Plunge! Fuse! What happened in the European and American stock markets last night is still haunting market sentiment. However, on the morning of the 10th, after the three major domestic stock indexes opened low and rebounded, they all bottomed out and rebounded. They turned strong and became a “V-shaped” trend.

Shanghai Stock Index morning chart on the 10th

In the early morning of the 10th, the three major A-share indexes opened lower. The Shanghai index fell 0.83% to 2918.93 points; the Shenzhen Component Index fell 0.82% to 11016.92 points; the ChiNext Index fell 0.47% to 2083.20 points.

After the three major stock indexes opened lower, they entered a slight shock situation, and then, driven by technology and securities stocks, they rose strongly.

As of midday closing, the Shanghai Index rose 0.62% to 2961.54 points; the Shenzhen Component Index rose 0.88% to 11206.56 points; the GEM Index rose 0.83% to 2110.45 points.

Top 10 A-shares gainers

The leading indicator of the stock market, the FTSE China A50 stock index futures, performed even more strongly, and took the lead in the night to rise, and in the early morning, the FTSE China A50 stock index futures further rose upward, and now rose more than 4%.

FTSE China A50 Stock Index Futures Chart

What happened in the European and American markets?

Due to Russia's refusal to reduce production at the OPEC + policy meeting on March 6, OPEC and its allies of the oil-producing countries failed to reach any agreement to reduce production. Crude oil prices in the United States and other foreign markets have experienced the largest discounts in more than 20 years. The price of oil has renewed after a lapse of 6 years, causing panic selling in financial markets.

On the 9th, international crude oil prices plummeted, falling by over 30% at one time, refreshing the largest intraday intraday drop in history. NYMEX crude oil futures closed down 26.74% to 30.24 US dollars / barrel, the lowest since February 2016; Brent crude oil futures fell 26.24% to 33.39 US dollars / barrel, both creating the largest one-day drop since the 1991 Gulf War.

On the same day, the Dow Jones Index plummeted by more than 2,000 points, closing down 7.79%, the largest one-day drop since 2008; the S & P 500 Index fell 7.60%, and the Nasdaq Index fell 7.29%. Oil stocks fell sharply, Chevron fell more than 15%, leading the Dow. The intraday lows of the Dow Jones Index fell by nearly 20% compared with the historical highs set by the second round of bull markets, and entered a technical bear market range. At the beginning of the trading session, due to the decline of the stock index by 7%, there was a second meltdown in US stock history. Trading was suspended for 15 minutes, but the fuse was not triggered again after trading resumed.

On the same day, the main European stock indexes closed down across the board, and several stock indexes entered a technical bear market. The British FTSE 100 index fell 7.69%, the French CAC40 index closed 8.39%, and the German DAX index fell 7.94%. Among them, the German DAX index, the French CAC40 index, the Italian FTSE MIB index, the European Stoxx 50 index and the British FTSE 100 index entered a technical bear market.

Data map. China News Agency issued a photo by Wu Junjie

Will A shares be affected?

On the 9th, the Shanghai Composite Index fell 3.01%, the Shenzhen Stock Exchange Index fell 4.09%, and the GEM Index fell 4.55%. Throughout the day, the turnover of the two cities exceeded one trillion yuan, and the net outflow of foreign capital exceeded 14 billion yuan. Affected by the plunge in the European and American stock markets overnight, many people worry that the A-share market will be affected and fall sharply.

According to the latest research report of Founder Securities, the decline in economic stall is the most important reason for the end of the US bull market, and the emergence of important catalysts will accelerate the exposure of downside risks to the economy. Whether the China-US business cycle is synchronized determines the response of A-shares to the end of the U.S. bull market. If the Sino-US economic trend diverges briefly, A-shares may rise against the trend, such as in 2000; Fell, as in 2007. If the U.S. stock bull market ends, the A-share probability will decline simultaneously but the decline will be much smaller than that of the U.S. stocks.

However, domestic securities research institutions such as Great Wall Securities believe that China's securities market has shown very obvious value resilience against the backdrop of a global downturn, and RMB assets are expected to become a safe haven for global funds.

Ren Zeping, chief economist and dean of the Evergrande Group, said that the current global epidemic factors and the plunge in crude oil have a short-term impact on A shares. The recent sharp decline in A-shares has fully absorbed the impact of the domestic epidemic. The recent market shock is a concern for external markets. The stock market is a barometer of economic confidence and economic expectations. China's economy is sufficiently resilient and its potential has not been fully released Out, the global allocation value of A shares is still obvious.

China Everbright Securities even emphasized that A-shares have increased immunity to overseas fluctuations. If they continue to fall, they can consider buying gradually. It believes that the fundamental reason for the sharp decline in US stocks is that its valuation under the "buffalo" is too expensive. Under the analysis framework of the policy economic cycle, it is not only economic data that determines the market trend, but also policy tightening. Oil prices fell sharply more than expected, reducing the risk of domestic stagnation in the near future and broadening the scope for policy easing.

Author: Cheng Chunyu