Global Economic and Political Events Shaping Markets

1

In an article on August 7, Bloomberg reported that the US stock market experienced a sharp decline on Monday, resulting in a market value loss of $6.4 trillion. However, behind the market crash, major investors like hedge funds were buying the dip, a strategy typically employed by retail investors. According to Goldman Sachs, these hedge funds have been purchasing US stocks at the fastest pace since March.

Analysis:

Impact on FX:Increased volatility could strengthen the USD as a safe haven.

FX Pair:USD/JPY, EUR/USD, GBP/USD

Impact on Shares:

US Market:Hedge fund buying could stabilize tech stocks.

Companies:General Market Indices

2

Bloomberg reported that Goldman Sachs CEO David Solomon predicts the Federal Reserve will not take emergency measures to lower borrowing costs, as he believes the US economy can avoid a recession.

Analysis:

Impact on FX:Confidence in the economy could stabilize the USD.

FX Pair:USD/JPY, EUR/USD

Impact on Shares:

US Market:Stability expected in financial sector.

Companies:Goldman Sachs (GS)

4

Prospect Capital, a leading private credit firm in New York, faces financial strain due to high-risk investments. The company relies on selling financial instruments to retail investors to maintain dividend payments, raising analyst concerns. As the Fed raises rates, Prospect faces more defaults, with many companies opting to accrue more debt to pay interest, reducing cash flow.

Analysis:

Impact on FX:Financial instability could weaken the USD.

FX Pair:USD/JPY, EUR/USD

Impact on Shares:

US Financial Sector:Increased risk for lenders.

Companies:Prospect Capital (PSEC)

5

Hamas appoints Yahya Sinwar as the new political leader, posing new challenges to Gaza ceasefire talks. Sinwar, considered the mastermind of the October 7 attacks, replaces Ismail Haniyeh, who was mediating the ceasefire talks. His appointment signals a hardline stance and a crucial role in future negotiations.

Analysis:

Impact on FX:Increased geopolitical risk could strengthen the USD.

FX Pair:USD/ILS, EUR/USD

Impact on Shares:

Global Market:Potential negative impact due to increased tension.

Companies:Defense sector stocks

6

Asian stocks surged after Japan's central bank vice governor stated no rate hikes would occur if financial markets remain unstable, alleviating investor concerns over the recent yen surge. Japanese stocks rebounded, continuing gains in Taiwan and South Korea, with the regional index up 1.4%.

Analysis:

Impact on FX:Stabilized market sentiment could weaken the JPY.

FX Pair:USD/JPY, EUR/JPY

Impact on Shares:

Asian Market:Positive impact on regional stocks.

Companies:General Market Indices

7

Pakistan's dollar bonds have risen about 30% this year, making them Asia's highest-performing bonds, thanks to the IMF's preliminary approval of a new three-year loan program. Investors believe Pakistan must continue economic reforms to further boost bond prices.

Analysis:

Impact on FX:Positive economic outlook could strengthen the PKR.

FX Pair:USD/PKR, EUR/PKR

Impact on Shares:

Pakistani Market:Positive impact on financial sector stocks.

Companies:Local financial institutions

8

South Korea's current account surplus reached its highest level since 2017, driven by strong demand for AI chips and tech exports. The surplus in June was $12.3 billion, mainly due to increased semiconductor and communication equipment exports, while imports of raw materials and capital goods declined.

Analysis:

Impact on FX:Positive trade balance could strengthen the KRW.

FX Pair:USD/KRW, EUR/KRW

Impact on Shares:

South Korean Market:Positive impact on tech sector stocks.

Companies:Samsung Electronics (005930.KS), SK Hynix (000660.KS)

9

UK police warn that far-right activists planning more riots at immigration centers on Wednesday will face arrests. Social media misinformation previously sparked violence, leading to 380 arrests and 100 prosecutions. Prime Minister Keir Starmer deployed “standby forces” to counter anti-immigrant and anti-Muslim riots, with Home Secretary Yvette Cooper promising government support for police resources.

Analysis:

Impact on FX:Increased political tension could weaken the GBP.

FX Pair:GBP/USD, EUR/GBP

Impact on Shares:

UK Market:Negative impact due to increased political instability.

Companies:Local security and service providers

10

UK's new Chancellor Rachel Reeves faces challenges in reviving the weak economy, with initial actions possibly hindering this goal. She cut investments in some road and rail projects and plans to propose an austerity budget on October 30, raising concerns among research institutes about long-term growth potential.

Analysis:

Impact on FX:Austerity measures could weaken the GBP.

FX Pair:GBP/USD, EUR/GBP

Impact on Shares:

UK Market:Negative impact due to reduced public investment.

Companies:Construction and infrastructure firms

11

The US trade deficit narrowed for the first time in three months in June, with exports growing the most this year. The deficit fell 2.5% to $73.1 billion, higher than economists' expectations of $72.5 billion. Exports grew by 1.5%, while imports rose by 0.6%.

Analysis:

Impact on FX:Improved trade balance could strengthen the USD.

FX Pair:EUR/USD, USD/JPY

Impact on Shares:

US Market:Positive impact due to better trade figures.

Companies:Export-focused companies

12

PwC estimates that banks in Hong Kong will likely enforce more foreclosures on mortgaged properties amid the real estate market downturn. PwC's partner Christopher So stated that his team manages over HK$12.8 billion ($1.64 billion) in foreclosed assets.

Analysis:

Impact on FX:Increased foreclosures could weaken the HKD.

FX Pair:USD/HKD, EUR/HKD

Impact on Shares:

Hong Kong Market:Negative impact on real estate sector stocks.

Companies:Local real estate companies

13

New Zealand's unemployment rate rose to 4.6% in Q2, higher than the revised Q1 rate of 4.4% but below economists' expectations of 4.7%. Despite a weak economic outlook, employment unexpectedly increased by 0.4%, surpassing the expected decline of 0.2%.

Analysis:

Impact on FX:Mixed employment data could stabilize the NZD.

FX Pair:NZD/USD, EUR/NZD

Impact on Shares:

New Zealand Market:Mixed impact due to economic uncertainty.

Companies:Local businesses and industries

14

Airbnb expects Q3 revenue to fall short of expectations, warning that booking windows are shortening as travelers wait until the last minute due to economic uncertainty. Shares fell 16% in after-hours trading.

Analysis:

Impact on FX:Weak earnings outlook could weaken the USD.

FX Pair:EUR/USD, USD/JPY

Impact on Shares:

US Market:Negative impact on travel and hospitality sector stocks.

Companies:Airbnb Inc. (ABNB)

15

Oil prices fell in early Wednesday trading after news of a surprise increase in US crude and gasoline inventories, offsetting concerns about global oil supply. Brent crude futures fell 0.27% to $76.27 per barrel, while West Texas Intermediate (WTI) fell 0.34% to $72.95 per barrel.

Analysis:

Impact on FX:Lower oil prices could weaken oil-exporting currencies.

FX Pair:USD/CAD, USD/NOK, USD/RUB

Impact on Shares:

Global Market:Negative impact on energy sector stocks.

Companies:ExxonMobil (XOM), Chevron (CVX), BP (BP)