Early in the morning, big dive! U.S. stocks plunged 600 points intraday, and the Federal Reserve released a major signal! What happens when a super giant is sold off? Big news coming from the RMB
The U.S. stock market plunged overnight.
On August 24, local time, the three major U.S. stock indexes collectively plunged, with the Dow Jones Industrial Average falling 1.08%, the Nasdaq Composite Index falling 1.87%, and the S&P 500 Index falling 1.35%. Both the S&P and Nasdaq had their worst single-day performance since Fitch downgraded the U.S. sovereign rating. The Dow fell from an intraday high of 34,694 points to 34,093 points, a total drop of more than 600 points.
On the news, Fed Collins said that the Fed may need to further raise interest rates, and interest rates may be close to their peak. In addition, on Friday local time, Federal Reserve Chairman Powell will deliver a major speech at the Jackson Hole annual meeting of the central bank.
Among them, Nvidia, the focus of the U.S. stock market overnight, opened high and moved low throughout the day. It once rose nearly 7% during the session, and the stock price hit a record high during the session. It was subsequently sold off and ended up only closing up 0.1%. On the eve of the disclosure of NVIDIA's financial report, Cathie Wood, known as the "female version of Buffett" and the "Queen of Technology", fled early.
In addition, a piece of data about the RMB has attracted attention. According to the latest monthly report released by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), in July 2023, in the ranking of global payment currencies based on amount statistics, the RMB maintained its position as the fifth most active currency in the world, with its share rising to 3.06%, rising for the sixth consecutive month. It is worth mentioning that this is the second time on record that the RMB’s share of global payments has exceeded 3%.
Big plunge
On August 24, local time, the U.S. stock market staged a thrilling scene, with the three major indexes collectively plummeting. Among them, both the S&P and the Nasdaq had their worst single-day performance since Fitch downgraded the U.S. sovereign rating.
Most large technology stocks fell, with Netflix falling by nearly 5%, Apple, Tesla, Microsoft, Amazon, and Meta falling by more than 2%, and Google falling by nearly 2%; Nvidia rose slightly, and once rose by nearly 7% during the session. VinFast, a Vietnamese electric vehicle manufacturer, rose by more than 32%, hitting a new closing high, with a market value of US$113.7 billion (approximately more than 820 billion yuan), becoming the third largest listed automobile stock in the world by market value.
On the news, two Federal Reserve officials said during the day that policymakers may be close to completing an interest rate hike, but one of them said that the possibility of further interest rate hikes should not be ruled out until there is more clear evidence that inflation is on a downward path.
Boston Fed President Collins said in an interview: "We may need to add a little more, and we may be very close to the level where we can keep interest rates unchanged for a long time. I think we are very likely to get to the point where we can stay on hold for a considerable period of time. "As for where the top of interest rates is, I won't make any hints now." Philadelphia Fed President Harker reiterated that the Fed "may have done enough" in tightening policy and should keep interest rates at restrictive levels while assessing the impact of policy on the economy.
In addition, the market may be more worried about the possibility of a meeting on the morning of Friday, August 25, local time.At the Jackson Hole annual meeting of global central banks, Federal Reserve Chairman Powell will deliver a major speech. Economists generally believe that Powell will further emphasize his stance of keeping interest rates in a restrictive range for a long time, but they do not think he will send a strong signal on the short-term policy path.
"Female Buffett" fled early
The focus of the whole market - Nvidia opened high and moved low, performing a good market. The US stock market once rose nearly 7% during the session, and the stock price hit a record high in the session. It was subsequently sold off and only rose 0.1% at the close.
Analysts pointed out that although NVIDIA's financial report data greatly exceeded expectations and was shocking, the market has already reflected this. Investors may have realized that there will be significant market fluctuations in the future, so they chose to take some profits before Powell poured cold water on it.
After the U.S. stock market closed on August 23, Eastern Time, Nvidia disclosed its latest financial report, which showed that in the second fiscal quarter of fiscal year 2024 as of July 30, operating income and earnings per share (EPS) both doubled and were 22% and 29% higher than Wall Street expectations respectively. At the same time, Nvidia approved a US$25 billion (approximately RMB 182.1 billion) stock repurchase plan.
