October surprise! FTSE Chinas A50 rose against the trend in global stock market

category:Finance
 October surprise! FTSE Chinas A50 rose against the trend in global stock market


Global stock market volatility

At 12:54 p.m. Beijing time and 0:54 U.S. Eastern time on October 2, the president of the United States said on personal social media that he and his wife Melania had tested positive for new coronavirus and would immediately start isolation and rehabilitation procedures.

After the explosive news came out, risk aversion in the market rose on October 2, investors sold risk assets, global stock markets fell, global crude oil prices fell, and gold prices rose.

Analysts said the news confirmed by the president of the United States has increased market uncertainty, which may lead to a sharp correction in US stocks and may affect markets such as Europe and Asia. The markets direct response to the news was a sell-off.

First, the Asia Pacific stock market closed, with the Nikkei 225 index down more than 1% from its original rally, closing down 0.67%; Sydney, Jakarta and Bangkok all fell more than 1%, while China and South Korea were closed for the holiday.

Subsequently, the three major European stock indexes opened sharply lower, with Germanys DAX index, Britains FTSE 100 index and Frances CAC40 index all fell more than 1%.

However, at the end of the day, the three major European stock indexes were up and down. Germanys DAX index was down 0.33%, Frances CAC40 index was up 0.02%, and Britains FTSE 100 index was up 0.39%.

Novel coronavirus pneumonia, which is the latest decision of the US House of Representatives Speaker, said in October 2nd that the new presidents wife had confirmed the new way of pneumonia, which changed the way of the stimulus plan negotiations. She was optimistic about reaching an agreement. After Pelosis speech, the Dow rose for a time. However, the U.S. House of Representatives failed to pass the aviation industry rescue bill, and immediately announced the recess.

At the end of the day, the three major U.S. stock indexes closed lower. The Dow fell 0.48%, the NASDAQ fell 2.22%, and the S & P 500 fell 0.96%.

It is worth mentioning that after the news of the US presidents diagnosis, the FTSE China A50 futures index fell more than 2%, but then rebounded to close at 0.54%.

In this regard, Yang Delong, chief economist of Qianhai open source fund, believes that the diagnosis of the US president has led to great changes in the US presidential election, which has a greater impact on the short-term trend of US stocks, but has little impact on A-shares. FTSE Chinas A50 fell first and then rose, reflecting the enhancement of investors confidence in A-shares.

October surprise in the aftermarket

How will October surprise affect the future market?

Soochow Securities pointed out that the president of the United States confirmed the new crown and staged October surprise again.

The research of Soochow securities shows that the competition between the two parties in this years US election has become increasingly fierce, and both parties have not yet had an overwhelming advantage. If there is a October surprise, this years election results may be even more confusing.

The existing information is not enough to help us make an accurate judgment. It is possible that the final result will not have much impact on the election and the market in retrospect; but it is certain that this will further increase the uncertainty of the path, that is, the increase of volatility or the odds ratio of different situations. CICC pointed out.

CICC pointed out that, first of all, if the current test results are correct, in any case, the election schedule in the future will inevitably be affected.

On the one hand, if the disease is not serious, can still exercise presidential functions, and after a period of isolation and treatment, then the overall impact will not be great, may be limited to a short period of time can not participate in a series of election campaign; even, its image of infection and recovery may even benefit him politically, similar to the previous British Prime Minister Johnson and Pakistan Western President bosonalo was infected and then recovered.

On the other hand, if the symptoms are serious, the recovery time is long, leading to the inability to exercise presidential functions in a short period of time, or even affecting the ultimate ability to run for election, it will bring greater and longer-term uncertainty.

1) Or it will slow down the process of resuming work which is currently being re promoted.

2) The further increase of election uncertainty may make the market continue the current volatile pattern, and investors may also take a wait-and-see attitude, and even turn to defense and risk aversion in stages.

3) Whether it is possible to become the catalyst of the financial policy break-up.

4) Focus on the risk of geopolitical tensions in extreme cases.

Li Chao, chief economist of Zheshang securities, believes that the president of the United States is in good health after his illness, and the market reaction is to increase uncertainty; asset prices will increase in the future, and the trend of US stocks will still be mainly fluctuating in the short term. If there is a trend adjustment tendency, the president of the United States can still start the diving protection mechanism as a response, and the probability of a sharp fall in US stocks is small.

Zhao Wei and the chief economist of Kaiyuan Securities said that the current situation of the virus infection in the United States needs to be further confirmed. Combined with historical experience, the rise of uncertainty will easily lead to the increase of volatility of major overseas risk assets. Correspondingly, if the patients condition is mild, the overseas major risk assets will undergo short-term adjustment or rapid repair, and drive logic to return to the deduction of the macro situation of the United States. The research of Soochow securities shows that the market trend after the US election is related to October surprise. Soochow Securities pointed out that after the election corresponding to the seven October surprise events in history, six of the changes in the stock price of the United States conformed to this rule: if the winner of the election is the beneficiary of October surprise, then the US stock market will rise all the way after the election; if the winner of the election is the loser of October surprise, then the US stock market will continue to fall after the election. Extended reading: Trumps diagnosis of cold water by non farm investors: huge uncertainty sweeping the globe black swan coming? Global capital market earthquake institutions can not hold back this National Day holiday, the world must be alert to the three black swans! Source: Yang Bin, editor in charge of economic report in the 21st century_ NF4368

Zhao Wei and the chief economist of Kaiyuan Securities said that the current situation of the virus infection in the United States needs to be further confirmed. Combined with historical experience, the rise of uncertainty will easily lead to the increase of volatility of major overseas risk assets. Correspondingly, if the patients condition is mild, the overseas major risk assets will undergo short-term adjustment or rapid repair, and drive logic to return to the deduction of the macro situation of the United States.

The research of Soochow securities shows that the market trend after the US election is related to October surprise.

Soochow Securities pointed out that after the election corresponding to the seven October surprise events in history, six of the changes in the stock price of the United States conformed to this rule:

If the winner of the election is the beneficiary of October surprise, then the US stock market will rise all the way after the election; if the winner of the election is the loser of October surprise, then the US stock market will continue to fall after the election.