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A-shares fell significantly this week, mainly on Tuesday and Wednesday, and showed signs of stabilization on Thursday and Friday. The Shanghai Composite Index fell 3.07% to 2890.90 points in a week; the Shenzhen Composite Index, the ChiNext Composite Index, and the Science and Technology Innovation 50 Index fell by 2.51%, 2.39%, and 3.95% respectively, and the Beijing Stock Exchange 50 Index fell by 3.14% for the week.

The important news before the market opened on Monday was that the central bank lowered several key interest rates by 10 basis points. Externally, it was mainly because US President Biden announced his withdrawal from the election. Judging from the performance of A-shares on Monday, although the Shanghai Composite Index fell on the day due to the decline of bank stocks, in fact, most stocks rose, so the market sentiment should be neutral or slightly optimistic.

On Tuesday, bank stocks, which had just fallen, rebounded quickly due to market rumors that "deposit rates may be lowered", but the vast majority of individual stocks fell sharply that day, and the "28 phenomenon" was quite obvious.

A-shares fell further on Wednesday, but some broad-based ETFs increased their trading volume, which may indicate that market-protecting funds may enter the market again. Therefore, although the stock index continued to fall, the decline has eased.

On Thursday, major A-share indices rose and fell, but in fact the market was relatively stronger as the vast majority of individual stocks rose.

A-shares continued to rise on Friday, and most stocks still rose. It is worth mentioning that a rare phenomenon occurred on Friday, that is, dividend stocks fell across the board.

After the market closed on Wednesday, the RMB appreciated significantly, which should be an important reason why A-shares rebounded on Thursday and Friday. In addition, the central bank added an MLF operation on Thursday, and the winning bid rate dropped by 20 basis points, which also strengthened the support for A-shares. On the same day, the state-owned banks also announced a reduction in deposit rates. Although it was in line with expectations a few days ago, it still provided some support for A-shares.

Judging from the frequent "interest rate cut" news this week, management should have begun to work hard to maintain economic growth, and market expectations may be slowly improving. The large-scale decline of dividend stocks on Friday also vaguely hinted at this. The reason why the word "vaguely" is used here is mainly because the spot and futures of treasury bonds were still strong on Friday.

In terms of economic indicators, the June personal core consumer price index (PCE) released by the United States on Friday night was slightly stronger than expected, but since the United States had already released the second quarter GDP that was much stronger than expected on Thursday night, the US dollar did not fluctuate much after the release of the above PCE. Judging from the US data this week, the overall reason for the Federal Reserve to cut interest rates should be slightly reduced, but the probability of the Federal Reserve cutting interest rates in September is still very high. At most, the "rate cut in advance at the meeting next week" that some investors are looking forward to has basically gone down the drain.

Next, investors should continue to hold their shares and wait for market sentiment to further improve.

Investment is risky, independent judgment is important

This article is for reference only and does not constitute a basis for buying or selling. You should bear the risks of entering the market at your own risk.

Cover image source: Photo by Liu Guomei of Daily Economic News (file photo)

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