The Shanghai Composite Index once fell below 4,000 points—has the "bull" been driven away? | Sichuan Market Analysis

Reprinted from: Sichuan Online

Sichuan Online Reporter Peng Yuheng

Yesterday, led by technology stocks, the market experienced a broad rally. Today, it faced a collective pullback. On March 19, major A-share indices fluctuated downward, with nearly 5,000 stocks closing lower. Main board large-cap stocks generally came under pressure, dragging the Shanghai Composite Index lower. The market saw increased trading volume on the decline, with overall sentiment subdued, and investors truly felt a sense of “warming then cooling.”

At the opening, the market already showed signs of fatigue. There was hardly any significant “resistance” during the session. Although some funds attempted to “rescue” technology stocks in the afternoon, heavy selling pressure in sectors like non-ferrous metals, chemicals, and finance limited the rebound, and the index struggled to recover. The Shanghai Composite Index briefly fell below 4,000 points in late trading. By the close, the Shanghai Composite fell 1.39% to 4,006.55 points; the Shenzhen Component Index dropped 2.02% to 13,901.57 points; the ChiNext Index declined 1.11% to 3,309.10 points. The total daily turnover expanded to 2.1273 trillion yuan, an increase of 66.2 billion yuan from yesterday. Both bulls and bears became more divided amid the decline, with panic and profit-taking selling simultaneously surging, adding pressure on market absorption.

Behind today’s broad decline, two “black swans” emerged.

First, the Federal Reserve signaled a hawkish stance. Early this morning, Beijing time, the Fed announced its March interest rate decision, keeping the benchmark rate unchanged as expected, but the dot plot indicated a reduction in expected rate cuts for the year from two to one, with a more hawkish tone on inflation risks. This statement pushed the dollar index higher, putting global risk assets under pressure, and weakening foreign capital inflows expectations, which in turn affected the A-shares.

Second, tensions in the Middle East escalated again. Israel attacked Iranian gas fields, sharply increasing global risk aversion. Oil and gold prices fluctuated violently, and stock markets generally came under pressure.

The global markets almost “caught a cold” collectively. Overnight, the three major U.S. stock indices all closed lower, and international copper, oil, and some agricultural futures prices retreated. In the Asia-Pacific region, the Nikkei 225 plunged 3.38%, and the KOSPI declined 2.73%. Hong Kong stocks also suffered; the Hang Seng Index fell 2.02%, and the Hang Seng Tech Index dropped 2.19%.

Despite the negative sentiment from external markets quickly transmitting to the A-shares, there were still “contrarians”—36 stocks hit their daily limit up. Under the influence of Middle East tensions, energy sectors such as oil and gas extraction, natural gas, and power generation strengthened, with stocks like Guangdong Electric Power A and Guang’an Aizhong hitting the daily limit. Additionally, the computing power theme remained active. After Alibaba Cloud and Baidu Smart Cloud announced price hikes for AI computing and storage products yesterday, a wave of price increases in computing services emerged, with stocks like Meili Cloud and Tongniu Information hitting the limit up.

Today, the Shanghai Composite Index returned near the 4,000-point mark, touching its lowest since January this year. Many investors couldn’t help but ask: everyone’s long-anticipated “bull market,” has it really been pulled away?

In fact, the short-term trend of the A-shares is always the result of a complex interplay of internal and external factors, and a single-day plunge does not mean a complete trend reversal. Currently, the market is in a phase of oscillation and bottoming out. External disturbances have not yet dissipated, and confidence needs time to recover. For investors, rather than worrying about short-term fluctuations, it’s better to stay calm and wait for clearer market directions.

(Data sources: Wind, Tonghuashun iFinD, Eastmoney; opinions expressed are for reference only and do not constitute investment advice.)