From NASDAQ: 2024-07-26 14:57:02

Stock indices experienced their worst day in over 18 months due to disappointing earnings from Tesla and Alphabet. The S&P 500 fell by 2.3%, the Nasdaq Composite dropped 3.6%, driven by AI stocks. Market corrections were attributed to the Japanese yen’s unexpected rise, impacting tech stocks and leading to a potential financial avalanche.

The one-way trade on the Japanese yen saw a rapid reversal with a more than 1% increase against the dollar, breaking key levels. This shift influenced tech stocks, with Nasdaq falling by 7% during the yen’s rise. Speculation on Fed rate cuts and potential BOJ rate hikes contributed to the yen’s surge and tech’s decline.

Hedge funds heavily invested in short yen/long tech trades faced pressure amid the yen’s unexpected strengthening. The market rotation highlighted the risks of one-way bets as momentum shifted. For investors looking to adapt, a focus on the yen’s undervaluation and potential ETF plays like Invesco CurrencyShares Japanese Yen Trust (FXY) might hold opportunities.



Read more at NASDAQ: Did the Japanese Yen Cause the Tech Selloff?