Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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Investors continued to rotate out of semiconductors and back into the magnificent seven this week, leaving many of the big names in the industry battered and scarred. The semiconductor sector as a whole has undergone a heavy bout of profit-taking since the end of June and this week was no exception. SanDisk (SNDK) lost 8% on Wednesday and then a further 12% during yesterday’s session; Western Digital (WDC) put in back-to-back 9% losses over the same time frame; Micron (MU) shed 8% and then another 6% the following day, while Advanced Micro Devices (AMD) fared slightly better with 3% and 5% losses respectively. Newly listed SK Hynix is doing the best it can to weather the inevitable post-IPO chaos, but it too succumbed to the negative sentiment by falling 9% and 14% over the last two consecutive sessions. Speaking of post-IPO chaos, SpaceX (SPCX) has officially fallen below its listing price of $135, sinking to just $126 per share in overnight trading after the company was forced to scrub a test launch yesterday evening.
The semiconductor sector as a whole enjoyed fantastic gains up until about the halfway point of the year, but a quick glance at the charts suggests that for many, the time has come to take some money off the table. The 25th of June appears to be the approximate turning point, marking the local bottom for almost all of the magnificent seven, a number of which have undergone impressive rallies since. Apple (AAPL) and Meta Platforms (META) are both up over 20% since last month’s lull, while Microsoft (MSFT) and Amazon (AMZN) have also gained in the double-digit range, suggesting that the flight from semiconductors is not a renunciation of the AI trade itself, but more so a re-evaluation of who seeks to gain the most from it. Tallying everything up, the big seven have added $1.5 trillion in market cap so far this month, while chip and memory stocks have lost around the same amount, balancing out the equation. Looking at US indices as a whole, which have been uncharacteristically dull over the last few weeks, it is easy to see how market participants overlooked the shift.
Unfortunately, the pain in semiconductors may not be over just yet, as the negative sentiment appears to be spilling over into the Japanese markets this morning. The Nikkei 225 lost 4% within the first hour of the opening bell, dragged down by the likes of Advantest and Tokyo Electron, companies intimately linked to semiconductor production. Funnily enough, South Korean markets are closed today due to a national holiday, isolating Korean traders from the damage. Until Monday that is.
Wednesday’s PPI reading did indeed follow suit from the huge drop in consumer prices that surprised markets the day prior, with the headline figure coming in at negative 0.3%, meaning that producer prices went down in June. A certain amount of scepticism is always healthy, but interest rate traders further rejected the notion of a rate hike at the end of the month, with odds now pointing to a 90% chance of a hold during the next FOMC meeting. Whenever the next rate adjustment may arrive, the dollar remains strong, with the DXY still closer to 101 than to 100, which is making life difficult for precious metals investors. Gold could not hold on to $4,000 yesterday and is lingering precariously above the void early this morning. Silver is not looking any better after falling to $55.5 per ounce on Thursday and sinking lower still at the time of writing. Bitcoin is practically euphoric in comparison, settling down to $63,500 per coin but still up 10% from July lows. Not much happening on the Iran front, leaving oil prices to stabilise for now, with the Brent Crude benchmark hovering around $85 per barrel and maintaining a decent gap with West Texas contracts, which are currently sitting at a mere $79.
About the Author
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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