During the Spring Festival, the A-share market was closed, and US stocks achieved four consecutive positive results. Since January 28, the three major US stock indexes have risen across the board, including the Dow Jones index rose 4.3%, the NASDAQ index rose 7.97% and the S & P 500 index rose 6.08%, which is in sharp contrast to the continuous decline in January.
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4 trading days: soaring 23 trillion yuan
Statistics show that in just four trading days from January 28 to February 2, the value of the US stock market increased by $3.69 trillion, which is about 23.47 trillion yuan at the latest exchange rate.
In fact, during the Fed's interest rate hike, the performance of US stocks was strong, and the rate of return even exceeded that during the interest rate cut.
The statistical results from Dow Jones market data show that since 1989, during the Fed's interest rate hike, the average return of the Dow Jones industrial average is close to 55%, the return of the standard & Poor's 500 index is 62.9%, and the average positive return of the Nasdaq composite index is 102.7%.
On the contrary, during the Fed's interest rate cut, the average return of the Dow was 23%, the S & P 500 was 21%, and the Nasdaq was 32%.
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why suddenly four consecutive Yang?
Some analysts believe that the rebound of US stocks for four consecutive trading days may be related to two factors.
On the one hand, with the expected increase in interest rates, the US stock market has stabilized after all the bad news. Marko kolanovic, chief equity strategist at JPMorgan Chase, said the Fed's expected interest rate hike later this year would not end the rally in US stocks. He believes that at present, the market generally expects the fed to raise interest rates at least four times this year, and JPMorgan Chase expects to raise interest rates at most five times this year.
On the other hand, the performance exceeded the expected growth or supported the continued strength of US stocks. Data show that so far, more than 170 companies in the standard & Poor's 500 index have reported earnings, of which 78.5% have exceeded analysts' expectations.
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Google's "high transfer" soared by 10%
For example, Google's parent company, alphabet, closed up 7.37% on Wednesday local time, and its share price was $2960.73. At the beginning of the session, it once rose 10%. The company's previously announced fourth quarter earnings exceeded expectations and announced a 1:20 share split plan.
Alphabet's latest quarterly profit was $20.6 billion, or $30.69 per share, with revenue of $75.3 billion, much higher than Wall Street analysts expected.
The financial report shows that the company's advertising business is still growing rapidly. In the fourth quarter of last year, Google's advertising sales increased by nearly 33% year-on-year to $61.2 billion, which contributed to the better than expected quarterly overall performance of its parent company alpha.
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local Fed chairman "fire fighting"
Why did the sentiment of the US stock market suddenly change in just four trading days? It may be related to a speech by the chairman of the local federal reserve. Atlanta Fed chairman Bostick said earlier this week that the Fed's policy process is not invariable. If inflation slows down more than expected, it may adjust its policy proposition and may not be so radical in raising interest rates.
Bostick also reiterated his personal preference for raising interest rates three times in 2022. Previously, the market expected the fed to raise interest rates five times, and some expected to raise interest rates seven times.
As soon as Bostik's voice fell, the US dollar index fell from a high level in nearly four trading days, recording four consecutive negative, and is currently hovering around 96.
For global stock markets, the US dollar index is a well-known reverse indicator, representing risk aversion and liquidity. For example, the financial crisis in 2008 and the sharp decline of the global market in March 2020 led to the continuous rise of the US dollar index.
In January this year, the US dollar index continued to rise, which was also the stage where the global stock market fell the most.
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4 how do U.S. stocks go after Lianyang?
Although from the historical data, US stocks rose more or fell less during the whole interest rate increase period, the stock price fluctuation during the period can not be ignored. At present, there are also differences in market views on the trend of US stocks after four consecutive positive days.
Senior strategist David roach warned that recent fluctuations could point to a bear market rather than a temporary slowdown in a sustained bull market. He explained that "all the positive factors" driving economic development during the pandemic - such as government financing of household and corporate balance sheets - would be "slowly withdrawn".
Savita Subramanian, head of US equity strategy and quantitative strategy at BofA, said investors should not expect a good return on the S & P 500 this year, but should be prepared for continued severe volatility in the stock market. This will be a year when we are shocked by fluctuations.
Although US stocks have rebounded so far in February, sabramania warned investors that I just don't think it's time to buy the S & P 500 wholesale. I don't think the S & P index will have a big return this year.
