Market Analysis for July 31

The U.S. stock market performed strongly on Wednesday, boosted by Federal Reserve Chairman Powell's hint of a possible rate cut discussion in September. The S&P 500 and the Nasdaq index recorded their largest single-day gains in five months. The Nasdaq index, in particular, saw a surge of over 3%. Although the Nasdaq was the only major index to decline in July, small-cap indexes performed strongly, with a cumulative increase of 10%, making it the best-performing month of the year.

In the latest FOMC meeting, the Federal Reserve kept interest rates unchanged, but emphasized a significant shift in strategy, now focusing on employment risks in addition to inflation. This marks a major shift in the Fed's strategy, balancing the dual goals of employment and inflation, paving the way for a rate cut in September.

In the tech sector, Meta's second-quarter report and next quarter guidance both exceeded market expectations, with the stock rising by 5% in after-hours trading. Zuckerberg predicts that Meta AI will become the most widely used artificial intelligence assistant globally. Meanwhile, Morgan Stanley reiterated that Nvidia is their "top pick" stock, expecting strong performance from its fourth quarter Blackwell chip deliveries. On Wednesday, Nvidia's stock price surged by nearly 13%, with Huang Renxun's net worth increasing by approximately $12 billion in a single day, setting a record.

In addition, the Bank of Japan unexpectedly raised interest rates and announced a quarterly reduction of 400 billion yen in bond purchases, leading to a sharp appreciation of the yen against the dollar, reaching 2%, and a cumulative increase of nearly 7% in July, marking its best performance in 20 months.

The tense geopolitical situation in the Middle East has also led to a significant surge in oil prices, rising by as much as 5%. Safe-haven assets such as gold and U.S. government bonds were also boosted by this.

In Asia, A-shares market rebounded with a large increase in trading volume, and the Chinext Price Index rose by over 3%. The Hang Seng Tech Index also rose by 3%. This series of market trends demonstrates the high sensitivity of global financial markets to central bank policies and the impact of geopolitical factors.

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