--- title: "CITIC Construction Investment | Is there a second bottom? Outlook on overseas major asset classes: April" type: "News" locale: "en" url: "https://longbridge.com/en/news/282107836.md" description: "CITIC Construction Investment Securities Research pointed out that although the US-Iran conflict led to a general adjustment of major asset classes in March, a rebound may occur in the short term as the conflict enters a negotiation phase. However, the market should not be overly optimistic, as it is difficult to replicate last year's post-tariff upward trend, and there are still risks of decline. It is recommended to pay attention to opportunities in the US technology sector, as current valuations are compressed, and if earnings reports exceed expectations, it may bring strong catalysts. Overall, the market still faces multiple fundamental challenges, and future trends need to be observed cautiously" datetime: "2026-04-08T23:29:37.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/282107836.md) - [en](https://longbridge.com/en/news/282107836.md) - [zh-HK](https://longbridge.com/zh-HK/news/282107836.md) --- # CITIC Construction Investment | Is there a second bottom? Outlook on overseas major asset classes: April CITIC Construction Investment Securities Research Written by: Qian Wei The conflict between the U.S. and Iran continues, and major asset classes generally adjusted in March. As the first wave of the conflict passes and enters a negotiation and desensitization period, a short-term tradable rebound is possible. However, it is not advisable to be overly optimistic, as the market is unlikely to replicate last year's trend of rising after tariff changes, and another decline cannot be ruled out. We continue to highlight the allocation opportunities in U.S. tech stocks. Current valuations have been significantly compressed, and the valuation premium of tech relative to the broader market has almost disappeared, but EPS expectations continue to be revised upward. If subsequent earnings reports exceed expectations, strong catalysts may emerge. If U.S. stocks experience another wave of decline, we recommend actively increasing holdings. I. Review of Major Asset Classes in March The conflict erupted and continued, with neither side able to gain absolute dominance on the battlefield. The Strait of Hormuz was blocked, economic concerns intensified, expectations for Federal Reserve interest rate cuts were reversed, and Trump's erratic statements further disrupted the market. Global assets generally faced shocks, with U.S. stocks and bonds pressured by stagflation risks. After extreme market conditions, commodities showed signs of deleveraging, with only oil prices (supply shock) and the U.S. dollar (safe-haven demand) receiving support. II. Outlook for Major Asset Classes in April 1. Overall Trend With the first wave of the conflict passing, we enter a negotiation and desensitization period, allowing for a short-term tradable rebound. However, it is not advisable to be overly optimistic, as the market is unlikely to replicate last year's trend of rising after tariff changes, and another decline cannot be ruled out. (1) From the perspective of market levels, after this round of U.S.-Iran conflict, the declines in major assets are far less than last year's tariff shocks, and even less than common retracement cases. Currently, U.S. stocks, U.S. bonds, and commodities are all at neutral levels for the past six months. The market seems to have used this event to release pressure after the early-year rise, and further upward space may be limited. (2) From a fundamental perspective, some core contradictions remain to be resolved. For example: How significant is the impact of inflation? Will the Federal Reserve cut interest rates? Can oil prices return to pre-conflict levels (currently still at high levels around 90)? Issues regarding AI capital expenditure and revenue, risks in private credit, and whether the war will increase fiscal deficits, etc. (3) Since the conflict began, the market overall has still been priced based on Trump's TACO, and the core negative feedback that forces Trump and the U.S. to compromise comes from the deterioration of financial markets, while the negative feedback that forces other countries to intervene in mediation comes from rising oil prices. However, currently, the declines in U.S. stocks and bonds are limited, and oil prices have not yet reached levels seen after the Russia-Ukraine conflict. It remains uncertain whether this is sufficient to compel Trump to yield. It cannot be ruled out that another significant decline in U.S. stocks or a surge in oil prices may be needed before the final negotiations are completed. 