Bank of America kept the year-end target of the S & P 500 index at 4600, about 5% lower than the record high of 4796 reached on January 3 and only about 1% higher than Wednesday's closing.
The Bank of America expects the Federal Reserve to raise interest rates seven times this year. Sabramania said that if this happens, each interest rate increase will trigger market fluctuations, and the technology stocks that led the market higher in the era of loose money will bear the brunt.
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different views: adjustment is a buying opportunity
However, there are different views. For example, Goldman Sachs, a well-known investment bank in the United States, expressed the view that "adjustment is a buying opportunity".
David kostin, head of U.S. stock market strategy at Goldman Sachs, said in the research report that if history can be used as a reference, the correction will rarely become a bear market unless the economy enters a recession. Historically, the S & P 500 correction is usually a good buying opportunity. If the economy does not enter a recession, the market adjustment is usually a good buying opportunity.
Goldman Sachs research report shows that since 1950, the S & P 500 index has experienced 33 pullbacks of 10% or more, with the median value lasting for about five months, of which the decline from high to bottom is 18%.
Goldman Sachs believes that if investors buy the S & P 500 at a level 10% lower than the high, whether it is at the bottom or not, the average return for investors in the next 12 months will be 15%.
According to an analysis by Deutsche Bank, the number of companies whose sales and profits exceeded Wall Street's expectations was above average at about half of the earnings season, although lower than at the beginning of the recovery.
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how to go after the A-share Festival?
In the face of the rebound in major global markets during the Lunar New Year holiday, the majority of investors are most concerned about the trend of A-Shares after the beginning of the year?
Zhou Weiwen, China Europe Fund, said, "considering the three factors of economy, capital and stock market valuation, the A-share market will have structural opportunities in 2022." The probability of improvement of the global epidemic is increasing, and the macro-economy will maintain a certain growth. The growth rate of China's economy is declining slowly due to the new construction of real estate, the possible gradual recovery of foreign supply chains, destocking and other reasons. Corresponding to the trend of economic growth, the low interest rate environment abroad will change, prices will rise, and the Federal Reserve will recover liquidity in the future. China has been relatively proactive in dealing with the epidemic, and the central bank's policies are more forward-looking. Under the background of low macroeconomic growth expectations, the currency will be relatively loose, which is beneficial to reducing the volatility of the stock market. At present, A shares have undergone two years of structural bull market. The overall valuation is not low, there are some structural bubbles, and there are also sectors with reasonable or undervalued valuation, and there are structural opportunities.
After the structural bull in 2021 and the rapid adjustment in January this year, Gao Yuncheng, general manager of Jinglin assets, said that the A-share market and zhonggai shares are expected to find a "double bottom" of economic and corporate fundamentals from the first quarter to the second quarter of 2022, and this "bottom" of the market is also expected to become the starting point of the "new development paradigm".
Jinglin assets focuses on investment opportunities in three areas: first, online and intelligent of all equipment, second, Quanzhen Internet, and third, the change of energy structure.
The seller is more optimistic than the buyer.
Chen Li, global chief strategy and vice chairman of Soochow international, said that the positive policies set by the central economic work conference will still be implemented. This is more obvious in terms of monetary policy, such as reducing the deposit reserve ratio and LPR (quoted interest rate in the loan market), and the credit growth may also pick up. In terms of fiscal policy, the effect may not appear until after the Spring Festival. Therefore, I personally believe that the performance of the A-share market after the Spring Festival will be better than that before the Spring Festival.
Zhou wenqun, head of stock investment of Fidelity International China, said that China's A-share market will make steady progress in 2022 and there will be many investment opportunities. Looking at the global market, from the perspective of profit growth and valuation, the core assets of A-Shares still have strong attraction. The net inflow of foreign capital in 2021 hit a record high. I believe the long-term trend of foreign capital increasing its holdings of A-Shares will not change.
Li qiusuo, executive general manager and strategic analyst of China International Capital Corporation Limited(601995) research department, said that the opportunities of A-Shares are expected to outweigh the risks in 2022. 2022 is the "afterwave" period after the great impact of the epidemic, and the growth and policy cycle at home and abroad are reversed again. Although there is still a lot of uncertainty and the market path may still have twists and turns, China's policies are loosening, growth is gradually improving, the overall market valuation is not high, and the market environment is gradually favorable. The focus is to grasp phased and structural opportunities according to the changes of the main contradictions in the market.
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