshore RMB and FTSE A50 futures. Chinese EV ADRs are best avoided for now.
