The reason why A-shares were sluggish yesterday (24th) is due to 2.5 pieces of bad news.
First, the US Purchasing Managers' Index (PMI) exceeded expectations, boosting rate hike expectations, triggering global bond market sell-offs and putting pressure on stock markets.
*Higher rate hike expectations, bond markets under pressure*
Late Wednesday night (23rd), the preliminary US September PMI came in at 58.4, far exceeding market expectations of 55.3 and reaching the highest level since July 2021. Markets are concerned that the economy is shifting from "resilient" to "overheating," sharply increasing expectations for a Federal Reserve rate hike in October, triggering massive sell-offs in the Treasury market. The yield on US 30-year Treasuries briefly rose to 5.415%, the highest since June 2007; Japan's 5-year government bond yield rose to a record high of 2.365%, while the 10-year surged to 3.075%, the highest since 1996; France's 10-year government bond yield rose to 4.908%, the highest since July 2008. Rising government bond yields have further hit global stock markets, with the Nasdaq closing down 1.1% on Wednesday. The three major A-share indices collectively opened lower, clearly impacted.
Second, Iran's hardline stance compounded by geopolitical risks has driven up oil prices, intensifying inflation and interest rate pressures.
*Rising oil prices intensify pressure*
Recently, the Iranian president stated at the United Nations General Assembly that Iran would not surrender to the US, is willing to negotiate but will not accept threats of force, and cannot allow certain countries to freely use the Strait of Hormuz while simultaneously using the strait to attack Iran. Affected by this, Brent crude rose to around $104 per barrel. Rising oil prices, combined with a sharp increase in US Treasury yields, further intensified inflation concerns. The US 30-year fixed mortgage rate rose to 7.12%, the highest since May 2024, significantly impacting the US real estate market. Both trends point to the same conclusion: expectations of economic overheating and geopolitical risks are jointly pushing up global interest rates, suppressing stock markets, and increasing downward pressure on real estate.
In addition, today (25th) marks the Mid-Autumn Festival short holiday in mainland China, followed shortly by the National Day holiday. By convention, ahead of each short holiday, the A-share market generally shows a trend of shrinking volume consolidation. The core reason is risk-averse capital exiting the market—given uncertainties such as overseas market volatility and exchange rate fluctuations during holidays, some leveraged and short-term speculative funds choose to hold cash and wait, leading to thinner trading activity and gradually declining volume. However, after the holidays, this capital outflow pressure is fully released, and the withdrawn funds gradually return to the market, forming the usual pattern of "lower volume before holidays, higher volume after." Therefore, low trading enthusiasm before holidays is understandable.
Looking ahead, as the short holidays approach, market sentiment remains weak. The key focus going forward will be changes in trading volume. If volume can stabilize and further expand, the market may still have upward momentum. The most significant news at the moment is the meeting between the Chinese and US leaders. We can wait and see whether it will bring positive stimuli. However, major market movements before National Day are unlikely, so more optimism can be reserved for after the holiday.
*Bitcoin options expiry risk*
The other half of the bad news is the pending bitcoin options expiry.
Traders are searching for clues to determine whether the bitcoin rally can continue, and their attention has now turned to a significant event in the derivatives market: the quarterly expiry of options contracts worth approximately $15 billion. On the Deribit platform, over one-third of the outstanding bitcoin options expiring on Friday are linked to the September 25 expiry date. The put-to-call ratio stands at 0.70, indicating market optimism about price increases. The most concentrated strike prices for call options are $85,000, $90,000, and $100,000.
CICC emphasizes the policy direction of Powell. Powell's policy tends to correlate highly with the political cycle: generally hawkish during Democratic presidents' terms but generally dovish during Republican presidents' terms. As Fed Chair nominated by Republican President Trump, Powell has a non-negligible probability of adjusting his policy stance again. It is unwise to linearly extrapolate the current hawkish policy reaction function. Future Fed policy may still shift toward dovishness. In fact, the five special task forces previously proposed by Powell have already reserved room for future adjustments to the policy reaction function. For example, re-evaluating economic data and the inflation framework may alter the Fed's interpretation of inflation risks and one-off price shocks; research on artificial intelligence (AI) and productivity may also reshape the Fed's assessment of potential growth and inflation centers.
Dongwu Securities' view on Hong Kong stocks is: Hong Kong stocks are currently in a slightly rebounding trend. This rebound is more akin to short covering following the temporary resolution of overseas negative factors, rather than being based on fundamental improvements. Overseas risks are difficult to clear all at once and will continue to intermittently disturb the market. A neutral and dynamic allocation approach to Hong Kong stocks is recommended. The rebound can be monitored, but chasing higher prices should be done cautiously; a clear turning point still awaits fundamental improvement. In terms of allocation, it is recommended to hold low-volatility dividend stocks as core positions. Focus on innovative pharmaceuticals and global expansion enterprises, dynamically adjusting according to macroeconomic and geopolitical changes. Additionally, from a medium-to-long-term perspective, focus on downstream and midstream AI sectors.
After today, A-shares will make investment allocations for the Mid-Autumn and National Day holidays. Although A-share trading halts, capital does not stop. Will capital flow, as before, toward where it can stay active? — Senior Investor, Shek King-chuen
(Investing involves risk; every investor has different risk tolerance—always think independently. The author may trade based on market conditions.)
*Articles published in ETNet, signed and/or unsigned, represent the authors' personal opinions and do not reflect ETNet's stance. ETNet plays the role of providing a free speech platform.
