Global Market Insights: Key Events and Economic Analysis Part 1

1

Federal Reserve Chairman Jerome Powell, in his semi-annual monetary policy testimony before Congress, stated that as signs of slowing inflation become more evident, Fed officials are becoming increasingly wary of the potential risks high borrowing costs pose to the labor market. Although investors expect the Fed to begin cutting rates in September, Powell did not provide a specific timeline. He emphasized that recent data show a noticeable cooling in the labor market. The CME bond trading index's odds of a September rate cut fell from 76% to 70%.

Analysis:

Impact on FX:Uncertainty about rate cuts could weaken the USD.

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

Impact on Shares:

US Stock Market: Potential negative impact due to uncertainty in Fed policies.

Companies:General Market Indices

2

TSMC's stock has been rising continuously amid an escalating strike at Samsung, which boosts investor confidence in TSMC's quarterly earnings. TSMC has become the sole supplier for many hardware components due to Samsung's strike, giving it pricing power. Despite Samsung's high level of automation, the company cannot afford any production disruptions in the coming weeks. Samsung is trying to persuade Nvidia to use its high-bandwidth memory, which is crucial for catching up with competitor SK Hynix in the rapidly growing AI sector.

Analysis:

Impact on FX:Increased market confidence could strengthen the TWD.

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

Impact on Shares:

Global Tech Market: Positive impact on semiconductor stocks.

Companies:TSMC (2330.TW), Samsung Electronics (005930.KS), SK Hynix (000660.KS), Nvidia (NVDA)

3

Russian President Vladimir Putin has been actively engaging in diplomatic activities to challenge US and allied efforts to isolate him. Since starting his fifth term in May, Putin has held over 20 meetings with leaders from Europe, Asia, Africa, Latin America, and the Middle East within two months.

Analysis:

Impact on FX:Increased geopolitical tensions could strengthen the USD as a safe-haven currency.

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

Impact on Shares:

Global Market: Negative impact on market sentiment.

Companies:General Market Indices

4

The People's Bank of China (PBOC) is preparing to counter record-low bond yields by selling hundreds of billions of yuan in securities. Bond traders are preparing for possible intervention. According to a Bloomberg survey, traders expect key yield points for 10-year and 30-year bonds to be 2.25% and 2.45%, respectively, with possible yield increases of 5 to 10 basis points if the PBOC intervenes.

Analysis:

Impact on FX:Increased intervention could stabilize the CNY.

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

Impact on Shares:

Chinese Market: Potential stabilization of financial sector stocks.

Companies:Major Chinese financial institutions and A-share indices

5

Next week, China's top leaders will hold a high-level meeting, and investors will closely watch for potential winners and losers in China's struggling stock market. The Third Plenary Session, held approximately every five years, typically announces significant economic and political changes, providing clues on Beijing's market and economic direction.

Analysis:

Impact on FX:Increased political attention could stabilize the CNY.

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

Impact on Shares:

Chinese Market: Potential positive impact due to anticipated policy announcements.

Companies:Major Chinese firms, A-share indices

6

Former Morgan Stanley banker-founded Korean private equity firm Hahn & Co. successfully raised $3.4 billion, becoming the largest single-country target fund in Asia this year. Sources say the fundraising included $140 million in co-investments. Asian investors contributed 35% of the funds, while US and Canadian investors contributed 30% and Middle Eastern investors 20%.

Analysis:

Impact on FX:Increased foreign investment could strengthen the KRW.

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

Impact on Shares:

Korean Market: Positive impact on financial and investment sectors.

Companies:Major Korean financial institutions