- The financial reports of tech giants have raised concerns about cash flow, putting pressure on global tech stocks last week. The three major U.S. stock indices rebounded slightly, closing the week with a gain of about 1% after the Federal Reserve's decision to hold steady. However, the Philadelphia Semiconductor Index fell by 4.3% against the trend, and major Asian stock indices also retreated.
- The Federal Reserve's interest rate decision kept the benchmark rate unchanged, with the 10-year U.S. Treasury yield remaining at a high range of 4.7%. Meanwhile, fluctuating U.S.-Iran tensions led to a drop in oil prices below $85 per barrel. Inflation indicators and the dollar index fell, keeping gold at the $4,000 per ounce mark.
- This week's market focus will be on the U.S. July non-farm employment report, U.S.-Taiwan July manufacturing PMI data, and Taiwan's July export performance. Boosted by strong demand for AI computing power, Taiwan's export growth rate is expected to remain high.
Tech Sector High-Level Correction and Global Market Divergence
Last week, global tech stocks faced valuation reassessment pressure, as large tech companies' financial reports revealed concerns about shrinking free cash flow, prompting profit-taking. The three major U.S. stock indices maintained a gain of about 1% for the week, but the Philadelphia Semiconductor Index SOX fell by 4.3% due to the drag from chip stocks. Meanwhile, risk aversion increased in Asian markets, with South Korea's KOSPI and Taiwan's TWII indices falling by 1.42% and 1.23%, respectively. If subsequent capital expenditures by tech giants do not translate into actual profit growth, risk asset preferences may be further squeezed.
Central Bank Policy Watch and Multi-Asset Volatility
The Federal Reserve chose to hold steady at its latest policy meeting, in line with market expectations, with the 10-year U.S. Treasury yield remaining at a high of 4.7%. In terms of geopolitical situations, fluctuating U.S.-Iran tensions led to a rise and fall in the oil market, with West Texas Intermediate crude oil prices falling back below $85 per barrel. The accompanying U.S. PCE inflation data showed stable performance, the dollar index DXY fell below the 100 mark, and London gold remained volatile at $4,000 per ounce. If inflation data continues to slow, market expectations for a future shift in monetary policy may be repriced.
U.S. Labor Market and Macro Economic Verification
The U.S. July non-farm employment report will be released this Friday, with the market expecting an increase of 88,000 non-farm jobs in June and the unemployment rate to remain at 4.2%. The stable performance of the labor market reflects the resilience of the U.S. economy, which has not yet fallen into a deep slump. Meanwhile, the U.S. manufacturing PMI for July is expected to rise from the previous value of 53.3 to 54.0, continuing to remain in the expansion range. If both the manufacturing PMI and employment data meet expectations, the Federal Reserve's policy space to maintain high interest rates for a longer period will be further consolidated.
Computing Power Demand Supports Taiwan's Export and Manufacturing Prosperity
Driven by the continued expansion of global AI computing infrastructure, Taiwan's July export value is expected to reach between $76 billion and $78.8 billion, with a year-on-year increase expected to be between 34% and 39%. Strong orders in the tech industry are likely to keep Taiwan's July manufacturing PMI above the 50 threshold, indicating that demand across the supply chain remains high. Despite geopolitical and external market fluctuations, as long as AI hardware demand remains strong, the profitability resilience of the Asia-Pacific electronics supply chain will continue to provide fundamental support to regional markets.