1. Opportunity Reminder We continue to highlight allocation opportunities in U.S. tech stocks. Current valuations have been significantly compressed, and the valuation premium of tech relative to the broader market has almost disappeared, but EPS expectations continue to be revised upward. If subsequent earnings reports exceed expectations, strong catalysts may emerge If there is another wave of decline in the US stock market, it is recommended to actively increase holdings. I. Review of Major Asset Trends in March: General Correction Under US-Iran Conflict Since March, the US-Iran conflict has become the core storyline for global assets. The conflict has erupted and continued, with neither side able to gain absolute dominance on the battlefield. The Strait of Hormuz has been blocked, economic concerns have intensified, expectations for Federal Reserve interest rate cuts have been reversed, and Trump's erratic statements have further disrupted the market. Global assets have generally faced shocks, with US stocks and bonds pressured by stagflation risks. Commodities have shown signs of deleveraging after extreme conditions earlier, with only oil prices (supply shock) and the US dollar (safe-haven demand) being supported. Specifically: crude oil rose over 40%, with Brent crude reaching above $110 per barrel; the three major US stock indices fell between 2-5%, with the Nasdaq outperforming, while non-US equity markets experienced larger declines, contrasting sharply with the equity styles of January-February; the 10-year yields of US, German, and Japanese bonds rose by 20-40 basis points, with Chinese bonds becoming a safe-haven asset; copper and gold fell by around 10%, while silver underwent a deep correction of nearly 24%; the US dollar rose by 2%, briefly surpassing the 100 mark. II. Important Macroeconomic Narrative Clues The main storyline in March revolved around the US-Iran conflict, with various assets showing different emphases. Rising oil prices and the protraction of the conflict brought about changes in sentiment, inflation expectations, and Federal Reserve policy expectations. Looking at different assets: 1. Global Stock Markets: Stagflation Trading The global equity market has clearly weakened, reversing the positive momentum seen since the beginning of the year. Structurally, there are several characteristics: First, US stock sectors such as energy have strengthened, while cyclical sectors have declined. Second, technology stocks have regained relative strength, outperforming the market. Third, the advantage of non-US markets over US stocks has weakened, with larger declines. The overall directional and stylistic changes exhibit clear stagflation trading attributes, reversing the previous recovery trade (non-US \> US stocks, Dow Jones \> Nasdaq). 1. Overseas Bond Markets: Trading Federal Reserve Tightening Risks Global government bonds, represented by US Treasuries, collectively declined. In our previous weekly commentary on US Treasuries, we pointed out that the current decline in US Treasuries is completely different from the situation during last year's tariff liberation day: At that time, expectations for interest rate cuts changed little, short-term yields remained stable, and the main issue was a significant rise in long-term yields. Due to narratives such as de-dollarization, long-term US Treasuries and other dollar assets were sold off, resulting in a bear steepening of the curve; In this round, the main driver is the short end. Due to the continuous rise in oil prices, the futures market no longer prices in a rate cut by the Federal Reserve this year, and even expectations for rate hikes have emerged. The rise in yields is concentrated at the short end and spreads to the long end, resulting in a bear flattening of the curve. 1. Commodities: Supply and demand shocks game, liquidity shock reduces leverage After the US-Iran conflict, the logic of commodities is relatively complex: on the supply side, there is a decline due to the blockade of the Strait, but on the demand side, there is little support under the negative outlook for the global economy; in addition, financial assets like gold are also affected by liquidity shocks. Overall, commodities are weak except for crude oil. Gold and Silver: Gold prices weakened significantly at one point, only rebounding at the end of the month, which may indicate a possibility of deleveraging. Historical experience shows that after the outbreak of geopolitical conflicts, gold prices tend to perform weakly, with declines being the norm, possibly related to cash tightness. In March, offshore dollar liquidity tightened marginally, and the Turkish central bank sold gold; gold experienced excessive volatility at the beginning of the year, with previous long positions being too concentrated, leading to accelerated deleveraging after the conflict broke out; gold has gradually strengthened its positive correlation with US stocks, showing some risk asset attributes, and is constrained under the backdrop of US stock declines. Silver has corrected more deeply, related to the more extreme sentiment of previous long positions. Copper: Market concerns about demand temporarily outweigh the positive supply factors. 