On August 19, U.S. equities fell for the third consecutive day overnight; technology stocks broadly declined; commodities diverged—oil prices rose while gold and copper fell. How should we interpret this?

I’ve stressed for three days straight that 'funding costs determine market trends'—especially yesterday, when I first flagged the possibility of an index-level drop of roughly 10% in U.S. equities in the near term. This round of market movement originated from the yen’s sudden plunge against the dollar, with the key resistance level at USD/JPY 160. Currently, the U.S. 30-year Treasury yield has surged to around 5.3%, meaning that speculation over whether the Fed will hike rates has become meaningless: a globally high-interest-rate environment has already taken hold, and the conventional path for central banks to ease policy via monetary leverage has effectively been priced out—and locked in—by the market itself. Under these conditions, AI chip stocks—highly sensitive to DCF valuations and facing relentless global liquidity withdrawal—are naturally the first to suffer. Moreover, their recent sharp rallies and gap-up moves provided short sellers with compelling justification to strike—waiting only for a plausible trigger! The global bond market selloff, weak macroeconomic data, renewed bubble anxiety in tech stocks, and rising oil prices amid a stalemate in U.S.-Iran tensions collectively delivered that perfect opportunity. I’ve often said: when assets that shouldn’t rally together do so, it almost certainly signals that some are deceptive—because most rallies defying liquidity fundamentals are ultimately designed as arbitrage platforms, luring retail investors into believing a bull market has arrived! Thus, what we’re witnessing is not a simple traditional 'risk-off' scenario—i.e., 'rising risk aversion → equity sell-off → gold rally'—but rather a situation where 'liquidity has tightened again, and its cost has risen significantly relative to the past.' When global long-end yields rise, financial conditions tighten passively, pressuring high-valuation/long-duration tech stocks first. Meanwhile, Middle East geopolitical risks push oil prices higher, triggering 'inflation shocks'; yet gold falls due to rising real yields and higher holding costs. Gold’s decline during U.S. equity selloffs has also become a common pattern in recent years. Copper, meanwhile, faces downward pressure from a stronger dollar, deteriorating growth expectations, and profit-taking on high valuations. As LME-COMEX spreads reach extreme levels, market participants likely no longer believe Trump will impose copper tariffs—hence, a natural expectation of a pullback. Therefore, the fundamental shift visible in price action centers on 'interest rates'—not merely risk sentiment. From the charts: all three major U.S. indices posted their third consecutive daily decline, while the SOX index plunged approximately 5%–5.6%, becoming the primary target of capital outflows. At the same time, U.S. long-dated Treasury yields remain alarmingly elevated! The 10-year Treasury yield stands at ~4.74%; the 30-year briefly breached 5.32%–5.33%, hitting its highest level since 2007. This signals markets are demanding substantially higher returns for holding dollar-denominated assets over the long term. And this is no isolated U.S. bond-market phenomenon—it’s a synchronized surge across developed-market sovereign debt markets! We see Japan’s 10-year JGB yield climbing to ~2.95%, a 30-year high; ultra-long Japanese yields are also sharply rising; German, French, and UK long-dated yields likewise sit at multi-year highs. Hence, if this correction deepens, it won’t be simply because 'U.S. equity valuations were too high'—rather, global bond markets are collectively demanding higher term premiums. Even if this doesn’t amount to a full-blown crisis, it unmistakably signals a bond-market storm unfolding against a backdrop of persistent high inflation.

How should we view the A-share market performance on September 29, 2026?

Last week, we advised tightening position control as the National Day holiday approaches, given the heightened risk of index adjustments at any moment. Yesterday’s sharp decline, however, has already released part of that risk: all three major indices broke below key technical support levels, further increasing the difficulty of market timing. I was too busy to update yesterday, and many asked about the causes behind the steep drop—mainly the confluence of multiple negative catalysts over the Mid-Autumn Festival holiday. The most significant was the 10-year U.S. Treasury yield breaking above 5.2% and the 30-year yield surging past 5.5%. Such elevated risk-free yields directly suppress high-valuation tech stocks—and also trigger selling pressure on non-yielding assets like precious metals. It’s truly frustrating: assets offering such yields would be snapped up instantly in China’s domestic market. Of course, such high rates cannot persist indefinitely; our current primary strategy remains defensive. Second, Trump rejected Iran’s proposal to reopen the Strait of Hormuz, intensifying oil-price-driven inflation concerns and causing a sharp global drop in risk appetite. Third, a 'rumor' circulated in the tech sector: reportedly, a U.S. Senate bill is being drafted to ban federal 'sensitive systems' from procuring Chinese-made optical modules. This news nearly collapsed the entire tech sector—optical communications stocks plunged 8%. We’ve long explained the logic underpinning tech stocks: for firms whose primary customers are in the U.S. and Europe, geopolitical risk must be explicitly priced in—whether or not 'choke points' are enforced hinges on little more than a single statement. Today, all three major indices turned positive: the Shanghai Composite rose 0.08%, and the ChiNext gained 0.34%. On the surface, indices look fine—but examine trading volume: just 884.3 billion yuan in the first half of the day, falling short of the 1-trillion-yuan threshold and down 286.1 billion yuan from the previous trading day. Over 4,000 A-share stocks rose, yet turnover shrank by nearly 25%. This indicates that early-mover funds exited yesterday, leaving the rest of the market largely passive and resigned.

Copper Declines as Tech Selloff, Oil Rally Dent Risk Appetite

14 hours ago

Copper prices declined on the London Metal Exchange amid tech sell-offs and rising oil prices, while a Rio Tinto mine incident added to supply concerns. Industrial metals faced mixed performance as global growth worries impacted risk appetite.

bloomberg

2026-10-29

Copper Declines as Tech Selloff, Oil Rally Dent Risk Appetite

Copper Declines as Tech Selloff, Oil Rally Dent Risk Appetite

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