On Monday, at the market opening, Japanese stocks plummeted again. The Nikkei 225 index saw its decline expand to 3% at one point, and as of press time, the drop stood at 2.97%. South Korea's stock market also experienced a significant decline, with the KOSPI index falling 1.36% as of press time.
U.S. stocks also saw a substantial drop.
Last Friday, U.S. stocks had already gone through a significant downturn.
The Dow Jones Industrial Average fell by 1.01%, the S&P 500 index by 1.73%, and the Nasdaq Composite by 2.55%. Amazon fell by 3.65%, and American Express by 3.08%, leading the Dow Jones decline. Tesla dropped by 8.45%, and Nvidia by 4.09%. Most Chinese concept stocks fell, with Legend Biotech falling by 10.66%, and Zeekr by 9.78%.
Advertisement
After plummeting on Friday, gold, silver, and crude oil rebounded slightly at Monday's opening.
The fear index soared.
In terms of news, the U.S. non-farm data released does not support a significant rate cut by the Federal Reserve in September, and the Fed remains tight-lipped about the extent of the rate cut; the Bank of Japan also indicated a possibility of raising interest rates; and Warren Buffett has begun to sell off a large amount of stocks. These three pieces of information have led to a surge in the global fear index.
The U.S. released its August non-farm data, with the Bureau of Labor Statistics showing that the U.S. non-farm payroll employment increased by 142,000 people in August, estimated to increase by 165,000, with the previous value being an increase of 114,000. The employment growth in August is consistent with the average employment growth in recent months but is lower than the average monthly increase of 202,000 in the previous 12 months.
Federal Reserve's "third in command," John Williams, stated that it is appropriate to lower the federal funds rate now and expressed more confidence in the sustainable convergence of the inflation rate towards 2%, with the policy gradually moving towards a more neutral direction.
Williams also indicated that the labor market is unlikely to trigger inflationary pressures. However, Williams did not comment on the possible extent of the first rate cut.Since September, the Chicago Board Options Exchange Volatility Index (VIX) has surged, spiking by approximately 49% last week. As the interest rate decision meeting approaches, it seems that investors may still be seeking more definitive information and confidence from the economic outlook and the Federal Reserve's monetary policy to determine whether the volatility risks have been fully released.
Buffett Sells More Stocks
Entering September, Buffett's pace of selling Bank of America shares did not slow down. Berkshire Hathaway continued to reduce its holdings in Bank of America shares on September 3rd, 4th, and 5th, 2024, over three consecutive trading days, with a total of 18.746 million shares, cashing out about $760 million.
According to statistics, since Berkshire Hathaway started selling Bank of America shares on July 17th, it has cashed out a total of approximately $6.97 billion.
Based on Buffett's habits, when he starts selling a stock, he will eventually liquidate his position in that stock. Moreover, in recent years, Berkshire Hathaway has liquidated its holdings in the stocks of several banks, including U.S. Bancorp, Wells Fargo, and The Bank of New York Mellon.
Market analyst and TheStreetPro columnist Doug Kass expressed concern about Buffett's stock selling strategy, especially regarding the reduction of positions in Apple and Bank of America, which were considered to be "permanent holdings."
A-Shares Have Bottom Conditions
In terms of A-shares, analysts from multiple securities firms believe that the market has bottom conditions, and there is significant room for a rebound in the future market.
Galaxy Securities analysts believe that there is considerable room for a rebound in the A-shares market.
The current valuation of the A-shares market is still at a historically moderate-low level, indicating a substantial rebound potential. Looking ahead, in terms of A-shares allocation: the 2024 semi-annual report performance shows that the financial sector has exceeded expectations and improved, with financial stocks offering a high dividend rate. The financial sector mergers and acquisitions are accelerating, and it is anticipated that the financial sector will continue to outperform the overall A-shares market. In September, new products in the consumer electronics industry will be unveiled, which is expected to drive a surge in related thematic trends. U.S. manufacturing activity remains in a contraction zone, and the vitality of the U.S. job market further weakens. Expectations for a rate cut in September are rising, and the rate-cutting cycle is expected to begin. It is recommended to pay attention to A-shares industries that may benefit from the Federal Reserve's rate cuts.CICC's research report points out that the market is showing many characteristics of a bottom.
The market is showing many characteristics of a bottom, but the recovery of confidence still requires more positive factors for support. Looking forward, although there are still many suppressive factors in the near term both internally and externally, the market itself is in a value range, and attention should be paid to the marginal changes of positive factors during the index adjustment period. Recently, the market has had some partial bottom characteristics: the turnover rate of A-shares, calculated based on free float market value, has dropped to a historical bottom level of 1.5%; on the valuation level, the dividend yield of the CSI 300 is 1.1 percentage points higher than the interest rate of 10-year government bonds, and the valuation of the CSI 300 index is near the bottom of the historical range with a one-standard-deviation margin, which has good valuation appeal; the catch-up decline of strong stocks is also a common phenomenon at the historical stage bottom. Subsequently, pay attention to the progress of fiscal expenditure and the marginal impact of the Federal Reserve's interest rate cuts on our country's monetary policy, exchange rate, and capital market.
In terms of allocation, after the adjustment, the dividend sector's attractiveness has increased, and it is currently necessary to pay more attention to the sustainability of the molecular end fundamentals and dividends; since the middle of July, consumer electronics, semiconductors, etc., have all adjusted by more than 10%, and the valuation is not high. Coupled with the recent consumer electronics sector, there may be many news catalysts and other factors, which may lead to a phased market; pay attention to the field of technological innovation, especially the sectors with industrial autonomy logic; the export chain and global pricing resources have been affected by overseas fluctuations and may have some differentiation after a short-term adjustment.
SWHY analysts believe that the market continues to be weak.
In the short term, economic data verification is weak, and the direction of strong expectations for the second-quarter report is rarely verified. Before there is a significant change in policy expectations, the market may continue along the original path. At this stage, the management's policy statement does not support the fermentation of particularly optimistic policy expectations, and the market's policy game is still not to let go without seeing the rabbit. Setting aside all the complex discussions, the short-term environment faced by A-shares is weak fundamentals + vague policy expectations. The original path of the market is weak and volatile.
The third-quarter report for consumer services may reflect more demand decline (which was not fully reflected in the second-quarter report), the appreciation of the renminbi, and the export chain's current revenue may be further pressured. Coupled with the high base of the third-quarter report, under the existing path, the profit growth rate of the third-quarter report may further decline. In this case, to break through the market's original path, there needs to be a significant change in policy expectations, especially monetary policy. At this stage, the central bank's statement supports a loose direction, but the description of the magnitude and strength is still restrained. It does not support particularly optimistic policy expectations. The market's policy game is still not to let go without seeing the rabbit. In the stage where the fundamentals are weak and the visibility of policy formulation, implementation, and effectiveness is low, the market continues to be weak.