01, A-shares and Hong Kong stocks
This morning, the A-share indices were generally on the rise, but they began to decline in the afternoon, with some indices rising and some falling by the time of closing. However, if we look only at the afternoon session, all indices were in decline.
In the end, the Shanghai Composite Index fell by 0.6%, the CSI 300 Index fell by 0.66%, and the SSE 50 Index fell by 1.1%. Although indices such as the Shenzhen Component Index, the ChiNext Index, and the CSI 500 Index saw slight increases, the gains were relatively small.
After the United States raised interest rates by 75 basis points last night, the A-shares held up for most of the day, only starting to decline significantly in the afternoon, which is quite commendable.
Hong Kong stocks were not so fortunate.
The Hang Seng Index opened higher, but a slight decline had already occurred in the morning, and the decline intensified in the afternoon. After the A-shares closed, the Hang Seng Index fell nearly 300 index points in the half-hour from 3:00 to 3:30, with the Hang Seng Index ultimately falling by 2.17%.
The chart above shows the trend of the Hang Seng Technology Index today, which is similar in shape to the Hang Seng Index, but the decline at the close was even greater, with a full-day decline of 3.33%.
02, European stock markets
After 3:00 PM, the European stock markets opened.
Although the U.S. stock market experienced a surprising rise last night, the performance of the European stock markets this afternoon is more in line with the actual situation.After all, the Federal Reserve's decision to raise interest rates by 75 basis points is a significant increase that has rarely been seen in nearly 30 years. This easily brings to mind the substantial interest rate hikes of the early 1980s.
Although the chairman of the Federal Reserve has long since changed, the inflation the current situation faces bears some resemblance to that of the past. The current inflation rate in the United States has returned to the high levels of the early 1980s.
However, after the substantial interest rate hikes at that time, while this inflation was brought under control, the cost was a severe recession in the U.S. economy that lasted for three years.
Therefore, the market is now widely concerned that after a substantial interest rate hike, perhaps inflation will recede, but the economic cost will be very high. It is normal for the stock market to decline based on such concerns.
By 7:00 PM in Beijing, the German stock market's decline had expanded to 3%, and both the UK and French markets had fallen by more than 2%. Before 7:30 AM Beijing time, the stock markets of the three European countries experienced a slight rebound.
03, UK Interest Rate Hike
In addition to the decline in Asian and European markets, although the U.S. stock market was not open, the three major U.S. stock indices all saw substantial declines in the futures market.
At 5:00 PM today, the Nasdaq index's decline had reached 3%.
In terms of specific stocks, British bank stocks in the U.S. market saw significant declines before the market opened, with HSBC down by 3%, and Barclays and Lloyds both falling by more than 4%.
Just now, the Bank of England announced an interest rate hike of 25 basis points.According to the Bank of England, the inflation in the UK remains at a high level, with the CPI expected to stay above 9% for the next few months, and the inflation rate could even exceed 11% by October this year.
At the same time, it is projected that the UK's GDP growth for the second quarter of this year will be close to 0.3%.
The situation in the UK is similar to that in the US, with high inflation and slowing economic growth, indicating that the economy is on the verge of a recession.
Whether it's A-shares, Hong Kong stocks, or Europe and the US, the current decline in stock markets is due to inflation and the resulting significant interest rate hikes.
In late July, the US will continue to raise interest rates at its next meeting, and it is estimated that the global stock market will still struggle to stabilize for the time being.