U.S. stocks ended Wednesday in the red, with technology stocks leading the decline. Fitch downgraded the long-term credit rating for the U.S. and predicted a continued deterioration in the country’s fiscal situation over the next three years. In contrast, U.S. July ADP employment numbers exceeded expectations. 

U.S. Stocks 

Fundamental Analysis: 

Fitch Ratings downgraded the U.S. long-term foreign-currency issuer default rating (IDR) from the highest “AAA” to “AA+,” echoing the move by Standard & Poor’s Global Ratings more than a decade ago.

Both downgrades were due to the U.S. getting caught in fierce debt issues, raising concerns about potential turmoil in the U.S. and global financial markets.  

In 2011, Standard & Poor’s downgraded the U.S. AAA long-term sovereign debt rating by one notch to AA+, causing the S&P 500 index to plummet 6.5% in a single day. 

Large technology stocks experienced widespread declines, with chip stocks taking a significant hit. AMD dropped over 7%, while Nvidia and Intel both fell by more than 4%. Tesla, Google, Amazon, and Microsoft also declined over 2%. 

The semiconductor and solar sectors saw the most significant drops, with Sunworks plummeting over 12%, and Nanometrics and SunPower Corporation falling over 8% and 4%, respectively. U.S. Steel dropped nearly 30%, erasing gains from the previous day.  

On the other hand, agricultural products and insurance broker sectors rose, with Cigna Corporation surging over 8%, Aon gaining over 5%, and Bank of Jinzhou rising over 4%.  

The “Big Four Banks” in the U.S. all declined by over 1%, with Westpac Banking Corporation and KeyCorp both falling by 0.8% and Alliance Western Bancshares down around 1%, although these key regional bank stocks all saw double-digit percentage rebounds in July. 

Technical Analysis:   

(S&P 500 Index, 1-day chart) 

Market Trends: 

• Dow Jones Industrial Average dropped 348.16 points, or 0.98%, to close at 35,282.52 points. 
• Nasdaq Composite fell 310.47 points, or 2.17%, to close at 13,973.45 points. 
• S&P 500 Index declined 63.36 points, or 1.38%, to close at 4,513.37 points. 

Hong Kong Stocks 

Fundamental Analysis: 

Hong Kong stocks opened lower on Wednesday and later extended losses to hit a low of 19,369 points, down 148 points at most. The market showed signs of support near the low levels, leading to a slight recovery.  

The Hang Seng Index (HSI) hit a high of 19,572 points, only gaining 55 points at most. Afterward, it fluctuated near the breakeven point. As of August 3rd, the HSI had declined for two consecutive days, with a total loss of more than 561 points. It seems to have failed to sustain the upward trend seen in July.  

The index experienced a sharp drop yesterday, falling 493 points by the close of the market. The downturn was largely affected by the U.S. credit rating downgrade. On the current day, the market has shown signs of stabilizing, and although there is still a decline, the extent has greatly reduced. 

In terms of sectors, heavyweight technology stocks saw mixed performance, with Kuaishou Technology (1024.HK) and Xiaomi Corporation (1810.HK) rising over 1%, while Alibaba Group Holding Limited (9988.HK) and JD.com, Inc. (9618.HK) dropped over 1%.  

Automobile stocks were the first to rebound, with NIO Inc. (9866.HK) leading the gain at 8.09%, followed by XPeng Inc. (9868.HK), Li Auto Inc. (2015.HK), and BYD Company Limited (1211.HK).  

Biotechnology and casino stocks saw increases, while Evergrande Property Services Group Limited (6666.HK) suffered continuous decline after resuming trading, falling by 46.52%. 

Technical Analysis: 

(Hang Seng Index, 1-day chart) 

Market Trends: 

• Hang Seng Index dropped 0.06% to close at 19,506.11 points. 
• Hang Seng Tech Index rose 0.47%. 
• Hang Seng China Enterprises Index increased 0.03%. 

FTSE China A50 Index 

Fundamental Analysis: 

Overnight declines in European and U.S. stock markets led to a collective drop in A-shares. On the current day, the three major indexes in China’s A-share market opened lower.  

The Shanghai Composite Index initially showed a consolidating trend after opening, briefly turning positive. The Shenzhen Component Index and the ChiNext Index reached highs but then fell back. The ChiNext Index remained in positive territory.  

The total turnover of the Shanghai and Shenzhen stock markets was 474.995 billion yuan, with a net outflow of 1.653 billion yuan of northbound funds. Eighteen stocks hit the daily limit up (including ST stocks), and one stock hit the daily limit down. 

In terms of sectors, food and beverage, photovoltaic equipment, securities, medical services, and chemical pharmaceuticals led the gains, while non-ferrous metals, automobile manufacturing, auto parts, precious metals, and electronic chemicals were among the biggest losers.  

In terms of themes, dairy, contract research organizations (CRO), pre-fabricated vegetables, and HIT batteries were among the most active performers. 

Technical Analysis: 

(SSE Composite Index, 1-day chart) 

Market Trends: 

• Shanghai Composite Index dropped 0.18% to close at 3,255.88 points. 
• Shenzhen Component Index dropped 0.23% to close at 11,078.74 points. 
• ChiNext Index increased 0.2% to close at 2,222.97 points. 
• SSE STAR 50 Index dropped 0.26% to close at 965.95 points. 
  
  

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