Trump's "chaotic" speech triggers a massive shake-up in global stock markets! What is the next move for the Shanghai Composite Index?

Why did AI · Trump’s speech trigger a global market chain reaction?

Everyday Economic Reporter: Zhao Yun Everyday Economic Editor: Ye Feng

On April 2nd, the market fluctuated and adjusted throughout the day, with the ChiNext Index and STAR Market 50 Index both falling more than 2%, and the Shenzhen Component Index dropping over 1%. By the close, the Shanghai Composite fell 0.74%, the Shenzhen Composite declined 1.6%, and the ChiNext Index dropped 2.31%.

Looking at sectors, the pharmaceutical sector rose against the trend, oil and gas stocks performed actively, and fiber optic concepts repeatedly strengthened. On the decline side, the computing power leasing concept collectively adjusted.

Over 4,300 stocks in the entire market declined. The combined trading volume of the Shanghai and Shenzhen markets was 1.84 trillion yuan, shrinking by 169.5 billion yuan compared to the previous trading day.

Veteran readers should know that our review articles during trading days are generally titled “Discussing the Market Based on Market Conditions”; only before weekends do we briefly summarize some news factors.

But today, there’s really no way around it.

The reason for the market decline is plainly laid out.

Trump’s speech shook the market

On Wednesday evening local time, which is Thursday morning Beijing time at 9 a.m., as U.S. President Trump delivered a nationwide speech, global financial markets trembled in unison:

Asian-Pacific stocks fell, U.S. stock index futures declined, gold and silver plummeted, and only oil prices surged.

Like yesterday’s “upward circuit breaker” in the Korean stock market, today in the afternoon it experienced a “downward circuit breaker.”

According to reports from Xinhua News Agency, CCTV News, and other media, Trump’s statements had three main points:

First, he claimed a “quick, decisive, overwhelming victory” in the Iran conflict. Trump said Iran’s missile and drone capabilities have been “greatly weakened,” weapons factories and rocket launch sites are “almost gone,” and the U.S. military’s strikes on Iran’s nuclear facilities have achieved “great success,” significantly reducing nuclear threats for the U.S. and other countries.

Second, Trump stated that the U.S. is “close to completing” its core strategic objectives in the Iran conflict; the U.S. no longer needs the Strait of Hormuz, nor does it need it now.

Third, Trump announced that in the coming weeks, the U.S. will intensify its strikes on Iran. If no agreement is reached, the U.S. will launch fierce attacks on all of Iran’s power plants. Moreover, the U.S. is conducting close surveillance and control over these facilities via satellites. If any movement is detected from the other side, the U.S. will immediately launch missiles to deliver a “destructive” blow.

But for the market, the biggest effect of these remarks was to dampen investors’ optimism about a quick end to the war.

Just the day before (March 31), Trump had stated at the White House that the U.S. would end its conflict with Iran “within two to three weeks,” possibly reaching an agreement before that.

According to CCTV News, Senate Democratic leader Chuck Schumer wrote on social media: “Is there a more rambling, illogical, and very sad presidential war speech than this?”

Iran’s response was also somewhat tough. According to reports from Xinhua, the Iranian Islamic Republic News Agency, Iran’s Foreign Ministry spokesman Bahar Gaei said on the same day that Iran’s entire nation is united in fighting “injustice and aggressive war.” As long as this “illegal war” continues and enemies keep attacking Iran’s people and cities, Iran will continue to resist.

Next response ideas?

By the close, the Shanghai Composite once again narrowly held the 3,900-point mark, touching a low of 3,900.12 points.

It’s worth noting that among the three major indices, both the Shenzhen Component and ChiNext Index retreated below the 120-day moving average today, which is the recent bottom of the oscillating range. Conversely, the Shanghai Composite, after a long absence, showed a “5-day crossing above the 10-day,” which is somewhat more positive.

We still believe that although we cannot say “everyone loses = no one loses,” excessive pessimism is not advisable.

On one hand, today’s decline is partly due to the market approaching a three-day holiday, increasing the demand for holding cash and waiting.

On the other hand, the scene of the market being “disrupted” by Trump’s speech actually aligns with some institutional forecasts made earlier.

For example, Huaxi Securities’ research report pointed out that the recent low-volume pattern in A-shares has not changed, and funds remain cautious about easing expectations. The trading volume still hovers around 20 trillion yuan, and market activity has not become more active due to positive news.

It also noted that, from the perspective of positive news itself, Trump’s statements are often unpredictable, and the market remains doubtful about whether he can deliver on them. From a capital perspective, floating positions are relatively small, with most holdings held by medium- and long-term allocation funds. These funds are less sensitive to short-term event-driven fluctuations and tend to trade more steadily. Therefore, even if positive signals appear, market response may be limited.

Thus, future trading remains challenging. Since March, the market has continued to operate with low volume, and investors face difficulties: left-side funds tend to position during declines, while right-side funds face rapid sector rotation, making chasing rallies risky and prone to adjustments.

In this context, position management remains crucial, and caution should be exercised with previously high-valued targets, focusing on undervalued stocks with solid fundamentals, such as power equipment, media, agriculture and animal husbandry, and large financials.

Debon Securities also believes that, in the absence of significant easing of external conflicts and with no clear signals of incremental funds, the short-term A-share market is likely to be dominated by risk aversion and fluctuate within a range.

From today’s market, aside from the “logic-following” surge in oil and gas sectors, the recently active pharmaceutical sector also showed some bright spots.

On the news front, Eli Lilly announced on Wednesday that the U.S. Food and Drug Administration (FDA) has approved its oral GLP-1 drug for market launch. Additionally, the 37th International Alzheimer’s Disease Conference will be held in Lyon, France, from April 14-16, 2026.

Market analysis suggests that China’s innovative drug industry is shifting from scale expansion to value deepening. The industry’s competitive logic has shifted from “speed” to “depth.” In this deep transformation, only companies with original innovation capabilities, independent commercialization systems, and a global perspective can truly withstand cycles and establish growth certainty.

The banking sector also played a stabilizing role. Agricultural Bank of China closed up 3.44%, contributing the most to the overall market gains.

Everyday Economic News