The trading week for A-shares has drawn to a close, and after a choppy session, the market saw a slight recovery as the afternoon progressed. With the weekend ahead, it might be a good time to catch up on some household chores.
By the closing bell, the Shanghai Composite Index fell 1.18%, the Shenzhen Component Index dropped 1.08%, and the ChiNext Index declined 0.49%. The market saw 643 stocks advance, with 40 hitting the daily limit up, while 4,870 stocks declined, with 21 hitting the daily limit down.
AI hardware stocks regained momentum in the afternoon session. Multilayer ceramic capacitor (MLCC) concept stocks rose against the broader trend, with Shuangxing New Material and Fenghua Advanced Technology both hitting their daily limit up. Printed circuit board (PCB) concept stocks also performed actively, with Chongda Technology, Ultrasonic Electronics, and Xiehe Electronics all reaching their daily limit up. In addition, CPO concept stocks saw collective gains.
On the news front, the Federal Communications Commission (FCC) published its final rule on September 10 in the Federal Register, titled "Protecting Against National Security Threats to the Communications Supply Chain Through the Equipment Authorization Program." The most concerning scenario for the market did not materialize: Chinese optical communication supply chain companies, including Zhongji Innolight, Eoptolink Technology, Dongshan Precision, and Tianfu Communication, were not directly included on the FCC's restriction list. The final rule primarily targets a relatively narrow scope: equipment using logic hardware components produced by companies already listed on the FCC's Covered List may not receive equipment authorization.
The defense sector saw a midday rally, with Inner Mongolia First Machinery Group hitting its daily limit up. On the downside, copper and precious metals led the non-ferrous metals sector lower, with Northern Copper hitting its daily limit down. The internet finance sector pulled back sharply, as Cuiwei Shares hit its daily limit down, and Jinlong Shares touched its daily limit down during the session.
Market analysts attribute today's market decline to two main factors: disruptions caused by the Houthi group and rising expectations of a US interest rate hike. Houthi-related disturbances have clogged oil transportation, indirectly pushing up oil prices, which in turn raises inflation risks. This has led investors to price in expectations of further monetary policy tightening by global central banks into stock valuations.
Adding to the market's jitters, an important event awaits this evening: the highly anticipated US Consumer Price Index (CPI) report for August, scheduled for release at 8:30 PM. Economists forecast a 0.4% month-over-month increase and a 3.4% year-over-year rise. This critical data will serve as a key reference for the Federal Reserve's interest rate decision on September 16. According to the CME FedWatch tool, federal funds futures trading suggests a roughly 71% probability of a rate hike.
Analysts note that the CPI report will be pivotal in determining whether the Fed stands pat or raises rates next week. "If the data comes in line with consensus estimates, it would mark the fourth consecutive month of encouraging inflation figures and ease pressure on the Fed to hike in September. However, if inflation data exceeds expectations, we anticipate a rate hike at next week's meeting," said one analyst.
Barclays strategist Emmanuel Cau pointed out that in-line data "would not rule out a rate hike next week." Meanwhile, Tobias Keller, investment strategist at UniCredit, commented: "While Fed tightening could pressure the market in the near term, and a rate hike may trigger periodic volatility, we still believe the broader corporate earnings backdrop remains supportive. As long as the Fed's rate hike cycle broadly aligns with current expectations, and economic growth alongside corporate earnings stays resilient, investors should not mistake short-term fluctuations for a deterioration in the medium-to-long-term outlook of equities."
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