01, Crazy Surge
This morning, A-shares and Hong Kong stocks experienced a significant rise as soon as the market opened, with the Hong Kong stock market seeing an especially exaggerated increase.
As soon as the market opened, the Hang Seng Index had already risen by 6.5%, surpassing an increase of 1,000 points; the Hang Seng Technology Index even reached a 9.9% increase, with Hong Kong stocks continuing to set new highs since the rebound from the lowest point of this round.
The overseas traded FTSE China A50 Index also rose by 3.7% at the opening of A-shares.
At the same time, the Shanghai Composite Index reopened above 3,100 points, and the ChiNext Index's increase exceeded 3.5% at the opening, with all major indices rising together.
Moreover, we found that this carnival is not limited to the Chinese market, nor even to the stock market.
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The Japanese stock market, which opened earlier, also saw an increase of more than 3%; and the major indices in Europe and the United States that closed last night also rose across the board, with many European national indices rising by more than 3%, while the three major U.S. indices were even more exaggerated, with the Dow Jones Industrial Average rising by 3.7%, the S&P by 5.5%, and the Nasdaq Index even rising by 7.35%.
In addition to the stock market's chorus of rises, commodities also saw a good increase, with the price of gold breaking through $1,750 per ounce.
Furthermore, in the foreign exchange market, major non-U.S. currencies such as the British pound, yen, euro, and Chinese yuan also rose in tandem.
The yen's exchange rate even quickly rose to 142, which is higher than the exchange rate before the first intervention in the foreign exchange market in September.02, Inflation: A Boon or a Bane?
All of these are closely related to a set of inflation data released by the U.S. Department of Labor.
U.S. inflation has shown an unexpected improvement, having dropped from a high of 9.1% in the previous few months to the latest figure of 7.7%.
As a result, there is a general consensus that it is time for the Federal Reserve to reduce the rate of interest rate hikes, and some officials at the Fed have even begun to suggest that the central bank should pause its rate hikes next year to allow the market to fully respond to the consequences of the previous rate increases.
However, the investment community may soon come to its senses and realize that U.S. inflation is not as favorable as currently imagined.
Last month's CPI data showed a year-on-year increase of 8.2%, while this month's CPI data shows a year-on-year increase of 7.7%, which appears to be much better.
But it is quite strange that the month-on-month increase for this month compared to last month is 0.4%.
Since this month's CPI is higher than last month's, why is the year-on-year data lower?
The reason lies in the fact that last month's year-on-year comparison was with September of the previous year, while this month's year-on-year data is compared with October of the previous year.
Due to the fact that the inflation data in the U.S. for October last year was already much higher than in September, with a significantly larger base figure, it has resulted in the year-on-year growth rate for this month actually coming down.In reality, inflation in the United States has not yet seen a true decline; at most, the pace of increase has slowed slightly. Moreover, even with a CPI of 7.7%, it is only slightly lower than the peak in the previous months and remains at a very high level compared to most periods over the past 40 years. Therefore, in this situation, whether it is the U.S. stock market, European stock market, or other markets, a brief rise is very likely to indicate an imminent significant correction.
03, A-shares may usher in a bull market
For A-shares, in addition to being influenced by overseas factors, it is more important to look at the domestic economic environment. Yesterday, we also released CPI data, which showed a significant decrease compared to last month. However, the logic is somewhat similar because the base figure from the same period last year was relatively high. But the biggest difference between our country's inflation data and that of the United States is that our overall CPI for this year is only 2%, at least 6 percentage points lower than that of the United States.
The 2% inflation range we are currently in is precisely the level of inflation that all economists recognize as appropriate. Therefore, the recovery of the U.S. stock market may still have a long way to go, and it is not ruled out that it may continue to decline. However, the bull market for A-shares has already begun again.