Specifically, revenue in the second fiscal quarter was US$13.507 billion, a year-on-year increase of 101%, ending three consecutive quarters of decline, far exceeding NVIDIA's previous guidance range of US$10.78 billion to US$11.22 billion, which was higher than market expectations. Analysts expected a year-on-year increase of approximately 65% to US$11.04 billion.
At the same time, Nvidia predicts that its revenue in the third fiscal quarter will reach US$16 billion, a year-on-year increase of 170%, which will be two consecutive quarters of doubling growth and 28% higher than analysts’ expectations.
In addition to all the good news, Nvidia’s high valuation is also one of the risks that the market is worried about. On the eve of the disclosure of NVIDIA's financial report, Cathie Wood, known as the "female version of Buffett" and the "Queen of Technology", fled early.
According to foreign media reports such as Barron’s and MarketWatch, on the eve of Nvidia’s financial report disclosure, multiple ETFs managed by Cathy Wood sold Nvidia shares worth more than $1 million on Tuesday local time, liquidating almost all their holdings in advance, leaving only two small ETFs that still hold Nvidia shares.
Cathy Wood said in an interview with the media that Nvidia’s valuation is unreasonable. Nvidia will face very fierce market competition. Tesla, Meta, and Alphabet (Google's parent company) are all developing their own AI chips.
In addition to Cathy Wood, many Wall Street tycoons sold Nvidia in advance, mainly because of concerns about high valuations, but they also missed Nvidia's subsequent surge.
According to previous reports from Bloomberg, the head of an asset management institution controlled by the Rothschild family, a long-standing European financial family,Chief Investment Officer Benjamin Melman revealed that the company's position of overweighting Nvidia since the end of 2020 has been broken, and some profits have been taken, and the position now held is "much smaller."
Regarding the reason for reducing Nvidia’s holdings, Melman said that Nvidia’s valuation is too high.
Also selling NVIDIA is the famous investment valuation expert Aswas Damodaran. According to "Barron's", Damodaran has sold Nvidia's shares. The reason for the sale is also that Nvidia's valuation is too high.
Big news about the RMB
On August 23, local time, the latest monthly report released by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) showed that in July 2023, in the ranking of global payment currencies based on amount statistics, the RMB maintained its position as the fifth most active currency in the world, with its share rising to 3.06%, marking the sixth consecutive month of increase.
It is worth mentioning that this is the second time on record that the RMB has accounted for more than 3% of global payments.
The last time the RMB share exceeded 3%, it dates back to January 2022. At that time, the proportion of RMB in international payments reached 3.2%, breaking the record set in 2015.
Behind the continued rise of the RMB in global payments is the fact that since 2023, big news about the RMB has been coming one after another.
From my country’s first imported liquefied natural gas settled in RMB, to the RMB surpassing the euro to become the second largest currency in Brazil’s foreign exchange reserves, to Argentina’s first use of RMB to repay foreign debt, the RMB’s international reserve currency, payment currency and other functions are constantly increasing.
In addition, according to previous foreign media reports cited by Global Network, a senior Indian official confirmed that Indian refiners have used RMB to settle part of Russian crude oil imports.
In addition to the RMB’s share exceeding 3%, multiple changes in the latest SWIFT report have also attracted attention.
The report shows that the use of the US dollar as a global payment currency increased significantly last month, and it once again ranked first in July with a record payment share of 46.46%.
While the U.S. dollar’s share of payments in the SWIFT report continues to increase, the share of the euro has dropped significantly. The report shows that in July this year, the share of euro payments has dropped to 24.42%, the lowest level since the advent of the euro.
In addition, the pound and the yen ranked third and fourth in terms of payment proportion in July, with their latest proportions being 7.63% and 3.51% respectively.
Analysts pointed out that the report disclosed by SWIFT shows that although the role of the US dollar in the international settlement system is still strong, many countries around the world are moving towards more diversified payments. For example, the multilateral lending institution created by the BRICS group of emerging market countries aims to increase the proportion of local currency financing from less than 20% to 30%.