First, the US Purchasing Managers' Index (PMI) exceeded expectations, boosting rate hike expectations, triggering global bond market sell-offs and putting pressure on stock markets.
*Higher rate hike expectations, bond markets under pressure*
Late Wednesday night (23rd), the preliminary US September PMI came in at 58.4, far exceeding market expectations of 55.3 and reaching the highest level since July 2021. Markets are concerned that the economy is shifting from "resilient" to "overheating," sharply increasing expectations for a Federal Reserve rate hike in October, triggering massive sell-offs in the Treasury market. The yield on US 30-year Treasuries briefly rose to 5.415%, the highest since June 2007; Japan's 5-year government bond yield rose to a record high of 2.365%, while the 10-year surged to 3.075%, the highest since 1996; France's 10-year government bond yield rose to 4.908%, the highest since July 2008. Rising government bond yields have further hit global stock markets, with the Nasdaq closing down 1.1% on Wednesday. The three major A-share indices collectively opened lower, clearly impacted.
Second, Iran's hardline stance compounded by geopolitical risks has driven up oil prices, intensifying inflation and interest rate pressures.
*Rising oil prices intensify pressure*
Recently, the Iranian president stated at the United Nations General Assembly that Iran would not surrender to the US, is willing to negotiate but will not accept threats of force, and cannot allow certain countries to freely use the Strait of Hormuz while simultaneously using the strait to attack Iran. Affected by this, Brent crude rose to around $104 per barrel. Rising oil prices, combined with a sharp increase in US Treasury yields, further intensified inflation concerns. The US 30-year fixed mortgage rate rose to 7.12%, the highest since May 2024, significantly impacting the US real estate market. Both trends point to the same conclusion: expectations of economic overheating and geopolitical risks are jointly pushing up global interest rates, suppressing stock markets, and increasing downward pressure on real estate.
In addition, today (25th) marks the Mid-Autumn Festival short holiday in mainland China, followed shortly by the National Day holiday. By convention, ahead of each short holiday, the A-share market generally shows a trend of shrinking volume consolidation. The core reason is risk-averse capital exiting the market—given uncertainties such as overseas market volatility and exchange rate fluctuations during holidays, some leveraged and short-term speculative funds choose to hold cash and wait, leading to thinner trading activity and gradually declining volume. However, after the holidays, this capital outflow pressure is fully released, and the withdrawn funds gradually return to the market, forming the usual pattern of "lower volume before holidays, higher volume after." Therefore, low trading enthusiasm before holidays is understandable.
Looking ahead, as the short holidays approach, market sentiment remains weak. The key focus going forward will be changes in trading volume. If volume can stabilize and further expand, the market may still have upward momentum. The most significant news at the moment is the meeting between the Chinese and US leaders. We can wait and see whether it will bring positive stimuli. However, major market movements before National Day are unlikely, so more optimism can be reserved for after the holiday.
*Bitcoin options expiry risk*
The other half of the bad news is the pending bitcoin options expiry.
Traders are searching for clues to determine whether the bitcoin rally can continue, and their attention has now turned to a significant event in the derivatives market: the quarterly expiry of options contracts worth approximately $15 billion. On the Deribit platform, over one-third of the outstanding bitcoin options expiring on Friday are linked to the September 25 expiry date. The put-to-call ratio stands at 0.70, indicating market optimism about price increases. The most concentrated strike prices for call options are $85,000, $90,000, and $100,000.
CICC emphasizes the policy direction of Powell. Powell's policy tends to correlate highly with the political cycle: generally hawkish during Democratic presidents' terms but generally dovish during Republican presidents' terms. As Fed Chair nominated by Republican President Trump, Powell has a non-negligible probability of adjusting his policy stance again. It is unwise to linearly extrapolate the current hawkish policy reaction function. Future Fed policy may still shift toward dovishness. In fact, the five special task forces previously proposed by Powell have already reserved room for future adjustments to the policy reaction function. For example, re-evaluating economic data and the inflation framework may alter the Fed's interpretation of inflation risks and one-off price shocks; research on artificial intelligence (AI) and productivity may also reshape the Fed's assessment of potential growth and inflation centers.
Dongwu Securities' view on Hong Kong stocks is: Hong Kong stocks are currently in a slightly rebounding trend. This rebound is more akin to short covering following the temporary resolution of overseas negative factors, rather than being based on fundamental improvements. Overseas risks are difficult to clear all at once and will continue to intermittently disturb the market. A neutral and dynamic allocation approach to Hong Kong stocks is recommended. The rebound can be monitored, but chasing higher prices should be done cautiously; a clear turning point still awaits fundamental improvement. In terms of allocation, it is recommended to hold low-volatility dividend stocks as core positions. Focus on innovative pharmaceuticals and global expansion enterprises, dynamically adjusting according to macroeconomic and geopolitical changes. Additionally, from a medium-to-long-term perspective, focus on downstream and midstream AI sectors.
After today, A-shares will make investment allocations for the Mid-Autumn and National Day holidays. Although A-share trading halts, capital does not stop. Will capital flow, as before, toward where it can stay active? — Senior Investor, Shek King-chuen
(Investing involves risk; every investor has different risk tolerance—always think independently. The author may trade based on market conditions.)
*Articles published in ETNet, signed and/or unsigned, represent the authors' personal opinions and do not reflect ETNet's stance. ETNet plays the role of providing a free speech platform.
