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

Sichuan Observation News Reporter Peng Yuheng

Yesterday, led by technology stocks, the market experienced a broad rally, but today it faced a collective pullback. On March 19, major A-share indices fluctuated downward, with nearly 5,000 stocks closing lower. The main board large-cap stocks generally came under pressure, dragging the Shanghai Composite Index lower. The market declined on increased volume, and overall sentiment was subdued, with investors truly feeling a “warm spell followed by cold.”

At the opening, the market showed signs of fatigue. There was hardly any significant “resistance” during the session. Although some funds attempted to “rescue” technology stocks in the afternoon, the heavy selling pressure in sectors like non-ferrous metals, chemicals, and finance made it difficult for the indices to rebound. The Shanghai Composite Index even briefly fell below 4,000 points at the close. By the end of the day, the Shanghai Composite fell 1.39% to 4,006.55 points; the Shenzhen Component Index dropped 2.02% to 13,901.57 points; and the ChiNext Index declined 1.11% to 3,309.10 points. The total trading volume expanded to 2.1273 trillion yuan, up 66.2 billion yuan from yesterday. The divergence between bulls and bears intensified amid the decline, with panic and profit-taking both 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 the number of rate cuts this 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. Foreign capital flow expectations weakened, and the A-share market was affected accordingly.

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 fell 2.73%. Hong Kong stocks also suffered; the Hang Seng Index closed down 2.02%, and the Hang Seng Tech Index fell 2.19%.

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

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

In fact, the short-term trend of 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 is better to stay calm and wait for the market direction to become clearer.

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

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