US stocks are driven by AI optimism and Trump's new tariff policy. WTI crude tumbles on supply concerns. Asia Pacific markets are buoyant ahead of the BoE meeting.
Risk-on prevails in equities; US dollar weakness extends ahead of BoE
Risk-on sentiment was on full display on Wednesday, 6 August, as optimism around the US technology boom driven by Artificial Intelligence (AI) once again overshadowed more worrisome global developments on tariffs and growth.
The US stock market applauded the news that ChatGPT maker OpenAI, the front-runner of the ongoing AI boom, is mulling a stock sale that could value the company at $500 billion, a huge jump from its current valuation of $300 billion.
Secondly, the US President Trump’s latest tariff announcement of a plan to slap a 100% levy on semiconductor imports was brushed aside, as some “carrots” were given to negate the impact of the 100% semiconductor tariffs. Trump promised to exempt US corporations from the chips levy if they demonstrate a commitment to shift production back to the US and flagged out Apple Inc. as an example.
In conjunction, Tim Cook, CEO of Apple Inc., announced an additional investment of $100 billion in its US manufacturing operations. The share price of Apple, a major component stock of the S&P 500 and Nasdaq 100, jumped by 5%.
Overall, the S&P 500 and Nasdaq 100 continued their short-term bullish trends since Monday, 4 August, with intraday gains of 0.7% and 1.3% respectively. The Dow Jones Industrial Average lagged and recorded a minor gain of 0.2%.
Over in Asia today, bullish animal spirits continue to prevail in equities. The S&P 500 and Nasdaq 100 E-mini futures extend their overnight gains by 0.2%. Japan’s Nikkei 225 notched three consecutive sessions of rallies as it jumped by 0.6% intraday, led by the Information Technology sector (1.4%).
Hong Kong’s Hang Seng Index rallied by 0.5%, on track for its fourth consecutive session of positive returns, reinforced by resilient China’s exports in July that managed to beat expectations (actual: 7.2% y/y, June: 5.8%, consensus: 5.4%).
Singapore’s Straits Times Index soared by 0.8% to an intraday level of 4,26, just a mere 0.3% away from its current all-time high of 4,274 printed on 24 July, supported by a tremendous jump in key component stocks; Yangzijiang Shipbuilding (8%), and DBS Group (2%) due to earnings beat to offset the lacklustre Q2 earnings result of another Singapore bank, UOB that dragged its share price down by -2% intraday.
Read also: Understanding tax – A quick guide for OANDA traders in Singapore.
In the FX market, the US dollar remained soft against the AUD (0.2%), EUR (0.1%), and GBP (0.07%) in today’s Asia session ahead of the Bank of England (BoE)’s monetary policy decision today, where market participants have almost fully priced in a 25-basis-point interest rate cut.
The outlier was the Japanese yen, where the USD/JPY traded almost flat due to political uncertainty surrounding the fate of the incumbent Prime Minister Ishiba as his ruling Liberal Democratic Party will hold a joint plenary meeting on Friday, 8 August, that may add pressure for the resignation of PM Ishiba.
WTI crude oil reversed initial gains and tumbled by -1.4% yesterday due to increasing supply concerns as US President Trump touted that an imminent cease-fire deal may materialise soon between Russia and Ukraine that would allow the removal of sanctions on Russia’s oil exports.
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The latest bearish movement seen in WTI crude oil suggested a six-week range bearish breakdown, where further near-term weakness in oil prices may materialise.
Our YouTube video above contains the latest intraday technical analysis on the latest intraday technical analysis on US Wall Street 30, US Nas 100, US SPX 500, Hong Kong 33, Japan 225, Germany 30, EUR/USD, GBP/USD, AUD/USD, USD/JPY, Gold (XAU/USD), and West Texas Oil.
