**Major Asset Tracking** The interest rate bond market showed overall volatility, with long-term bonds dipping slightly while short-term bonds edged higher. We maintain our previous view: equities may enter a short-to-mid-term correction, while bonds are expected to remain resilient. However, in a multi-year cycle, the A-share uptrend is unlikely to end, and the long-term downtrend in bonds persists. Target levels: The 30-year government bond may oscillate upward toward annual resistance in the near term, but the long-term target remains near the policy-driven low of September 2024.
**A-Shares: Mid-Term Correction Begins** As anticipated, the A-share market has entered a mid-term correction. Since last week, we have advised investors to remain cautious, adopting a strategy of "fortifying defenses" (dividend stocks), "conserving ammunition" (reducing positions), and "waiting for opportunities." The correction is still in its early stages, with global risk assets declining in tandem. Patience is key to identifying future buying opportunities. While Nvidia’s stronger-than-expected earnings briefly stabilized U.S. stocks, markets soon hit new lows, signaling exhaustion of bullish catalysts. Technically, further downside is likely for U.S. and European equities, which may weigh on A-share risk sentiment. Today, the A-share index broke below the critical 3,920 support level on heavy volume, confirming the mid-term correction. Despite this, the long-term uptrend remains intact—investors should stay patient and preserve dry powder for future entry points.
**U.S. Stocks: Correction Phase Underway** Nvidia’s earnings initially lifted U.S. markets pre-market, but stocks later plunged to fresh intraday lows. Technically, downside momentum has strengthened, warranting caution. The U.S. market is now in a short-to-mid-term adjustment phase, particularly for overextended AI-related valuations. However, with U.S. private sector leverage remaining low and economic resilience intact, the overall correction may be limited. Investors should watch for "buy the dip" opportunities.
**FX Market: RMB Weakens** The onshore yuan closed at 7.1129 against the dollar, down 35 bps from the prior session. Offshore USD/CNH appears to be forming a triple-bottom pattern. Given broad risk-asset weakness, the yuan faces near-term depreciation pressure.
**Commodities: Broad Declines** The Wenhua Commodity Index fell 0.78%, with most sectors down except for corn-related products. Macro-sensitive commodities underperformed, aligning with recent equity market headwinds. As both A-shares and U.S. stocks hover in high-risk zones, and the commodity index weakens technically, a wait-and-see approach is prudent.
**Key Policies & Updates** **Domestic**: 1) National Energy Bureau: October power consumption rose 10.4% YoY to 857.2 billion kWh. 2) Draft standards for new energy vehicle procurement released for public feedback. Multiple A-share-listed company experts, including BYD’s Lian Yubo and CATL’s Wu Kai, elected to the Chinese Academy of Engineering.
**International**: 1) OpenAI partners with Foxconn. 2) Chicago Fed President Goolsbee expresses unease over inflation fluctuations.
**Trading Strategies** - **Bonds**: Near-term volatility with upside bias; long-term downtrend unchanged (target: Sept 2024 low). - **A-Shares**: Defensive positioning (dividends), reduced exposure, and patience for re-entry. - **U.S. Stocks**: Await dip-buying opportunities as downside risks emerge. - **FX**: Yuan likely to weaken. - **Commodities**: Stay sidelined.
**Risk Warnings** 1. Escalating trade tensions. 2. Heightened geopolitical risks. 3. European sovereign credit risks.
Comments