The adjustment of Asia Pacific and European and American markets is not over. It is expected that the adjustment range of American stocks will be at least 10% - 15%. Zhao Wenli, chief Hong Kong stock strategist of CCB international, previously told the first financial reporter that recently affected by the epidemic, it has a short-term impact on the global industrial chain and economy. So far, the S & P 500 has fallen as much as 13% from its high near 3400 on February 20.
Yuan Yuwei, a senior global macro trader, told reporters that the epidemic is just a catalyst, and the overvalued value and profit decline all make the market have a callback demand. After the recent correction, the selling pressure of US stocks has basically been released, but the risk aversion mood is difficult to decline. Last week we saw signs before the sell-off. Some stocks with low volatility began to fall sharply, and the decline was relatively large. Even before the number of people diagnosed with the global epidemic rose, the epidemic was just a catalyst. This shows that the portfolio of large funds (pension, social security) is undergoing a rebalancing, which may start to accelerate stop loss due to the recent slump, which may lead to new liquidity problems.
The market believes the Fed is expected to be forced to cut interest rates.
US equity fell 9% early in the week from its February 20 high. Now, the U.S. money market has priced a comprehensive rate cut at the end of June, with a total of 60BP cut by the end of the year. We expect the FOMC to cut rates by 25bp each in April and June. Robertson, head of global macro strategy of Standard Chartered, told reporters that the impact of the epidemic on economic growth will be lasting and the bond market will be bullish. But risk averse investors should be aware that once the global central banks have relaxed policies, there may be a rebound in yields and risk assets.
Huang Jun, a senior trader, also told reporters that there are four similarities between the decline of the US stock market and that of May 2019. As a result, the Federal Reserve launched a defensive interest rate cut in June 2019. These four aspects include: the sudden events led to the collapse of the US stock market, the similar attitude of the Federal Reserve before the stock market crash, the similar reverse hanging of the Treasury bond interest rate, and the similar performance of manufacturing data.
Asia Pacific risk aversion model continues and Chinas market remains resilient
Most institutions expect that the Asia Pacific market will maintain a safe haven mode in the near future, and relevant central banks are also expected to cut interest rates.
On the 27th, Koreas Kospi index and Nikkei 225 index all fell sharply, Hong Kongs Hang Seng index rebounded slightly, and the three major A-share indexes were in a volatile pattern, and ended up slightly.
However, on the 27th, the Central Bank of Korea announced an interest resolution, unexpectedly maintaining the benchmark interest rate unchanged, after the market expected to cut interest rates. The novel coronavirus pneumonia outbreak affects consumption and exports, and the negative effects may be concentrated in the first quarter, said Li Zhulie, the governor of the Bank of Korea. It seems that the outbreak has not affected the chip production, and the prediction of chip production recovery has not changed. After raising the special loan ceiling of the Korean Central Bank, quantitative easing has not been considered.
In response to the recently affected Hang Seng Index, Zhao Wenli told reporters that the market still has callback pressure. The current round of Hong Kong stock market is in a very different environment from the SARS period in 2003. It is not suitable to simply apply the previous experience. The overall impact is greater this time. Although the first wave of market rebound and repair around the Spring Festival is very fast, it may have a second bottom in the future. The short-term support is 26300 points, the medium-term support may be 25000 points, and the most pessimistic one is 23000 points, he said He said that due to the effective control of the epidemic in China, Hong Kong stocks in China had a retaliatory rebound after the panic, and the health care, information technology and telecommunications industries have rebounded more than before the outbreak, but it can be said that the short-term panic decline and valuation restoration caused by the outbreak have ended.
In terms of Chinas A-share market, the turnover of the two markets exceeded another trillion on the 27th, with a net outflow of 1.058 billion yuan from the north and a cumulative outflow of 17.486 billion yuan in the past five days. Institutions believe that in the short term, some of the science and technology sector has a large increase, there is a callback pressure, but after the callback, it is conducive to the appearance of the market looking forward to further admission of funds.
On the exchange rate, the US dollar index remained strong, above 99, while the RMB recently showed resilience, only a small decline. After the upward stop of USD / RMB was around 7.0550, the short-term consolidation started, and the lower support was in the 7.0100-7.150 area, which is the support line of the upward wave in mid February and the previous rebound resistance level. Liu Min, China market analyst at fxtm Futuo, told reporters. Institutions generally believe that under the risk aversion mood, the US dollar will remain high, the US bonds with better liquidity and the Chinese bonds with relatively considerable yield will be the ideal choice for risk aversion allocation, and expect gold to break above 1700 US dollars / ounce in the short and medium term.