Today was another day of chaos in the A-share market! Last night, the U.S. released its CPI for March, which greatly exceeded expectations, causing the U.S. dollar index and Treasury yields to soar, and the U.S. stock market to plummet. However, the A-share market opened low and rose in the morning, which could be considered strong when it should have been weak. But when you wanted to praise it, it dived in the afternoon, making it hard to say whether it was strong or weak today. Moreover, today's trading volume was reduced, with various rumors flying around, sectors rotating rapidly, and if you chased high, you would be trapped. The phenomenon of individual stocks collapsing during the earnings period appeared again, and it can be summed up in one word - chaotic!

The strength of the A-share market in the morning might have been stimulated by two pieces of news: the restriction of net sales by public funds and the suspension of securities lending business by securities firms. The former is uncertain, but the latter seems to be true. According to a report from Caixin, there are rumors that several securities firms have suspended the addition of new securities lending sources and plan to temporarily stop the daily new allocation of securities lending sources. A journalist inquired with an investment consultant from a leading securities firm in East China, who confirmed that this is true.

Advertisement

Let's look at today's heavy news:

U.S. March CPI greatly exceeded expectations

Last night, the U.S. announced a year-on-year increase of 3.5% in the March CPI, exceeding the market's expectation of 3.4%, and rebounded for two consecutive months; the core CPI, which the U.S. values the most, increased by 3.8% year-on-year, exceeding the market's expectation of 3.7%, with a month-on-month growth rate of 0.4%, exceeding the market's expectation of 0.3%.

The most prominent issue comes from non-rent core service inflation (supercore). This is one of the indicators that the Federal Reserve pays the most attention to, and its seasonally adjusted month-on-month growth rate rebounded from 0.5% to 0.6%, and the three-month month-on-month annualized growth rate further climbed to 8.2%, the highest since May 2022.

The Federal Reserve's biggest problem is that it was too early to be dovish at the end of last year, leading the market to enter a loose environment too early. The yield on U.S. ten-year bonds plummeted, market interest rates also fell sharply, manufacturing rebounded, and the wealth effect brought by the stock market's surge supported residents' spending, ultimately causing the U.S. economy to rebound too early.

Now the Federal Reserve has no choice but to be cautious about cutting interest rates. The market has already pushed back the timing of the rate cut from June, but entering the third quarter is the U.S. election. If the Federal Reserve cuts interest rates at that time, it would seem as if the Federal Reserve is using monetary policy to influence the U.S. election, which would greatly damage the credibility of its monetary policy. Therefore, the Federal Reserve may only be able to cut interest rates after the election.After the data release last night, the US dollar index broke through the 105 mark, and the yield on the US 10-year Treasury note broke through the 4.54 mark, both setting new highs in recent times. However, US stocks did not plummet; they stabilized after opening lower, mainly supported by the resilience of the US economy, with the market believing that the US economy will at least achieve a soft landing.

AI Sector Rebounds

The AI concept sector, which had been weakening consecutively, finally rebounded, especially concepts like Kimi and AI corpus, mainly stimulated by several major news items:

Although US stocks plummeted last night, Nvidia rose nearly 2% against the market trend, alleviating concerns about Nvidia's sharp decline dragging down related sectors in A-shares;

Last night's US CPI significantly exceeded expectations, suppressing expectations for interest rate cuts, leading to a pullback in resource stocks today, while technology stocks got a breather. Additionally, last night, Quanzhi Technology and Lianqi Technology's first-quarter earnings forecasts exceeded expectations, boosting sentiment in technology stocks;

AIwatch.ai released the "Global AI Product Growth Dark Horse List," with two AI products from Qihoo 360 making it into the top ten, with 360 AI Search ranking first, with a month-on-month increase in visits of 1677% in March. 360 Soda Office also made the list, with data showing its March visits exceeded those of WPS;

Another new product, Meta AI Search, has gained popularity, with a month-on-month increase in total traffic of 512.6% in March. Meta AI Search, developed by the up-and-coming Shanghai Meta Network Technology, competes with overseas perplexity, providing information extraction such as mind maps, outlines, and related events after searching, with reliable sources and an excellent search experience.

Stimulated by the related news, AI concept stocks strengthened today, with Zhongtian Guangze hitting the daily limit, and 360 temporarily hitting the daily limit during trading.National Development and Reform Commission's Major Announcement

Zhao Chenxin, Deputy Director of the National Development and Reform Commission, stated at a press briefing that the document on the consumer goods replacement scheme, led by the Ministry of Commerce, has been printed and is likely to be officially released in the coming days.

Lastly, a brief look at the market shows that, as of the close, the Shanghai Composite Index rose by 0.23%, the ChiNext Index fell by 0.44%, the Hong Kong Hang Seng Index fell by 0.16%, and the Hang Seng Technology Index fell by 0.24%. The total turnover of the two markets slightly shrank to 0.81 trillion, with net purchases of 2.022 billion by Northbound capital, and the individual stocks saw a roughly equal split between gains and losses.