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before the holiday, the a-share market gained popularity rapidly. during the long holiday, a50, hong kong stocks, and chinese concept stocks all rose significantly. therefore, many investors believe that the a-share market will accelerate after the holiday. the current market situation indeed has an unstoppable trend. however, variables emerged again.

even as the stock market rose sharply, the offshore rmb against the u.s. dollar fell nearly 1,200 points in the past week, and fell to the 7.1 mark again. at the same time, the u.s. dollar index continued to rise, and expectations for the federal reserve to cut interest rates also narrowed during the national day holiday. some analysts believe that under this background, global macro constraints may be tightened again, and there seems to be a force competing for capital hidden behind this.

so, how big will be the impact on a-shares after the holidays?

there has been a lot of movement in currency markets over the past week. the u.s. dollar index started at 100.17 and has been rising for 5 consecutive trading days. as of now, it has reached 102.45. against this background, the rmb has continued to fall in the past week, falling by nearly 1,200 points.

it is worth noting that non-us currencies have generally fallen in the past week. the mainstream currency japanese yen once fell to around 149. the thai baht fell by more than 3% on friday, and the korean won also fell more than the rmb. during this period, there seemed to be a force intentionally guiding the return of capital. moreover, we can also see that under this background, the liquidity of the us market has also significantly stabilized, and its sofr interest rate has fallen significantly recently after a brief rebound from september 26 to 30.

the reason why the us dollar will continue to rise is that it is closely related to its interest rate expectations. the latest data released by the u.s. department of labor showed that the u.s. unemployment rate dropped to 4.1% in september; the number of new jobs in the non-agricultural sector was 254,000, significantly higher than market expectations. as a result, many u.s. research institutions said on october 4 that as the latest number of new jobs in the u.s. non-agricultural sector performed better than market expectations, it may prompt the u.s. federal reserve to remain cautious when adjusting interest rate policies, and it is expected that the rate of interest rate cuts in november may be it narrowed to 25 basis points from 50 basis points previously.

the second is related to the situation in the middle east. on october 1, iran launched a large-scale missile attack on israel. subsequently, israel threatened to retaliate, and us president biden said that he was discussing with israel an attack on iranian oil facilities. according to israeli media reports citing israeli officials, israel may first strike at iran's oil fields and other energy facilities in the future. if iran strikes back, it will consider targeting iran's nuclear facilities. iran announced that it was ready to respond to the attack and planned to launch a second round of attacks in response to the israeli military strike. as a result, international oil prices have risen by nearly 10% in the past week. if the situation in israel and iran continues to deteriorate, international oil prices may be in a trend that is easy to rise but difficult to fall, which will affect the direction of global inflation.

recently, the market seems to pay little attention to the variables brought by the foreign exchange market. in the past week, the hang seng index of hong kong stocks rose by more than 10%, the hang seng technology index rose by more than 17%; the a50 rose by more than 14%, and it still maintained a strength of nearly 1% in friday night trading. the three times long china etf listed in the united states rose more than 35% in a single week. therefore, many people believe that the popularity of a-shares will increase after the market opens on october 8.

galaxy securities believes that this rise cannot be simply regarded as a purely policy-driven market rebound, but should be regarded as a policy turning point of strategic significance for china's economic transformation. policies to stabilize growth have been introduced continuously in the past two years, but weak expectations of the real economy and capital markets have always been the main problem restricting the effectiveness of the policies. there is a major change behind the introduction of this policy, that is, a change in the way expectations are managed, which has led to the emergence of the long-anticipated policy and has become the most direct catalyst for the market to rise.

however, continued excessive heat may also trigger the need for shock consolidation. citic construction investment believes that judging from the experience in 2015, 2019 and 2020, after the sentiment enters the excitement zone, the market will often continue to rise in the short term. there may be some adjustments in the market as sentiment falls later, but this adjustment does not mean the end of the bull market. judging from the current sentiment index position, the current market sentiment at the end of september is equivalent to march 5, 2019 or july 7, 2020 in history. now we should make investment decisions with bull market thinking.

so, will the exchange rate affect the rhythm of the market? analysts believe that this variable should not be ignored. looking back, the reason why the a-share market from 2020 to september 2021 will have a bull market with a very good systematic + structural connection is that it is in the downward cycle of the us dollar against the offshore rmb. the exchange rate environment during the market wave from the end of 2018 to the beginning of 2019 was also relatively favorable. of course, there are exceptions, that is, when the super bull market was launched in 2014, the exchange rate environment was not actually good, but it turned better in 2015 when the bull market accelerated. the impact of exchange rate variables on equity actually depends on the target weight of monetary policy. if its weight is biased towards macroeconomics, it may break the constraints of the periphery. of course, it is also necessary to observe whether further changes in the foreign exchange market are still within control.