U.S. stocks have fallen into a skyrocketing pattern in recent days, which has also caused the Asia-Pacific markets to follow the ebb and flow.

  Beijing time opened on Tuesday evening, and the three major U.S. stock indexes opened higher collectively. The Dow rose 2.03%, the Nasdaq rose 2.67%, and the S&P 500 rose 2.25%; star technology stocks generally rose, Tesla, Nvidia, Amazon rose more than 4% , Apple rose more than 2%; popular Chinese concept stocks rose, Weilai rose more than 7%, and Xiaopeng Motors rose more than 5%.

Yesterday, the three major U.S. stock indexes also closed sharply higher. The strong financial report of Bank of America and the withdrawal of tax cuts in the United Kingdom boosted market optimism. The Nasdaq rose as high as 3.43% (the largest single-day increase in nearly 3 months), and the S&P 500 rose 2.65%.

  On October 18, the Hang Seng Index closed up 1.82%, and the Hang Seng Technology Index rose 4.25%.

Does the sharp rise and fall of the peripheral market mean that the bottom is coming?

How will this affect the Chinese market?

The technical side temporarily dominates

  The bear market in U.S. stocks is far from over, and in addition to the "kill valuation" that may be caused by the Federal Reserve's sharp interest rate hike, the decline in earnings will continue to accelerate.

However, the current rally has technically prevailed after a full year of slumps.

  “Last week’s obsession with U.S. CPI/PPI (higher than expected) could be a trap for the ‘inflation bulls’. U.S. stocks’ 200-week moving average is an important bottom for support until corporate earnings are cut sharply or a recession officially hits (both The situation may take several months) and trigger a technical rebound in the short term." Morgan Stanley Chief Investment Officer Michael Wilson (Michael Wilson) recently said.

Wilson is the vanguard of Wall Street’s bearish U.S. stock market this year. When more institutions’ forecasts for the S&P 500 were still at 4,300, Morgan Stanley had already adjusted it to 3,600.

It can be seen that the "big bears" have also tended to be cautious recently.

  The reason why the S&P 500 index plummeted by 3% last Thursday due to high inflation data, and then quickly rebounded by more than 2%, is also related to technical factors.

"One of the possible reasons is the automatic triggering of buying near the 200-week moving average." A trader in the prime brokerage business of a foreign investment bank told reporters.

After all, since the beginning of this year, the S&P 500 has fallen by nearly 25%, and the decline in September alone is close to 10%. The stock index has retraced from above 4800 to 3600.

  Wilson said that for some time to come, technicals are likely to prevail.

Yet inflation figures are lagging economic data that tell us very little about the future.

“Inflation has peaked, in our view, and will likely come back down quickly next year. This could lead to lower long-term interest rates, which could be supportive for equities until earnings are cut as we expect or a full-blown recession arrives. A wave of possible A tactical rebound in trade looks likely."

  In addition, the strongest seasonal effects of the year cannot be ignored.

November and December are the best seasons of the year for US stocks, and the "Christmas rebound" is also coming.

Statistics show that the median return in both November and December has been 2.1%, and the winning rate has been as high as 71% since 1985.

  U.S. corporate buybacks may accelerate in the future.

The latest share buyback tax proposed in the bill, which requires a 1% excise tax on the value of a company's share buybacks, has attracted much attention after President Biden signed the 2022 Inflation Reduction Act into effect.

Companies will prefer to execute buybacks by 2023 to avoid being taxed.

Goldman Sachs research shows that buybacks totaled as much as $190 billion over the past two months, or $4.5 billion a day.

It will probably reach $5 billion a day after November.

  In addition, positive factors in the United Kingdom also contributed to the rebound in global markets.

Overnight the new chancellor, Jerry Hunt, decided to scrap almost all the tax cuts that Prime Minister Truss had proposed in the government's mini-budget a few weeks ago, as he firmly believed it was incorrect to borrow for the sake of tax cuts that had previously cost the UK government debt. Soaring yields and bursting UK pensions sparked global panic.

The new measures pushed the yields of government bonds down, driving European and American stock markets to recover.

Hong Kong stocks rebound sharply

  Driven by the favorable overseas market, on October 18, the Hang Seng Index closed up 1.82%, and the Hang Seng Technology Index rose 4.25%. Biomedical and Apple concept stocks were among the top gainers. Technology stocks generally rose. BYD Electronics rose by more than 10%. Baiji China and Kingsoft rose more than 9%.

