1. The U.S. Dollar Takes a Deep Dive!
Amid rising trade tensions, the U.S. dollar has suffered a sharp decline. Since March 3, when the U.S. announced new tariffs on Mexico, Canada, and China, the dollar has dropped for three consecutive days, with a total loss exceeding 3%. Last night alone, it plunged over 1%.
This drop is significant—historically, a 10% decline in the dollar is enough to offset the impact of a 10% tariff on global trade.
2. What Happens Next?
Such a sharp short-term decline in the dollar is rare. In the past five years, similar events have only occurred twice:
- March 25-27, 2020: The U.S. Dollar Index fell 3.45%, triggering a bull market in both U.S. and Chinese equities—the largest A-share rally since 2015.
- November 2022: The A-share market bottomed at 2,886 points, and U.S. stocks entered a major tech-driven bull run.
Could history be repeating itself?
3. Chinese Stocks Are Soaring!
Last night, U.S. stocks found support after reports surfaced that the U.S. may temporarily lift auto tariffs on Mexico and Canada for one month. The Nasdaq, S&P 500, and Dow Jones all rebounded by over 1%.
However, Wall Street is growing cautious about the tech sector, fearing a potential bubble burst. As a result, investors are shifting their focus to Chinese stocks. The Nasdaq Golden Dragon China Index skyrocketed 6.46% overnight, reflecting a surge in interest.
4. A-Shares Follow Suit!
Riding the momentum from Wall Street, China’s A-share market opened higher and continued climbing throughout the morning session:
- Shanghai Composite Index: +1.06%
- Shenzhen Component Index: +1.75%
- ChiNext Index: +2.15%
- STAR Market Composite Index: +3.03%
Technology-heavy stocks led the charge, with the STAR 50 Index jumping 3.52%, fueled by explosive gains in the AI and computing power sectors.
5. Capital Floods In!
Investor enthusiasm is back. By midday, total market turnover surged past ¥1 trillion ($1.17 billion), an increase of ¥223.7 billion from the previous day. Funds are rushing in, positioning ahead of a potential breakout beyond 3,400 points.
Market breadth was overwhelmingly positive:
- 4,407 stocks gained, while only 833 stocks declined.
- Just 99 stocks fell more than 3%, while 856 stocks surged at least 3%.
Spring Rally Incoming?
The Chinese financial regulator recently approved an additional ¥60 billion in insurance funds to enter the market on March 4, bringing the year-to-date total to ¥112 billion. This is just the beginning of long-term capital inflows.
With a major policy meeting set to conclude next week, a fresh wave of pro-growth measures could be on the horizon. The market is poised for a spring rally—will A-shares ride the tailwind?
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