Focus this week: the new variant virus Omicron found in South Africa last week triggered market panic, the collective decline of external risk assets, and the VIX Index of US stocks soared 54.4% in one day. At the same time, the sharp decline of oil price led to the decline of US inflation expectations, which alleviated the market’s concern about inflation pressure in the early stage to a certain extent; Last week, the re-election of US Federal Reserve Chairman Powell stabilized the market’s expectations for the rhythm of interest rate increase. In addition, with the support of strong earnings of US stocks in the third quarter, the overall sharp downward risk is limited, and the rapid decline of us ten bond interest rate may be relatively good for growth assets. It is suggested to pay attention to the evolution of subsequent mutation virus. In China, steady growth is expected to rise under the downward pressure of the economy. In terms of monetary policy, it is expected to maintain a stable and loose tone in the fourth quarter. Recently, foreign capital is dominated by sustained net inflow, and the short-term external risk appetite shrinks or brings disturbance. However, China’s epidemic prevention and control situation is better, and the sharp downward risk of the stock market is small. In terms of sectors, the rotation has accelerated recently, and the main line is scattered. We believe that the hard science and technology sector with good overall performance and continuous capital inflow is still in the downward cycle, especially the new energy sector (growth scarcity, policy support and high prosperity); defensive big finance; and the rotation in the required consumption of inflation pricing.
Market performance: last Friday, covid-19 mutation virus caused a collective decline in risky assets, the main stock markets fell together, oil prices fell sharply – 13%, and gold rose slightly. On the whole, bonds > stocks > commodities. In terms of equity, the decline in developed markets was greater than that in emerging markets; In China, A-Shares were relatively less affected by the news of mutated virus on Friday. Recently, the rotation of industry plates has accelerated, and the main line is relatively scattered. Last week, they were distributed in high boom consumption, new energy industry chain and some cycles of oversold rebound. The growth of CSI 800 is better than the value, and the small market is better than the large market as a whole; The bond market strengthened (CSI 300 -. 061%, CSI 500 + 0.70%, gem + 1.46%, Kechuang 50 + 1.05%, and China bond total wealth index + 0.33%); In terms of industries, the continuity of the recent sector is poor. Last week, some consumption and cycles were dominant and stable, and the financial style was weak. In terms of primary industries, non-ferrous metals, steel, food and beverage, medicine, commerce and trade, mining and chemical industry increased, while leisure services, agriculture, forestry, animal husbandry and fishery, military industry, banking, media and transportation decreased; The decline of Hong Kong stocks increased, with Hang Seng Index – 3.87% and Hang Seng technology index – 4.74%. In terms of industry, the decline of technology, medical treatment and real estate was the highest; In Europe and the United States, after the continuous shock of US stocks, affected by the virus news, the VIX fell collectively on Friday. VIX soared 54.4% to 28.62 in a single day. Driven by inflation expectations, the US bond interest rate fell sharply (NASDAQ – 3.52%, S & P 500-2.20%, US 10 bond interest rate fell from 1.63% to 1.48% on Friday), and the euro zone fell sharply (FTSE 100-2.49%, Germany dax-5.59%); Commodities fell under the leadership of oil price (oil distribution – 8.99%), iron ore (+ 7.79%), thermal coal (- 0.04%), and precious metals strengthened slightly on Friday (London gold – 2.9% / London Silver – 6.1% / copper + 1.52%).
