A night of horror! Tesla plunged 8%, Bitcoin experienced a huge shock, commodities continued to soar, the US stock market split, how will the A-share market perform?

Source: China Securities

Author: Shi Qian

Original title: "A terrifying night! Tesla plunged 8%, Bitcoin experienced a huge shock, what happened? Commodities continued to soar, the US stock market split, how will the A-share market perform? "

Huge shock + sharp drop was the main theme last night and this morning!

Last night, the Dow Jones Industrial Average closed up 0.09% at 31,521.69 points; the S&P 500 fell 0.77% to 3,876.5 points; and the Nasdaq fell 2.46% to 13,533.05 points.

The highlight here is that the Nasdaq plunged more than 2%, and behind this was the plunge in technology stocks. Tesla fell more than 8%, and its total market value fell below $700 billion. Apple fell nearly 3%, Micron Technology fell more than 5%. Bilibili fell more than 10%, and NIO fell more than 7%.

In addition, digital currencies suffered a bloodbath last night, with Bitcoin plummeting by more than 15% and Ethereum plummeting by 20% at one point, but then the bleeding stopped. However, in the short term, the strength is no longer there.

Corresponding to the sharp drop and huge shock is the sharp rise. International oil prices went crazy again last night. Brent crude oil surged by more than 4% overnight, while the US dollar index fell below the 90 mark at one point.

There is also a big split in the U.S. stock market. What exactly happened and how will A-shares be affected?

Tesla plunged 8%, and the US stock market also split

Overnight, the Dow Jones Industrial Average reversed 200 points to close up 31.37 points, or 0.1%, at 31,521.69. A handful of economic rebounds boosted the blue-chip benchmark. Disney rose 4.4%, while industrial giant Caterpillar and chemical company Dow Inc. both rose more than 3.5%. American Express and Chevron rose 3.2% and 2.7%, respectively.

However, the Nasdaq Composite fell 2.5% to 13,533.05, with Tesla shares falling 8.6%. Large technology stocks were under pressure, with Apple, Amazon and Microsoft all falling at least 2%.

From the perspective of the market structure, traditional forces have fully recovered. US airline stocks rose across the board, with American Airlines up 9.42%, Delta Airlines up 4.51%, Southwest Airlines up 3.69%, and United Airlines up 3.48%. US energy stocks rose collectively, with ExxonMobil up 3.63%, Chevron up 2.79%, ConocoPhillips up 5.14%, Schlumberger up 5.55%, and Occidental Petroleum up 3.82%.

However, most of the popular Chinese concept stocks fell, with Ebang Communications down 24%, Zhaoyan Network down 19.5%, Xunlei down 17.4%, Lexin down 17.4%, iClick down 16.4%, Bilibili down 10.1%, Alibaba down 3.6%, JD.com down 8%, and Baidu down 1%. New energy vehicle stocks fell across the board, with NIO down 7.74%, Xpeng Motors down 6.92%, and Li Auto down 6.7%. However, Burning Rock Medical rose 25.3%, setting a new record high, 36Kr up 17%, Chalco up 15.7%, and Beike up 10.7%.

what happened?

Analysts believe that the Bitcoin shock has a great impact on Tesla, which in turn drags down the performance of the entire new energy sector. Overnight, affected by Yellen's remarks, Bitcoin once plummeted by more than 15%, and then recovered, but it is still weak in the short term. Tesla previously bought a large amount of Bitcoin.

Wedbush Securities analyst Daniel Ives said in a weekend research note that the company is “on track to earn more from its bitcoin investment than it does from the sale of its electric vehicles throughout 2020.”

In addition, the Treasury yields, which have attracted much attention recently, are also a factor of concern. OANDA senior market analyst Edward Moya said in a report: "The higher the Treasury yields rise, the faster investors will withdraw from high-flying technology stocks and turn to stocks in the Russell 2000 Index and the Dow Jones Industrial Average."

The 10-year Treasury yield rose to 1.374% on Monday from 1.344% on Friday, marking three straight weeks of gains, with last week's gain being the biggest since early January. "As yields rise, demand for bonds increases relative to other assets," said Hani Redha, portfolio manager at PineBridge Investments. "How much are you willing to pay for stocks? If you can only get a very low yield from bonds, you should be willing to pay a higher price for stocks. But when bond yields rise, that starts to change."

Still, we do not see the recent rise in yields as a threat to the bull market, Keith Lerner, chief market strategist at Truist, said in a note. “Given that we are early in the economic recovery, monetary and fiscal policy remain supportive, earnings have rebounded sharply, and relative valuations are favorable, we maintain our overweight on equities.”

Commodities are soaring, how will A-shares open?

Oil prices continued to soar overnight, with Brent crude approaching $65, an increase of more than 4.5%.

At the same time, the chemical market was also ignited.

The non-ferrous metal market continues to heat up, with LEM copper breaking through $9,000.

During this process, the US dollar index continued to hit new lows, falling below the 90 mark overnight.

So, what is the impact on A-shares? Judging from the performance of the A50 index futures, after a sharp drop of more than 4% during the day yesterday, the A50 night session performed relatively strongly.

Analysts believe that from a structural perspective, A-shares may still tend to be strong cycles and recovery patterns, and the previous group-holding style may still be weak. The change in this pattern requires guidance from the external market.

Federal Reserve Chairman Jerome Powell will be in full force when he delivers semi-annual testimony on the economy before the Senate Banking Committee on Tuesday. His comments on interest rates and inflation will likely determine the direction of markets this week.

European Central Bank President Christine Lagarde said in a speech on Monday that the central bank is "closely monitoring developments in long-term nominal bond yields." Her comments pushed European sovereign bond yields lower.

In addition, European bond yields generally fell on Monday, with the UK 10-year government bond yield falling 2 basis points to 0.676%; the French 10-year government bond yield fell 3.5 basis points to -0.096%; the German 10-year government bond yield fell 3.2 basis points to -0.341%; the Italian 10-year government bond yield fell 2.6 basis points to 0.595%; the Spanish 10-year government bond yield fell 3 basis points to 0.321%; and the Portuguese 10-year government bond yield fell 3.3 basis points to 0.213%.