Market analysis on July 31st

The strong performance of the US stock market on Wednesday was boosted by news that Federal Reserve Chairman Powell suggested that interest rate cuts might be discussed in September. The S&P 500 and NASDAQ indices each recorded their biggest one-day gains in five months. The Nasdaq index was particularly prominent, rising more than 3% at one point. Although the Nasdaq was the only major index to fall in July, the small-cap stock index performed strongly, with a cumulative increase of 10%, making it the best performing month of the year.

At the latest FOMC meeting, the Federal Reserve kept interest rates unchanged, but emphasized that in addition to inflation, it is now also concerned about employment risks. This marks a major shift in the Federal Reserve's strategy, balancing the dual goals of employment and inflation, thus paving the way for interest rate cuts in September.

In terms of technology stocks, Meta's second-quarter report and guidance for the next quarter both exceeded market expectations, and the stock price rose 5% in after-hours trading. Zuckerberg predicts that Meta AI will become the most used artificial intelligence assistant in the world. Meanwhile, Morgan Stanley once again emphasized that Nvidia is its “stock of choice” and expects strong Blackwell chip deliveries in the fourth quarter. On Wednesday, Nvidia's stock price surged nearly 13%, and Huang Renxun's net worth increased by about 12 billion dollars in a single day, setting a record.

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

Geopolitical tension in the Middle East also contributed to a sharp jump in oil prices, which rose 5% at one point. Safe-haven assets such as gold and US Treasury bonds have also been boosted as a result.

In Asia, the A-share market fought back and volume surged. The GEM index rose more than 3%, and the Hang Seng Technology Index also rose 3%. This series of market trends shows the high sensitivity of global financial markets to central bank policies and the influence of geopolitical factors.

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