Market analysis on February 20

The US stock market was closed last night. The pan-European stock index hit another two-year high in recent trading, although gains in the German and French stock markets were suspended. The German stock market fell from a high closing record, while the French stock market, which had a record high for two consecutive days, largely closed. Novo Nordisk hit a record high for five consecutive days, helping the Danish stock market set a record high for the fourth day in a row. In terms of sector performance, the medical sector led the European stock market, while the mining sector led the decline by 1%, technology stocks also declined, and ASML fell 1.7%.

In the US, Morgan Stanley's bear analyst Wilson pointed out that the balance of the Federal Reserve's overnight reverse repurchase tool continues to shrink, suggesting that Biden's fiscal stimulus measures are coming to an end. For ordinary US companies and consumers, the current economic situation is not optimistic. Meanwhile, BlackRock said that as the market anticipates that the Bank of Japan may soon raise interest rates, Japanese stocks will be the big winners, because overseas investors currently have low allocations on Japanese stocks, and it is expected that more capital will flow in to support the further rise in Japanese stocks.

On the geopolitical side, tension in the Red Sea escalated, and the Houthis claimed to have attacked two American ships with missiles and hit them accurately. Meanwhile, the British “Ruby” freighter that was attacked has completely sunk. This incident may affect regional security and related market sentiment. Crude oil prices hit a three-month high, although Brent crude oil turned up after falling more than 1% in the intraday period and closed higher for three consecutive days.

In China, A-shares had a good start on the first trading day of the Year of the Dragon. The Shanghai Index rose more than 1% to 2,900 points. AI concept stocks exploded, “three barrels of oil” strengthened, and small and micro capitalization stocks continued to rebound. The offshore RMB exchange rate against the US dollar rose above 7.21 in the intraday period, hitting a new high of more than a week. Although it later fell by more than 100 points, it eventually achieved a slight increase. These market dynamics reflect a variety of factors, including policy expectations, geopolitical tension, and industry trends, all of which have had an impact on investor sentiment and market trends.

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