The three major indices all fell sharply!!

$SentinelOne(S.US)hanghai Composite Index sh000001$ The performance of A-shares today looks quite pessimistic, with all three major indices falling in unison. Market hotspots continue the old pattern of high-low switching, with the computing hardware sector showing weakness, and previously popular sectors like memory chips and nuclear power also performing poorly. However, the AI application sector has emerged as a dark horse, rising strongly and becoming a bright spot in the market. The innovative drug and lithium battery sectors also refused to lag behind, rising against the trend.

Overall, tech stocks are indeed facing short-term adjustment pressure, but fortunately, market hotspots haven’t completely dissipated, nor has there been large-scale panic selling. From a medium-term perspective, the market still has the potential to maintain a volatile upward trend.

As for the reasons behind today’s A-share decline, I think there are three main points:

1. Overnight, the U.S. stock market, especially tech stocks, fell sharply. Meta’s stock price plummeted by 11.33%, marking its largest single-day drop in nearly three years, while tech giants like Microsoft and NVIDIA also followed suit. The Nasdaq Golden Dragon Index also fell by 1.88%. This has clearly suppressed risk appetite in the A-share market, particularly sentiment in the tech sector.

2. Although the Federal Reserve announced a 25-basis-point rate cut on October 30, Powell also stated that further rate cuts in December are “far from certain.” This statement caused the market’s expectation for a December rate cut to drop from around 95% to 72.8%, triggering subtle changes in global liquidity expectations.

3. Market funds have started shifting from high-growth, high-valuation tech stocks to lower-positioned sectors. Defensive sectors like consumer goods and pharmaceuticals, as well as cyclical resource stocks like lithium batteries and rare earths, have seen capital inflows. This sector rotation and capital volatility have impacted the market.

Looking ahead, I believe the current volatile adjustment in A-shares is a normal phenomenon. After all, occasional pullbacks during an uptrend are healthy and can build momentum for further gains. I don’t think this decline signals the end of the rally! At least based on the current situation, absolutely not! This is a healthy short-term adjustment, a normal part of sector rotation. In the short term, I expect the market to continue fluctuating around 4,000 points, possibly even dipping below 4,000 for a while. From a timing perspective, the market still needs a catalyst from major positive news. But from a long-term perspective, I remain bullish!

Now, let’s take a look at the performance of various sectors:

1. AI Applications
Multiple departments jointly released the “Action Plan for Deepening Smart City Development and Advancing Comprehensive Digital Transformation,” aiming to integrate smart technology with quality living, inject new vitality into fields like culture and tourism, sports, and digital consumption using digital technology, while also promoting the widespread application of AI in consumer scenarios. Some institutional reports noted that OpenAI’s newly released text-to-video model, Sora2, has made significant technological advancements and is closely integrated with social interaction features, accelerating the commercialization of AI in consumer applications. Meanwhile, demand for innovative content like “AI comic dramas” has surged, bringing new opportunities to the industry. Currently, both domestically and internationally, the performance and application scenarios of AI video products continue to improve, with their empowering effects on industries like film, gaming, and IP becoming increasingly evident, and the paths for product forms and monetization becoming clearer.

2. Innovative Drugs
Sansheng Guojian reported that its profits for the first three quarters increased significantly year-on-year, rising by over 70%. The 2025 medical insurance catalog adjustment officially began at 8:30 AM on October 30, introducing a new mechanism called the “Commercial Insurance Innovative Drug Catalog.” Some analysts noted that the pharmaceutical and biotech industry has shown signs of a new upward trend, with overseas collaborations accelerating. The entire industry is still in its early growth stage, with strong momentum. Companies with strong overseas capabilities in the upstream biopharmaceutical sector are particularly favored.

3. Lithium Battery Sector
According to relevant data, the average price of lithium hexafluorophosphate reached 103,000 yuan per ton on October 30, a slight increase of 2.49% from the previous trading day. At the end of September, the average price was only 63,300 yuan per ton. Since the beginning of this year, the price of this product has surged by 113% from its low, making it the most outstanding performer among the four major lithium battery materials. Currently, the lithium battery industry is gradually recovering, with the industrialization of solid-state batteries accelerating. Breakthroughs in technology, capacity expansion, and equipment deliveries are coming one after another, making the industrialization prospects increasingly clear.