Global Market Impacts from Political, Economic, and Corporate Developments

1

Japan plans to introduce a new pre-screening system from January next year to handle the increasing number of tourists, starting with visitors from Taiwan. This new system will allow travelers to complete most of the entry screening before departure, shortening entry procedures upon arrival.

Analysis:

Impact on FX:Increased tourism could strengthen the JPY.

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

Impact on Shares:

Japanese Market: Positive impact on tourism and travel-related stocks.

Companies:Japan Airlines (9201.T), ANA Holdings (9202.T)

2

The Taiwanese dollar fell to its lowest level against the US dollar in eight years due to increased foreign capital outflows. The sell-off in semiconductor stocks, especially Taiwan Semiconductor Manufacturing Company (TSMC), exacerbated the depreciation of the TWD. The TWD fell about 0.4% on Friday to 32.74 per USD, the lowest level since 2016. Global funds sold $1.79 billion of Taiwanese stocks on Thursday, the highest single-day outflow since April, marking the fifth consecutive day of outflows.

Analysis:

Impact on FX:Continued capital outflows could weaken the TWD.

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

Impact on Shares:

Taiwanese Market: Negative impact on semiconductor and technology stocks.

Companies:Taiwan Semiconductor Manufacturing Company (TSMC), Hon Hai Precision Industry (2317.TW)

3

Netflix added 8.05 million users in the second quarter, far exceeding analysts' expectations of 4.87 million, and raised its full-year sales and profit margin estimates. The company attributed the growth to cracking down on password sharing and introducing a low-cost ad subscription plan, with nearly half of new users in the markets where the plan is offered opting for the low-cost plan. (Strong US consumer demand)

Analysis:

Impact on FX:Strong corporate earnings could strengthen the USD.

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

Impact on Shares:

US Market: Positive impact on technology and media stocks.

Companies:Netflix (NFLX), Walt Disney Company (DIS)

4

Israeli officials are considering transferring control of the Rafah border crossing in Gaza to the EU and the Palestinians. Despite Prime Minister Netanyahu's opposition to relinquishing control of the crossing, Israeli officials are negotiating with the EU and the US on this proposal. If implemented, the agreement could signal the end of the conflict between Israel and Hamas and allow more aid into the heavily damaged Palestinian territories.

Analysis:

Impact on FX:Reduced geopolitical tensions could weaken the USD as safe-haven demand decreases.

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

Impact on Shares:

Global Market: Positive impact on market sentiment.

Companies:General Market Indices

5

Hawaiian Electric Industries Inc. has reached a preliminary settlement exceeding $4 billion with other companies and government agencies to resolve hundreds of lawsuits stemming from last year's Maui wildfires. The fires caused an estimated $5.5 billion in damages, destroying 2,207 structures, most of which were homes.

Analysis:

Impact on FX:Large settlement payments could weaken the USD.

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

Impact on Shares:

US Utility Market: Negative impact on Hawaiian Electric and related utility stocks.

Companies:Hawaiian Electric Industries Inc. (HE)

6

Texas's largest public pension fund, the Teacher Retirement System of Texas, has decided to withdraw nearly $10 billion from private equity investments. This decision is a blow to the asset class, which has faced increased scrutiny in recent years as exit speeds have slowed and returns have diminished.

Analysis:

Impact on FX:Reduced investment in private equity could weaken the USD.

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

Impact on Shares:

US Financial Market: Negative impact on private equity firms.

Companies:Blackstone Group (BX), KKR & Co. (KKR)

7

Japan's inflation rate accelerated for the second consecutive month in June, prompting the Bank of Japan (BOJ) to consider raising interest rates at its policy meeting later this month. Consumer prices excluding fresh food rose 2.6% year-on-year, up from 2.5% in May. Although the increase was slightly below economists' expectations of 2.7%, it has remained above the BOJ's 2% target for 27 consecutive months.

Analysis:

Impact on FX:Increased likelihood of a rate hike could strengthen the JPY.

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

Impact on Shares:

Japanese Market: Potentially negative impact on export-dependent stocks, positive impact on financial stocks.

Companies:Mitsubishi UFJ Financial Group (8306.T), Toyota (7203.T)

8

Despite Labour's overwhelming victory in the elections, it has had little impact on UK consumer confidence. According to GfK data, the confidence index rose by 1 point in July to -13, marking the fourth consecutive month of improvement and the highest level since September 2021. The July survey covered the period of the election and the European Football Championship. The data shows that despite Labour's landslide victory on July 4, households remain cautious due to the new government's warning of limited room for increased spending and tax cuts. GfK's Client Strategy Director Joe Staton stated that the election and England's performance in the Euros “may have lifted the nation's mood, but the positive impact on confidence appears limited.”

Analysis:

Impact on FX:Limited impact on the GBP.

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

Impact on Shares:

UK Market: Limited impact on consumer stocks.

Companies:General Market Indices

9

According to a recent report by Goldman Sachs, Nvidia plans to showcase specific cases of how its end customers are profiting from AI chips during its upcoming second-quarter earnings call. This could quell criticisms of AI. Goldman Sachs expects Nvidia to exceed expectations again in its earnings report at the end of August. After meeting with Nvidia CFO Colette Kress, Goldman analysts learned that Nvidia plans to provide data on the return on investment for customers using its AI chips to boost investor confidence.

Analysis:

Impact on FX:Positive corporate news could strengthen the USD.

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

Impact on Shares:

US Technology Market: Positive impact on Nvidia and related tech stocks.

Companies:Nvidia (NVDA), Advanced Micro Devices (AMD)

10

Oil prices fell on Friday, with Brent crude dropping 51 cents to $84.50 per barrel, down 0.6%, and West Texas Intermediate (WTI) futures falling 72 cents to $82.10 per barrel, down 0.9%, as mixed economic signals affected investor sentiment and boosted the USD. Oil prices are expected to decline for the second consecutive week.

Analysis:

Impact on FX:Lower oil prices could weaken oil-exporting currencies.

FX Pair:USD/CAD, USD/NOK, USD/RUB

Impact on Shares:

Global Energy Market: Negative impact on energy sector stocks.

Companies:ExxonMobil (XOM), Chevron (CVX), Schlumberger (SLB)

11

Samsung Electronics Co. has agreed to resume negotiations with the union organizing a strike at its chip manufacturing plant, as the unprecedented labor action threatens to enter its third week. According to Samsung and union representatives, executives from South Korea's largest company will meet with union leaders on Friday to discuss the framework and timetable for wage negotiations. This month's series of strikes and protests mark the largest and most widespread labor protests in Samsung's half-century history. Samsung's largest union, with over 30,000 members, called for employees to strike at an advanced AI storage chip plant and other factories around Seoul, signaling a shift in strategy after the campaign for higher wages showed signs of losing momentum.

Analysis:

Impact on FX:Prolonged labor unrest could weaken the KRW.

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

Impact on Shares:

South Korean Market: Negative impact on semiconductor and technology stocks.

Companies:Samsung Electronics (005930.KS), SK Hynix (000660.KS)