APAC Equity Daily Wrap 20240904 - Selloff, Nvidia, Yen carry trade, VIX

APAC Equity daily WP September 4th 2024 Asian markets slid weighed down by semiconductor stocks after Nvidia led a Plunge in the US overnight Tokyo and Taipei each slumped over 4% while Soul dropped more than 3% Hong Kong Sydney and Singapore lost over 1% with Shanghai Bangkok and Mumbai also falling Tokyo electron tsmc SK HX Samsung and other Tech Giants led the decline the apparent trigger for the plunge seems similar to last month the usism manufacturing PMI slightly missed estimates reminding investors that bad news is bad news Bloomberg suggested several possible reasons for nvidia's overnight tumble but I believe it may be a continuation of the carry trade unwinding triggered by their quarterly report last Wednesday Nvidia has dropped 16% since then carry trade risks returned to the spotlight yesterday following hawkish comments on rate hikes by boj zua as I mentioned last week the Japanese Yen has shown a stronger correlation with the Philadelphia semiconductor index than with Japan's own topics this year any disappointment in nvidia's report or guidance could significantly impact markets given the stocks weight in US indexes and its high exposure to Yen funded carry trades while the Yen has gained the most against the US dollar among major currencies during Asian hours the performance of us equities tonight particularly tech stocks will reveal whether the carry trade unwinding has intensified vix surged above the 20 Level again last night signaling that the US market is likely to experience significant volatility tonight again regardless of direction if us equities rise it could indicate that large fluctuations will become the norm in September member if they close lower it may confirm that a substantial sell-off is underway