  The reason for the rebound of Hong Kong stocks is similar to that of US stocks.

"Hong Kong stocks are seriously oversold. Although the U.S. recession risk is dark, there should be trading opportunities." Sirui Research previously said.

From a technical perspective, both the relative strength indicator and the proportion of constituents above its 200-day moving average are at one of the lowest levels in history.

  The agency also mentioned that China's 10-year government bond yields have actually begun to rise, which is contrary to the price trend of China's growth assets represented by Chinese stocks. The rise in bond yields is likely to mean growth recovery, although this The recovery is likely to be modest, and growth assets will follow suit.

  However, how long the technical rebound will last is still an unresolved issue. The market may still return to its fundamentals. The Fed will raise interest rates by at least 150BP this year. It is expected that the final federal funds rate next year may reach 4.8% or more.

  “Considering that the Fed’s rate hike cycle is not over yet, and the market seems to have a fluke on the Fed’s future easing path, overseas liquidity risks will continue to disrupt the index’s valuation expansion. Given liquidity pressures remain and earnings growth has yet to solidify , we believe that the current rebound of the Hang Seng Index is highly likely to be technical." Tan Chun, a strategist at Bank of Communications International, previously mentioned to reporters.

Mainland stock and bond markets fluctuate

  Entering the second half of October, most institutions predict that the stock and bond markets in mainland China may enter a range-bound state.

  As far as the bond market is concerned, the unexpected drop in the medium-term lending facility (MLF) interest rate in August has stimulated the bond market's enthusiasm for long.

However, starting in September, the capital center slowly rose, the PMI data rebounded in September, and institutions began to reduce leverage and shorten the duration of transactions, the interest rate continued to adjust in the last week of the month, and the 10-year treasury bond yield rose from 2.67% to 2.755% nearby.

The key term treasury bond interest rates rose by 3~11BP, and the yield curve generally showed signs of bear steepening.

On October 18, the yield on the 10-year Treasury bond was around 2.72%.

  Wang Qiangsong, head of the financial market research department of Southern Bank, told reporters that at present, the interest rate trading space is narrow, and the cost-effectiveness of adding positions is not high, so you can consider reducing positions.

The impact of property loosening and social financing improvements was largely priced in at the end of September.

At present, the weak economy and counter-cyclical policies are expected to compete with each other, the volatility of the bond market is expected to intensify, and inflation supports the hawks of the Federal Reserve. U.S. bonds may disturb the domestic bond market. It is expected that the trend of the bond market will be more tangled and volatile in October. The 10-year treasury bond rate will fluctuate within a range of 2.7% to 2.78%.

  In addition, there is still the possibility of a RRR cut after October.

Wu Zhaoyin, director of macro strategy at AVIC Trust, said: "China's CPI in September was 2.8% year-on-year, 3% lower than expected; PPI was 0.9% year-on-year, 1.1% lower than expected. The US inflation rate was higher than expected, and China's inflation rate was lower than expected. , reflecting that China's monetary policy still has room for easing, the money supply can still be expanded, and interest rates still have room to fall, that is, interest rate cuts and RRR cuts are still possible."

  Beginning last week, A-shares experienced a rebound, with the Shanghai Composite Index down 0.13% on Monday.

"In fact, China's currency data in September did exceed expectations. The liquidity in October was still relatively sufficient, providing a better monetary environment for stocks and bonds. In addition, October is still a window for the Fed to raise interest rates. Therefore, the October The stock market is still not pessimistic." Wu Zhaoyin said.

  Similar to Hong Kong stocks and U.S. stocks, the valuation of A-shares is also at a low level. If there are positive factors, there is likely to be a technical rebound.

Goldman Sachs Asia-Pacific chief economist Andrew Tilton previously said that the current A-share stock valuation has implied a higher risk premium.

On Friday, the MSCI China index traded at 9 times forward earnings, 1.2 standard deviations below its 10-year average.

In addition, the current position of international investors in the Chinese market is generally relatively light. For example, overseas mutual funds have underweighted about 400BP (the allocation level weighted by asset management scale) to the Chinese stock market, which is at a lower position in the historical range, and hedge funds The position of the company is also relatively low, which means that a lot of risks have been reflected in the market price to some extent.