Last week, A-shares experienced a rebound in sync with global markets, catalyzed by the temporary truce in US-Iran negotiations. Despite some fluctuations, major indices successfully corrected their oversold conditions on daily charts. The Shanghai Composite Index closed at 3986 points, up 2.73% for the week. The ChiNext Index surged 9.5%, hitting a new yearly high driven by optical modules and the "Ning Portfolio," while the STAR 50 Index rose 8.6% and the SSE 50 Index gained 2.4%. The outperformance of growth indices over the SSE 50 reflected improved market risk appetite and a seesaw effect between growth and value styles.
After rebounding near the 4000-point level and recovering approximately half of the previous decline, the technical oversold condition has been alleviated. The momentum for an endogenous Wave-B rebound is expected to weaken. Further gains would require positive catalysts from both domestic and external factors, such as tangible improvements in US-Iran tensions or better corporate earnings. However, with no agreement reached over the weekend and ongoing maximum pressure tactics and maritime blockades, oil prices surged on Monday morning while precious metals declined. This suggests that US-Iran conflicts will continue intermittently rather than resolving quickly, keeping oil prices volatile.
Consequently, A-share indices are likely to experience back-and-forth movements to consolidate gains after the technical rebound. Key support near 3950 points and developments in domestic and international situations should be closely monitored. In such a high-volatility environment, maintaining a calm approach is advisable. Investors should track the evolution of US-Iran tensions and oil price trends, as well as the recovery progress of real estate in major Chinese cities, to gauge market style rotations. In the short term, opportunities may lie in oversold tech growth sectors with high trading volumes, which offer stronger rebound potential. Quick trades and contrarian strategies are recommended, along with selective accumulation of blue-chip value stocks to hedge against market fluctuations and potential earnings season shocks.
Several key market focus points emerge. First, global equities remain influenced by US-Iran tensions and volatile oil prices, though the marginal impact appears to be diminishing. During earnings season, capital is flowing into sectors with strong performance growth, seeking certainty amid uncertainty. US-Iran negotiations remain unpredictable, with frequent policy shifts contributing to high market volatility. The correlation between A-shares, H-shares, and other Asian markets, as well as the interplay among oil prices, precious metals, and equities, warrants continued attention. Typically, sectors like oil, coal, banking, and agriculture decline when tech stocks lead, and vice versa.
Additionally, the strength in AI computing-related stocks presents an interesting timeline, coinciding with Nvidia's rise since April and Oracle's historic layoffs in early April. Oracle's cost-cutting measures to boost AI computing investments reinforce the logic that providers of AI infrastructure are becoming tech leaders, while software applications face uncertain prospects due to rising computational costs. The outcome of this computing gamble remains unclear, but capital markets currently favor确定性更高的 AI hardware over software applications. Oracle's stock did not follow the historical pattern of rising post-layoffs, indicating a lose-lose situation for companies and employees. This marks a shift from the previous broad-based rally in TMT stocks to greater differentiation—a paradox of the AI era.
Second, recent sessions have seen sharp hundred-point gains, frequent fluctuations, broad rallies on Wednesday, mixed performances on Thursday, and more gains than losses on Friday. The ambiguous nature of US-Iran tensions may have a diminishing impact, with domestic funds increasingly focusing on high-growth sectors and earnings reports. For instance, the first brokerage quarterly report showing strong growth triggered a pulse rally in brokerage stocks, while institutional favorites like optical modules and memory chips surged, highlighting heightened attention to earnings.
On the policy front, reforms to the ChiNext system and adjustments to ST stock price limits on the Shanghai Exchange from 5% to 10% signal encouragement for innovation and market-oriented approaches, implying that short-term A-share performance will rely more on endogenous forces. March CPI slightly declined to 1%, while PPI turned positive to 0.5%, boosted by oil prices but reflecting weak consumption. The narrowing CPI-PPI gap indicates downstream pressure from rising costs and subdued demand. Capital is likely to延续 previous market preferences, favoring AI hardware with strong external market correlations, earnings-driven sectors, and inflation-driven themes.