Recently, the A-share market has been quite peculiar. When the market consensus was expecting a decline, it held firm, but when there was a general belief in an uptick, it weakened instead. In the early morning, the Federal Reserve's interest rate meeting took a dovish stance, and the US stock market surged at the close, ending in the green. Today, Asian stock markets rose across the board, with the Nikkei 225 index reaching a new high, the South Korean Kospi index rising by more than 2%, and even the Hang Seng Index in Hong Kong increased by nearly 2%. However, A-shares experienced a high open followed by a low close, with all three major indices closing lower. The A-share market is still too speculative, with funds often taking advantage of the consensus on good news to sell, and even foreign capital has started to engage in swing trading, buying 5.5 billion against the trend yesterday and selling off 6 billion today.
Looking at today's significant news in detail:
The Federal Reserve Doves
The Federal Reserve's interest rate meeting was held as scheduled in the early morning. Due to the significant exceedance of expectations in the US inflation data for February, the market was originally concerned that this US interest rate meeting would be more hawkish, such as reducing the number of rate cuts from three to two in the dot plot.
Advertisement
However, both the dot plot and Powell's speech were somewhat dovish. The dot plot still indicated three rate cuts, and Powell stated that inflation has eased significantly and continues to fall, but there is still uncertainty. Powell pointed out that the Federal Reserve's policy rate may have reached its peak, and it is appropriate to begin easing monetary policy at some point this year. He also, as always, emphasized that if necessary, interest rates will be maintained at a high level for a longer period; but if the labor market unexpectedly weakens, measures may need to be taken.
For the Federal Reserve, a short-term rebound in inflation is a constraint on rate cuts, but a soft landing of the US economy and the US elections both support the Federal Reserve in cutting rates. We believe that as long as inflation does not form a continuous rebound, it will be difficult for the Federal Reserve to return to a hawkish stance. The final outcome may be that the US economy either does not land or lands softly, with the Federal Reserve accepting a higher inflation target, or the US economy rebounds strongly and falls into a stagflation situation.
After the interest rate decision was announced, the US ten-year bond yield and the US dollar index both plunged, boosting market sentiment. The US stock market surged, with the Nasdaq closing up 1.25%, and the international gold price once broke through $2,246 per ounce, reaching a new high.
Storage Sector Soars
The storage sector experienced significant gains today, driven by the positive market sentiment following the Federal Reserve's dovish stance and the potential for increased demand in the technology sector. This has led to a surge in the stock prices of companies involved in the production and supply of storage devices and solutions, reflecting investors' optimism about the growth prospects in this industry.Traditional server demand is warming up, and AI application transformation is stimulating demand, leading to a significant increase of over 140% in NAND wafer quotes from their lows, with DRAM prices rising for four consecutive months. Samsung is renegotiating with customers, increasing NAND flash memory prices by 20%. Gartner points out that storage demand will strongly recover in 2024, with revenue estimates soaring by 66.3%, including a 49.6% surge in Flash Memory revenue and an 88% surge in DRAM revenue.
NVIDIA plans to purchase HBM (High Bandwidth Memory) chips from Samsung, which are key components for AI processors. NVIDIA CEO Jen-Hsun Huang stated that NVIDIA is conducting certification tests on Samsung's HBM chips and will start using them in the future.
Last night, Micron Technology's adjusted revenue for the second fiscal quarter and the revenue guidance for the third fiscal quarter both exceeded expectations, mainly due to AI's pull on storage demand, causing Micron's stock to surge by over 18% after hours.
The A-share storage sector has been strong for several days, especially the leader Demingli, which has seen 3 out of 4 days of board hits, and Dawei Shares also hit the daily limit today.
The US Philadelphia Semiconductor Index has doubled from its bottom, while the A-share semiconductor sector is still at the bottom. Although the US semiconductor sector has significantly benefited from AI-driven growth, domestic semiconductor companies will not be absent if the global semiconductor cycle reverses. Currently, panel and storage prices have started to rise, and stock prices have also shown a trend. We are waiting for more sub-sectors to turn around.
Expectations for a reserve requirement ratio cut:
The National Development and Reform Commission, the Ministry of Finance, and the People's Bank of China held a press conference on March 21 at the State Council Information Office regarding recent investment, fiscal, and financial data and policy situations.
The Deputy Governor of the People's Bank of China, Xuan Changneng, stated at the meeting that China's monetary policy has ample policy space and a rich reserve of tools, and there is still room for the statutory reserve requirement ratio to be reduced.Let's take a brief look at the market. By the close, the Shanghai Composite Index fell slightly by 0.08%, the ChiNext Index declined by 0.64%, the Hang Seng Index in Hong Kong rose by 1.88%, and the Hang Seng Tech Index increased by 0.83%. The turnover of the two markets surged to 1.06 trillion, with net sales of 6.02 billion by Northbound capital, and nearly 3,000 stocks fell.
Looking at the industries, sectors such as agriculture, forestry, animal husbandry, and fishing, media, social services, banking, and non-ferrous metals led the gains, while home appliances, beauty care, power equipment, medical and biological, and building materials industries led the declines.
Today, the concept of Kimi and the low-altitude economy continued to ferment, but there were signs of weakening in AI applications. Applications alone cannot drive the market; computational power must step in to stimulate the market.
As for the surge in the pork sector, the recent pig prices have shown a "not-so-off-season" performance, which is an initial manifestation of the results of last year's capacity reduction and the losses due to diseases. Institutions believe that the restructuring of Tianbang will strengthen the market's confidence in the extent of previous capacity reduction, coupled with the recent increase in pig prices, which will shift the entire breeding stock investment from the previous logic of pig capacity reduction to the logic of the right side of pig price increases.
Risk warning:
The stock market carries risks, and investment should be approached with caution. This article does not constitute investment advice, and readers should think independently.