On the last day of April, the three major U.S. stock indexes fell sharply, including the Dow Jones index fell by 1.49%, the Nasdaq index fell by 2.04%, and the S&P 500 index fell by 1.57%!
From a technical point of view, U.S. stocks have risen too much in the past year or so, and after a week-long rally, there is a high probability that there will be a C wave decline. This means that after the decline in April, the three major U.S. stock indexes will most likely still fall in May. In April, the Dow Jones fell 5%, the NASDAQ lost 4.41%, and the S&P 500 lost 4.16%.
In 2024 and even 2025, the major indices as a whole will show a trend of "easy to fall and difficult to rise", or in other words, the major U.S. stock indexes have been consolidating for two years, and it is difficult to do anything.
Based on this judgment, the impact of U.S. stocks on A-shares is relatively "neutral", and it is precisely because it has become more and more difficult for international capital to find opportunities in the U.S. stock market that the Chinese market, which is seriously undervalued in terms of fundamentals, will be considered. In other words, the opportunities for A-shares are much greater than those for U.S. stocks.
The three major stock indexes fell sharply on April 30, which is related to the fundamentals of the U.S. economy.
On the news side, the U.S. authoritative agency released key data, the consumer confidence index fell to 97 in April, lower than the expected 104, falling for three consecutive months, falling to the lowest level since July 2022.
Some people may ask, it has declined for 3 consecutive months, why didn't the previous data disclosures fall so much this time?
In the past, we rarely mentioned the consumer confidence index, and the index in the United States is obviously between 0 and 200, with 100 being the median, above 100 being optimistic, and below being pessimistic. Although it has declined for three consecutive months, the consumer confidence index fell below 100 in April, which means that consumer confidence has begun to be significantly pessimistic.
You must know that the United States is a big consumer country, not only consuming the United States, but also consuming the world, consumer confidence is insufficient, and it is natural that the stock market will plummet.
Referring to the other two indexes, the US consumption status index fell to 142.9 from 146.8 last month, and the consumer expectations index fell to 66.4 from 74 last month, both of which fell sharply.
Combining the three indicators, it is not difficult to see that although the current real consumption in the United States is in the boom range, consumer confidence and consumption expectations are in the pessimistic range, indicating that the US economy is about to enter a recession.
Of course, friends who have been paying attention to leisure finance for a long time know that this is what we expected.
The U.S. economy must go through a process where consumer confidence is low, household spending is declining, unemployment is starting to climb sharply, commodity prices are falling, and inflation can be contained. In turn, the Fed began to cut interest rates in order to restimulate the economy and start a new economic cycle. In this process, it is inevitable to be accompanied by the emergence of a recession, and of course, the United States prefers a "soft landing".
An important variable at present is that the U.S. immigration policy makes employment and unemployment data less objective and does not fully reflect the real situation of the U.S. economy.
On April 30, the USDA said that agricultural prices fell 1.1% month-on-month and 4.8% year-on-year in March, which looks like a very good sign. As U.S. Treasury Secretary Janet Yellen said, U.S. inflation has fallen sharply, but many commodity prices are still above pre-pandemic levels, and housing inflation is highly likely to fall in 2025.
According to data released by the American Association of Realtors, the median price of existing homes in the United States was $393,500 in March, up 4.8% year-on-year and the highest price in March since the association began to record.
In other words, housing prices in the United States are still feverish, even if the Federal Reserve raises interest rates so aggressively, it has not been able to stop the rise in housing prices in the United States, or in other words, real estate has become an important tool for the preservation of U.S. assets, which is related to the large release of water in the United States during the new crown pandemic.
In other words, when U.S. housing prices begin to adjust, the current round of inflation in the U.S. may really hit the bottom. If the Fed starts cutting interest rates in the second half of 2024, it will only add to the firmness of US home prices. It is extremely detrimental to curbing inflation itself. This suggests that the United States will have a long and difficult time in the coming year or so.