A50 futures experienced a sudden decline, breaking from their strong performance over recent trading sessions.
Following yesterday evening's drop, A50 futures continued their downward trajectory this morning with a sharp dive, dragging both A-shares and Hong Kong stocks into correction territory. Hang Seng futures fell more than 1% at one point.
Market analysts identify two potential variables impacting the market: First, the U.S. Dollar Index has shown unexpected strength recently, rebounding above 98 last night. Second, A-share market style has become extremely concentrated, with the number of stocks in bullish patterns continuously shrinking while trading volume concentrates in large-cap technology stocks. The Moore Threads incident that dominated investment circles last night also affected technology stock sentiment.
However, some analysts point out that with capital expenditure continuing to expand, technology remains the most certain direction for the future.
**A50 Weakness Spreads**
After declining yesterday evening, A50 futures continued their dive during morning trading, with losses expanding beyond 1% at one point. Hang Seng futures also declined significantly, with Hong Kong stocks falling across the board.
In the A-share market, the ChiNext Index and STAR Market Index continued weakening. Around 10:20 AM, the ChiNext Index fell more than 1%, while the Shanghai Composite dropped 0.33% and the Shenzhen Component Index declined 0.76%. Gaming, liquid cooling servers, robotics, and copper cable high-speed connectivity sectors led the declines, with over 2,700 stocks falling across Shanghai, Shenzhen, and Beijing markets at one point.
From an external perspective, the U.S. dollar tide has somewhat weakened. Recently, the U.S. Dollar Index has continued strengthening, breaking above 98 last night, further cooling global risk appetite. The U.S. second-quarter GDP was significantly revised upward, and initial jobless claims for the week ending September 20 recorded 218,000, the lowest since the week of July 19, 2025. This data has weakened Federal Reserve rate cut expectations. Meanwhile, discussions about U.S. stock overvaluation are ongoing, with markets continuing their recent weakness.
From an A-share structural perspective, while indices have performed excellently, data through yesterday shows that among the market's over 5,000 stocks, fewer than 800 remain in bullish patterns. This indicates extremely crowded positioning in certain A-share segments. From an index perspective, this sector is undoubtedly related to big tech. Many small-cap stocks are actually in a state of neglect. Today, this pattern has somewhat eased, with more stocks rising while leading technology stocks began adjusting. Analysts suggest that last night's Moore Threads incident may have been the main catalyst triggering the big tech adjustment.
**Where Trading Volume Exists, Strength Remains**
Through yesterday, total A-share trading volume continued maintaining above 2 trillion yuan, with margin financing balances not shrinking as expected before the long holiday. So what stage is the market in? Analysts believe that as long as trading volume can be maintained, the entire market will not lack structural opportunities. The technology sector, due to the ongoing capital expenditure cycle, may still offer the greatest certainty.
Yuekai Securities believes this market rally stems from three main factors: First, from an expectation perspective, changes in macroeconomic control logic since last year's "9.26" policies and changes in artificial intelligence technology narratives this year have boosted risk appetite and market expectations. Second, from an institutional perspective, capital market infrastructure continues improving, with quality companies continuously entering the market, enhancing market attractiveness. Third, from a capital perspective, medium and long-term funds continue entering the market, with household assets orderly transferring to equity markets.
Looking ahead, the foundation of these three factors remains solid: First, China's science and innovation industries are transitioning from "following" to "leading" in multiple fields. Second, capital market reforms continue progressing. Third, domestic medium and long-term funds continue entering the market, while overseas capital has demand for Chinese asset allocation amid global changes. The sustainability is expected to exceed most historical rallies. After sustained gains, volatility will increase significantly, with fluctuations amid advances being the basic pattern, making short-term pullbacks good buying opportunities.
Huajin Securities' Deng Lijun believes A-shares will continue a volatile but upward slow bull trend in Q4. Against the backdrop of structural earnings recovery and credit repair, overall market risk appetite is expected to remain relatively positive, with loose liquidity, policy benefits, and foreign capital inflows jointly supporting market performance. The Federal Reserve will likely continue rate cuts in Q4, with falling U.S. bond yields potentially further boosting core asset valuations. Meanwhile, fiscal policy may gain seasonal momentum in Q4, supporting the earnings cycle.