1. Exchange Rates: Safe-haven demand boosts the dollar's strength again The US dollar index has gradually rebounded from a phase low of 96, accompanied by a marginal tightening of offshore dollar liquidity. The dollar is regaining its safe-haven properties. III. Outlook for Major Asset Classes in April 1. Macroeconomic Narrative: The first wave of the conflict has passed, entering a negotiation period + desensitization period, but tail risks may not be cleared Although the US and Iran have entered a negotiation period, the market's reaction to news has become desensitized over the past two weeks. However, before a substantive agreement is reached and the Strait of Hormuz is fully opened, it is difficult for the market's focus to return to economic fundamentals. A short-term tradable rebound is possible, but excessive optimism is not advisable. The market is unlikely to replicate last year's trend of rising after tariff impacts, and further declines cannot be ruled out. The logic includes: (1) From the market level, after this round of the US-Iran conflict, the declines in major assets are far lower than last year's tariff shocks, and even less than common retracement cases. Currently, US stocks, US bonds, and commodities are all at neutral levels for nearly half a year. The market seems to have used this event to release pressure after the early-year rise, and further upside may be limited (2) From a fundamental perspective, some core contradictions remain to be resolved. For example: How much impact does inflation have? Will the Federal Reserve cut interest rates? Can oil prices return to pre-conflict levels (currently still at a high of 90)? What are the capital expenditure and revenue issues for AI? What are the risks of private credit? Will the war increase the fiscal deficit? And so on. (3) Since the conflict began, the overall market has still been priced based on Trump's TACO, and the core negative feedback that forces Trump and the U.S. to compromise comes from the deterioration of the financial markets, while the negative feedback that forces other countries to intervene comes from rising oil prices. However, currently, the declines in U.S. stocks and bonds are limited, and the oil price center is far from the levels after the Russia-Ukraine conflict. It remains uncertain whether this is enough to make Trump yield. It cannot be ruled out that another significant drop in U.S. stocks or a surge in oil prices may be needed before the final negotiations are completed. 1. Key Events to Watch (1) U.S.-Iran Negotiations: The situation regarding navigation in the Strait of Hormuz may be a short-term observation focus, as well as the extent of oil price declines. (2) Federal Reserve's April Monetary Policy Meeting: Focus point one, if Waller's nomination is approved by Congress, Powell will step down, and the market may shift to discussions about the new chairman; focus point two, if U.S.-Iran tensions ease and oil prices decline, how will the Fed view the subsequent policy path? (3) Trump's Visit to China: Previously postponed to May due to the U.S.-Iran situation, if there are no further delays, market risk appetite may receive significant support. (4) U.S. Q1 Earnings Reports, CPI Data: If overall results are good, it will support both stocks and bonds. 1. Asset Views (1) Relative Ranking: U.S. Stocks \> U.S. Bonds \> Commodities In the short term, with improved risk appetite, the market will trade a rebound, but it may end quickly and fall back into a phase of oscillation and observation. If there is a lack of a sustained recovery or trading themes, it will be difficult for major assets to show a trending market, and range trading is advisable. Specific views are shown in the figure below: (2) Opportunity Reminder: Technology Stocks Continuing to highlight the allocation opportunities in U.S. technology stocks. Current valuations have been significantly compressed, and the valuation premium of technology relative to the market has almost disappeared, but EPS expectations continue to be revised upward. If subsequent earnings reports exceed expectations, strong catalysts may emerge. If U.S. stocks experience another wave of declines, it is recommended to actively increase holdings. U.S. inflation rises beyond expectations, U.S. economic growth exceeds expectations, leading the Federal Reserve to continue tightening monetary policy, resulting in a significant appreciation of the U.S. dollar, rising U.S. Treasury yields, continued declines in U.S. stocks, a banking crisis, and emerging markets facing currency and debt crises. The U.S. economic recession exceeds expectations, causing a liquidity crisis in financial markets, forcing the Fed to shift towards easing. The European energy crisis surpasses expectations, plunging the Eurozone economy into deep recession, global markets into turmoil, external demand shrinks, and policies face dilemmas. Global geopolitical risks intensify, U.S.-China relations deteriorate beyond expectations, uncontrollable factors emerge in commodities and transportation, the degree of de-globalization deepens, supply chains continue to be disrupted, and competition for related resources worsens. Qian Wei: Chief Analyst of Overseas Economy and Major Assets at CITIC Securities, Ph.D. in Economics from Fudan University, joined CITIC Securities Research Institute in 2020, covering overseas macroeconomics, major assets, exports, exchange rates, capital flows, etc. Securities Research Report Title: "Is There a Second Bottom? Outlook on Overseas Major Assets: April" Release Date: April 8, 2026 Report Issuer: CITIC Securities Co., Ltd. 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