Significant positive developments in Middle Eastern geopolitical events have led to substantial gains across major indices today, with most broad-based indexes advancing and trading volume expanding in both markets. The Shanghai Composite Index rose 2.70% to 3,995 points, while the ChiNext Index surged 5.91%. Hong Kong's Hang Seng Index also recorded a strong increase, climbing 3.05% by the close of A-share trading. Combined turnover across the two markets expanded to over 2.4 trillion yuan.
According to WIND data, 29 of the 31 primary Shenwan industries closed higher, with only petroleum & petrochemicals and coal sectors declining. The market displayed broad-based gains among individual stocks. Communications, electronics, media, computers, and non-ferrous metals led the advances with increases of 6.96%, 6.60%, 6.52%, 6.45%, and 5.99% respectively. Meanwhile, petroleum & petrochemicals, coal, banking, agriculture, and food & beverage sectors underperformed. Among more than 5,300 stocks in the market, 5,146 registered gains, indicating strong profit-making effects.
The sudden easing of Middle Eastern tensions, marked by a two-week ceasefire and planned negotiations between the US and Iran, has rapidly improved market sentiment. As geopolitical-induced market volatility shows temporary relief, oil prices experienced their largest single-day drop in nearly six years, global equities rallied sharply, and expectations for Federal Reserve rate cuts have reignited. Following the news, West Texas Intermediate crude plunged over 19% at one point, while Brent crude fell 13% to $94.50 per barrel, breaking below the $100 threshold. The MSCI Asia-Pacific stock index jumped 5% to a five-week high, European stock futures surged 5.3%, and US stock futures gained over 2.5%. US Treasury yields declined, the dollar weakened, and gold prices advanced significantly.
In A-shares, major indices opened higher and continued climbing, with growth sectors staging a collective rebound while petroleum & petrochemicals retreated. Driven by the major geopolitical breakthrough, A-shares opened substantially higher today, with all three major indices gapping up at the open. The benchmark index jumped more than 1% at the opening and maintained upward momentum throughout the session, eventually closing 2.70% higher in a clear unilateral advance. Market structure analysis indicates this represents a systematic recovery driven by risk appetite improvement. Previous market pricing had incorporated considerable pessimism regarding geopolitical conflicts, evidenced by continuously shrinking turnover and declining turnover rates in growth-style stocks, suggesting capital had adopted a cautious or defensive stance. The ceasefire announcement effectively broke the negative expectation framework, causing investor risk preference to rebound rapidly within a short period. Historical patterns show such emotional "V-shaped reversals" often lead to swift index-level recoveries, particularly when no fundamental deterioration occurred previously.
Today's capital flows demonstrated clear "repositioning and chasing" characteristics. On one hand, funds that had withdrawn due to risk aversion began returning quickly to equity markets, especially institutional capital making passive additions from underweight positions. On the other hand, short-term capital entered promptly after confirming the sentiment inflection point, significantly boosting market activity.
Sector performance revealed leadership from high-volatility segments. Growth sectors previously suppressed by geopolitical tensions, along with liquidity-sensitive areas like technology, showed notable rebounds. Meanwhile, some pro-cyclical sectors strengthened alongside improved global risk appetite. In contrast, defensive assets that had resisted declines earlier (such as utilities, coal, and banking) relatively underperformed. This style rotation essentially reflects the market's transition from defensive to offensive positioning. Overall, today's substantial A-share gains represent a typical sentiment-driven rebound, fueled by external risk mitigation, improved global liquidity expectations, and domestic policy support. The core features include rapid risk appetite recovery and synchronized capital flow improvements.
Looking ahead, following short-term pessimism alleviation, further upside potential may depend on new oil price equilibrium feedback. The two-week ceasefire agreement substantially reduces the likelihood of further Middle East conflict escalation, reflecting third-party intervention effects on the three participating parties. All conflict participants have demonstrated preference for diplomatic resolutions. Consequently, with downward risks largely released after previous corrections, markets are experiencing a phased rebound primarily driven by liquidity improvements and risk appetite recovery. However, from a medium-term perspective, certain oil and gas infrastructure damage persists from the conflict, while Iran-led strait mechanisms face additional geopolitical premiums from potential toll charges. Furthermore, considerable uncertainty remains regarding future negotiation processes among conflict parties. Therefore, the new oil price equilibrium post-conflict easing will still impact second-quarter macroeconomic conditions, with stagflation challenges to the global economy persisting, though China remains relatively less affected. Current assessment suggests that after short-term recovery, market focus will shift from valuation repair to earnings leadership. During this transition, global stagflationary pressures' impact on economic realities will become increasingly important, potentially revealing new structural opportunities through changes in corporate profit margins compared to pre-conflict levels.
Regarding sector allocation, investors should optimize portfolio structures during broad rallies while maintaining balanced exposure to upstream energy/midstream leaders and technology focus for medium-term positioning. Within value segments, beneficiaries of stagflation-driven price increases—such as coal, oil & gas extraction, and aquaculture—maintain phased allocation value amid elevated oil price trends. Any price declines due to conflict resolution trading could present allocation opportunities. Midstream leaders like chemicals and engineering machinery may offset limited demand contraction through overseas market share expansion. Additionally, improved liquidity from geopolitical easing and changing international dynamics will support precious metals through central bank gold purchases in both short and medium terms. For technology growth segments, focus should remain on companies with solid earnings and order-backed industry trends. Continued emphasis on computing power, semiconductor equipment, and materials remains advisable. Given relatively limited recent tech corrections (reflecting foreign market optimism about conflict prospects), short-term additions should target oversold positions with medium-term industry trend realization, prioritizing new energy areas like energy storage, wind power, and grid infrastructure.
Risk Disclosure: The views, analysis, and forecasts referenced herein represent personal opinions based on specific market conditions and certain assumptions, not necessarily suitable for all future market environments. Past performance of relevant indexes and sectors does not indicate future results or fund performance, and should not constitute investment advice. Historical fund performance does not guarantee future results, and past performance of other funds managed by the fund manager does not predict future fund performance. Previous holdings do not represent current or future positioning and should not be considered investment recommendations. Investing involves risks requiring careful consideration. Before making investment decisions, please carefully review fund contracts, prospectuses, product summaries, and other legal documents along with this risk disclosure, fully understand risk-return characteristics and product features, seriously consider all risk factors, and assess your risk tolerance based on investment objectives, time horizon, experience, and financial situation. Make rational and prudent decisions after understanding product details and suitability opinions. This document does not constitute investment recommendations or guarantees for any business and is not a legal document. No liability is assumed for any losses resulting from use of this content in whole or in part.
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