U.S. stocks fell sharply on Tuesday night, and the decline narrowed. The Dow Jones index fell 129 points to end, but the real storm was in the commodity market. Oil prices fell by more than 9% at one point amid worries regarding recession, and the price of gold broke through $1,800 a barrel. A sharp drop, if the pace of water collection in the United States and Europe remains unchanged, I believe that the asset ebb will continue to emerge.
As the epidemic subsides and the economy returns to normal, the central banks of the United States and Europe, which had previously released water, have successively tightened their money. The outbreak of the Russian-Ukrainian war has caused inflation to rise, disrupting the central bank’s wishful thinking of safe retreat, and it has become a dangerous situation facing both inflation and recession. Is the market facing a rapid decline in inflation or a rapid economic recession? If inflation recedes rapidly, the economy may have a soft landing, and if the economy declines rapidly, there is a chance of stagflation, which is quite “selective”.
Recession expectations weigh on sector valuations
At present, the market is increasingly divided on oil prices, and the latest to play the role of a cold friend is the big bank Citi. Citi estimates that oil prices will reach $65 by the end of this year and may fall to $45 by the end of next year. The rationale for the analysis is that every time there is a recession, it is difficult for oil prices to be significantly higher than production costs. JPMorgan Chase is betting on the opposite, if Russia really cuts production by 5 million barrels a day, the most optimistic forecast is $380 per barrel. Oil prices are shrouded in double fog due to the impact of the economic boom on demand and the impact of the Russian-Ukrainian war on supply, resulting in serious divergences in the market outlook for major banks.
Since energy prices are a major factor driving up inflation, a drop in oil prices can ease inflation to a certain extent, so a drop in oil prices is good news for the stock market, which explains why the decline in U.S. stocks was relatively mild while oil prices fell sharply. However, this round of decline in oil prices is mainly due to concerns that the economic slowdown will affect demand, not to solve supply shortages. Under the insistence of the United States and Europe on sanctions once morest Russia, we have not seen that oil supply can be balanced, and whether oil prices can fall to a level that can effectively alleviate inflation and There are still big doubts regarding maintaining it; in other words, the suspension of interest rate hikes has not fallen, and whether it is the stock market or the commodity market, the volatility will continue to remain.
Oil prices fell, while US bonds fell, short-term interest rates were higher than long-term interest rates, reflecting that more and more people believe that there is a recession in the market. Now we need to see whether the downward spiral will accelerate. In a bearish atmosphere, mainland A shares remain weak , the Shanghai Composite Index closed down 1.4%. After the Hang Seng Index opened lower, the trend repeated downwards. It rebounded in the late market, and the decline was halved to 21,586 points, down 266 points, or 1.2%; the state-owned enterprise index closed at 7,545 points, down 96 points; It closed at 4801 points, down 59 points, with a turnover of 141.2 billion yuan.
Weaker U.S. economy has become the focus of the dominant market. “Three barrels of oil” followed oil prices down. CNOOC (883) fell 5% to close at 9.9 yuan, being the worst performing blue-chip stock; PetroChina (857) plunged 4% to close at 3.55 yuan; Sinopec (386) slipped 0.9% to close at 3.5 yuan. Under normal circumstances, oil stocks should be more sensitive to fluctuations in oil prices, but because the market expected that high oil prices would be difficult to maintain, the valuation of oil stocks was low, and the decline in three barrels of oil was lower than the correction in oil prices. Under the shadow of recession, it is estimated that the valuation discount of oil stocks will maintain or even expand, so the rebound of oil stocks at the current level does not seem to be deep enough, in other words, the valuation rate is not high enough.
Also affected by the decline in economic confidence are bank stocks. The U.S. bond yield curve is inverted, bank stocks are under pressure, and some European businesses are even worse. HSBC (005) fell 3.5% to close at 49.1 yuan; its subsidiary Hang Seng (011) fell only 1% to close at 133.5 yuan; Standard Chartered (2888) fell 2.6% to close at 55.85 yuan; BOC Hong Kong (2388) fell 3.5% to close at 28.9 Yuan; Bank of East Asia (023) fell 1% to close at 11.1 yuan; Dah Sing Bank (2356) fell 2% to close at 6.42 yuan. The rise in interest rates has increased bank interest margins, but Hong Kong interest rates have risen less and slower than U.S. interest rates. In addition, the business environment is not easy to do, and banks have not seen any outstanding tricks in developing new businesses. Bank stocks are in the interest of raising interest rates. , the increase has so far failed to meet expectations.
Bank stocks have so far missed expectations
In addition to the external negative, another reason for the decline of A-shares is that 4 places in Shanghai are listed as high-risk areas, and 22 are listed as medium-risk areas. As the epidemic may worsen, tourism and airline stocks weakened. Ctrip Group (9961) plunged 7% to close at 205 yuan; Fosun Travel Culture (1992) fell 8% to close at 11.22 yuan; Huazhu (1179) fell 5% , to close at 29.3 yuan; Tongcheng Travel (780) fell 6% to close at 15.86 yuan; China Eastern Airlines (670) fell 2% to close at 2.92 yuan; Air China (753) fell 6.5% to close at 6.22 yuan; China Southern Airlines (1055) fell 4% , to close at 4.3 yuan.
The traditional stock market is five-five, six-perfect, and seven-turnaround. This year, the “six” stocks have not failed, and the “seven” stocks have had a flat start so far.
Hitoshi Rikuha
