No matter how good the stock market is, there will always be times when it falls. Take the U.S. stock market, for example. Although it entered a bull market that lasted for more than ten years after the last financial crisis, it eventually suffered a sharp decline.

In the stock market, there is no permanent rise and no permanent fall. No matter how good the stock market is, there will always be times when it falls. Take the U.S. stock market, for example. Although it entered a bull market that lasted for more than ten years after the last financial crisis, it eventually suffered a sharp decline. So, what is the reason for the sharp decline in the U.S. stock market? What impact will it have on A shares ?

What is the reason for the sharp decline in the United States?

First of all, the most direct reason for the sharp decline in the US stock market should be the Federal Reserve tightening monetary policy . Before the collapse of the U.S. stock market, although it had repeatedly reached record highs, its rise was mostly caused by bubbles blown by the release of currency.

Because before this, the U.S. central bank, the Federal Reserve, implemented extremely loose policies in order to boost the economy. Not only did it quickly reduce interest rates to a level close to 0, it also implemented unlimited quantitative easing, that is, it issued a large amount of money and purchased assets. put on the market.

Ultra-low interest rates and excessive money investment are like a free cake in front of the U.S. stock market. You can eat as much as you want. It would be strange if you can avoid getting fat.

However, the fatness of the US stock market is nothing more than puffiness, because there is not much support from the economic foundation. With the shift in the Fed's monetary policy, interest rates have increased and less currency has been issued, which also means the free feast is over for the U.S. stock market. How did it go up before, but now it goes down.

Secondly, from a fundamental perspective, it is caused by the surge in inflation in the United States. Although the Federal Reserve's quantitative easing policy has restored a certain degree of vitality to the U.S. economy, it has also posed a big hidden danger, which is the rise in inflation. Because too much money is issued in a short period of time, it is almost inevitable that the inflation rate will rise.

In addition, the Federal Reserve has obviously underestimated the rising speed of U.S. inflation , so that the United States has encountered serious inflation that has not been seen in decades, and this inflation remains high.

Because of this, the Federal Reserve had to significantly reduce the scale of quantitative easing and significantly increase interest rates, hoping to curb the rise in inflation.

Therefore, if it were not for soaring inflation, there would be no need for the United States to tighten monetary policy. If the Federal Reserve had not tightened monetary policy, the U.S. stock market would not have fallen so badly.

What impact will the sharp drop in US stocks have on A shares?

Although I don’t want to admit it, the U.S. stock market is still the most influential stock market in the world. Almost all stock markets around the world will be affected by it to a greater or lesser extent, including A-shares.

Normally speaking, when the US stock market plummets, it is difficult for A-shares to survive alone. Especially short-term trends are greatly affected by U.S. stocks. When U.S. stocks fall sharply, A-shares will most likely fall as well.

However, the rise and fall of my country's A-shares does not only depend on the mood of the U.S. stock market. Because there are many factors that affect the rise and fall of the stock market, the sharp drop in the U.S. stock market is only an external factor and does not play a decisive role. The main factor that determines the rise of A shares is internal factors.

Because our country has not flooded the country with floods like the United States, nor has it suddenly tightened the purse strings, nor has it suddenly raised interest rates significantly. Therefore, the internal situation is much better than that in the United States.

Because of this, A-shares have their own independent market trends. Although they are affected by U.S. stocks, they do not entirely depend on U.S. stocks. Therefore, even if the United States plummets, A shares may not be unbuyable.