[Huaxi Overseas Strategy] Middle East issue remains deadlocked, some markets rebounded after overselling this week

West China Overseas Strategy

Key takeaways for the global markets this week: Middle East geopolitical issues are still in a stalemate. This week, some global markets saw a sharp oversold bounce. This week, the three major U.S. stock indices experienced a sharp oversold rebound, with relatively high volatility on certain trading days during the week. This week, in the U.S. stock market, aside from the energy sector, most other sectors rebounded. This week, the TAMAMA Technology Index rebounded. At present, the P/E ratio of the TAMAMA Technology Index has risen modestly to 30.8. This week, the Philadelphia Semiconductor index rebounded, and its P/E ratio quickly climbed to 39.09, returning to the range near 40. The Nasdaq Composite Index rebounded this week, and its P/E ratio rose to 37.24. As the valuation of U.S. tech stocks will gradually increase alongside the progression of the oversold rebound phase, new positive catalysts for U.S. tech fundamentals still need to wait. Coupled with the increasing complexity of Middle East geopolitical issues, it is expected that after the oversold rebound period, there will still be consolidation and differentiation within U.S. tech stocks, and some individual stocks that have not digested their weakness sufficiently will face continued pressure. Currently, the S&P 500 Cyclically Adjusted P/E (CAPE) ratio has risen to 37.94 and remains in a relatively elevated range. Due to uncertainty in Trump’s policies, combined with the impact of geopolitical issues, and with U.S. stock valuations being lifted, it is expected that after the oversold rebound in the coming period, some assets in sectors such as U.S. financials, consumer, communication services, and industrials that are at relatively high levels will still face pressure in the medium term. Due to the large decline in the short term in the European market previously, this week the European market saw an oversold rebound. Given pressure on Europe’s economic fundamentals, and that the price-to-book ratios of multiple important European market equity indices are still relatively high, together with the uncertainty from geopolitical issues, it is expected that after the current oversold rebound, key European market indices such as Germany’s DAX, the UK’s FTSE 100, France’s CAC 40, Italy’s FTSE MIB, Europe’s STOXX 50, and Europe’s STOXX 600 are still likely to see some volatility. This week, the Nikkei 225 index’s intra-week fluctuations remain quite pronounced. At present, the Nikkei 225 index’s price-to-book ratio is still 2.34, remaining at a relatively high level. Because the Japanese market saw a relatively large short-term pullback in the prior period, it may experience an oversold rebound in the coming period. However, considering that Japanese liquidity is still relatively tight, and Japan’s economy is rather weak, and with the Japanese equity indices’ price-to-book ratio still high, it is expected that after the oversold rebound phase, the Nikkei 225 index will still face pressure for further pullback in the medium term. Since multiple factors continue to affect fundamentals—such as uncertainties in the U.S. economy, diplomatic and trade policies—it is expected that after a period of oversold rebound, overseas emerging market indices such as IPSA Santiago in Chile, Brazil’s IBOVESPA, Mexico’s MXX, India’s SENSEX 30, and the Ho Chi Minh Index will still have some pressure in the medium term. Because the short-term Korean market previously saw a large decline, it is expected that there will be some oversold rebound in the coming period. However, considering that the Korean market has many technology-related assets with substantial bubbles and the pressure has not yet been digested sufficiently, it is expected that after the oversold rebound period, the Korea Composite Index may still have the possibility of further adjustment in the medium term. Due to the impact of Middle East geopolitical issues, it is expected that the Middle East market at this stage will be prone to more volatility on balance. On the other hand, because the Middle East issue is becoming more complex, it is expected that Israel’s TA35 will face substantial medium-term pullback pressure. This week, Hong Kong stocks saw mixed performance across different broad-based indices. It is expected that in the coming period, different assets within the Hong Kong stock market will still be prone to divergence. There are limited impacts from external markets, there is a preference for industry trends, and some assets with resilient fundamentals have certain structural opportunities.

U.S. stock market performance for the week: This week, the S&P 500 Index, the Nasdaq Index, and the Dow Jones Industrial Average all rose, with increases of 3.36%, 4.44%, and 2.96%, respectively.

Hong Kong stock market performance for the week: This week, the Hang Seng Index, the Hang Seng China Enterprises Index, and the Hang Seng Hong Kong Listed Mainland Companies Index all rose, with increases of 0.66%, 0.04%, and 0.15%, respectively. This week, the Hang Seng Tech Index fell by 2.07%.

Overseas key economic data: In March 2026, the Eurozone CPI year-over-year growth rate was 2.5%, higher than the prior value of 1.9%; the Eurozone core CPI year-over-year growth rate was 2.3%, lower than the prior value of 2.4%.

Risk warning: Monetary policy of the Federal Reserve is beyond expectations; economic growth is below expectations; global geopolitical risks are intensifying; global black swan events.

Securities Analyst: Wang Yitang S1120521080003;

Publication date: 2026-04-04;

“Middle East issues remain stuck; some markets see oversold rebound this week”

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