Daily Brief Thematic (Sector/Industry): Analyzing the Triggers Behind Global Stock Market Sell-Off in Jul-24 and more

• Nikkei 225 dropped 12.4% on August 5, 2024, amid yen strength and recession fears in the U.S., triggering circuit breakers.
• Economic uncertainties, geopolitical tensions, and interest rate changes are heightening market volatility, impacting global investor sentiment and financial stability.
• The Yen Carry Trade has faced turmoil due to rising Japan interest rates, Fed comments on rate cuts, and a weaker-than-expected US job report, leading to substantial market sell-offs.

• Stocks plummeted on Monday, with the Dow suffering its worst day in nearly two years due to growing concerns over the U.S. economy. The Dow dropped 1,033 points
• The Cboe Volatility Index surged to its highest since early 2020, reflecting heightened market anxiety
• Nikkei futures rebounded to 33,830 yen, 2,450 yen higher than the closing price of the OSE.

• A week dominated by earnings reports, particularly in the semiconductor industry
• Microsoft and AWS’s strong capex spending indicates a positive outlook for data center infrastructure
• AMD’s revenue growth driven by data center and client segments, with potential for further growth in the next quarter due to capacity constraints and solid execution under CEO Lisa Su

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• The amount of deposits in the US banking system are substantial in absolute terms and compared with recent periods and older periods
• Of the USD17.4tr in deposits in the US banking system, 86% is liquid, available to access
• Alongside concerns about the S&P 500 Index or the broad US stock market, we believe it is worthwhile to keep in mind the amount of depositor liquidity

• More tech weakness in the US but most names off their lows, with Japan futures pointing to a recovery
• Big margin calls yesterday at Japanese retail brokers may see continued forced selling in the most crowded names.
• A quick glance at names with upside catalysts/strong fundamental drivers which should have room to run on an overall market recovery.