To The Moon

Federal Reserve meeting minutes released on Wednesday local time showed that all 19 officials supported the September rate hike decision, believing it would help guard against further intensifying inflation pressures. In addition, most Fed officials expect another rate hike will be necessary before the end of the year. Some participants believe that AI infrastructure construction could cause medium-term aggregate demand to outpace supply, thereby putting upward pressure on inflation. Furthermore, the Fed should also prepare for stress in the bond market. US stocks edged lower yesterday, with the Dow falling 0.66%, the S&P 500 dropping 0.22%, the Nasdaq slipping 0.22%, and the Philadelphia Semiconductor Index declining 1.15%. Technology leaders showed relative strength, with the Wind US Technology Seven Giants Index closing slightly higher. Among individual stocks, Micron Technology rose 4.06%, Amazon gained 1.41%, Apple added 0.91%, Nvidia fell 0.74%, Tesla dropped 0.75%, and Coherent declined 1.12%. In Chinese concept stocks, the Wind China Concept Technology Leaders Index fell 1.34%, while the Nasdaq Golden Dragon China Index rose 0.12%.

During the National Day holiday, overseas markets were generally stable, with no black swan events on the fundamental front. In US stocks, the market overall trended upward with volatility during the holiday, showing index divergence, with tech growth leading gains. The Nasdaq and S&P 500 once again hit record highs, while the Dow posted modest gains. In Asia-Pacific markets, Japan's Nikkei 225 led strongly during the holiday, benefiting from spillover from the US AI rally, combined with continued recovery in domestic corporate earnings, with capital continuously flowing into Japan's technology and semiconductor equipment sectors. Semiconductor equipment stocks such as Tokyo Electron and Advantest performed notably well. The Korean market fluctuated downward, mainly due to relatively large declines on the 6th and 7th. The Hong Kong market showed relative weakness during the holiday, with the Hang Seng Index and Hang Seng Tech Index falling more than 2% on October 2, before partially narrowing losses. With long-end US Treasury yields continuing to rise, Hong Kong financial heavyweight stocks faced strong pressure. Combined with the closure of Stock Connect during the National Day period, southbound capital — an important marginal buyer of Hong Kong financial heavyweights — could not enter the market, leading to shrinking trading volume.

During the holiday, the US September nonfarm payrolls data was released, showing only 29,000 new jobs, missing market expectations of 90,000, with the previous two months revised down by a combined 60,000. The unemployment rate rose to 4.2%, and wage growth also declined. However, looking at the internal structure, the household survey showed a monthly employment increase of more than 400,000, and the labor force participation rate rose from 61.6% to 61.8%. Combined with ongoing market concerns about the Middle East situation, US Treasury yields did not significantly retreat. On October 5, the US 30-year Treasury yield briefly touched a new high of 5.7%. However, the US stock market did not decline with rising rates; instead, it trended upward with volatility amid extraordinarily strong AI sentiment. The US market is becoming increasingly divergent — employment and high rates have indeed pressured traditional sectors, but AI capital expenditure has not slowed due to high rates, providing confidence support for the market.

Regarding A-shares, looking at the overall September trend, the market showed clear characteristics of consolidation in a low range, with limited downside space for the index and continuously strengthening bottom support. The pessimistic sentiment brought by the sharp July selloff may have been fully digested. In early September, valuations of the continuously adjusted tech growth sectors fell sufficiently, while defensive sectors such as high-dividend, infrastructure, financials, and precious metals rotated to support the market. Market hotspots shifted from single-sector crowding to multi-point diffusion, with sector rotation accelerating and structural opportunities increasing, while overall market resilience remained. In October, the market enters the third-quarter earnings disclosure period, and sentiment is expected to recover. We believe that after the holiday, the A-share market will likely see a catch-up rally after risk appetite was excessively suppressed, especially for core targets in the AI industrial chain. However, the sustainability of the sentiment improvement still needs observation, with attention to A-share trading volume and the degree of third-quarter earnings delivery. If trading volume in the two markets can effectively expand, the continuously suppressed tech growth sectors have valuation repair opportunities; if volume remains sluggish, the market will likely continue its consolidation pattern, and defensive sectors will still offer relative returns.

Overall, external interest rate volatility remains the main risk point. Going forward, key focuses include Fed policy speeches, US Treasury yield trends, and A-share third-quarter earnings delivery. Strategically, the market can be approached optimistically after the holiday, as systemic crash risks have basically been cleared. However, before overseas liquidity uncertainty is fully resolved and A-share trading volume continues to expand and break through, a full trending upward market will still be difficult to launch. At present, the market is in a transition period of chip structure optimization and gradual sentiment recovery. In terms of allocation, focus on tech growth sectors with strong third-quarter earnings certainty, including high-prosperity directions such as computing power, semiconductors, and optical modules. In addition, one can also consider rotation opportunities in defensive sectors such as high-dividend, infrastructure, and consumer, to capture structural opportunities.