U.S.-Iran negotiations repeatedly stall. How will the A-share market perform?

Ask AI · How do the fluctuations in US-Iran negotiations influence international oil prices?

CNR News, Beijing, March 26 (Reporter: Fu Tianming) The situation in US-Iran negotiations has suddenly reversed, with previous opposing statements causing a sharp “deep V” fluctuation in international crude oil prices. Against this background, on March 25, the A-share market demonstrated resilience, with all three major indices closing higher and trading volume remaining above 2 trillion yuan for three consecutive days. What are the short-term impacts of geopolitical conflicts on the A-share market and the medium- to long-term trends? Where are the sector opportunities?

The situation is still evolving

According to CCTV News, the escalation of the Middle East situation has entered its fourth week, and the sudden “reversal” of the US stance has triggered turbulence in global financial markets. On the morning of March 23, local time, U.S. President Donald Trump posted on social media that the U.S. and Iran had conducted very good and productive discussions over the past two days regarding hostile actions in the Middle East, and announced a 5-day delay in plans to carry out airstrikes against Iranian power plants and energy infrastructure.

Sources revealed that the U.S. is in talks with Iranian Parliament Speaker Ghalibaf, but this was quickly denied by Ghalibaf himself. He explicitly stated on social media that the rumors are “false information,” aimed at manipulating financial and oil markets to help the U.S. and Israel escape their current predicament.

Affected by this geopolitical volatility, the international energy market experienced increased short-term fluctuations. On March 25, international crude oil futures prices exhibited a “deep V” reversal, with both WTI and Brent crude oil prices plunging sharply in early trading.

On March 25, the A-share market showed strong resilience to external shocks. All three major indices closed higher: the Shanghai Composite Index at 3,931.84 points, up 1.30%; the Shenzhen Component Index at 13,801.00 points, up 1.95%; and the ChiNext Index at 3,316.97 points, up 2.01%. The combined trading volume of the two markets reached 2.18 trillion yuan, maintaining above 2 trillion yuan for three consecutive days.

Nearly all industry sectors rose, led by power and communication equipment, with only photovoltaic equipment slightly down. Nearly 4,900 stocks increased in value, with over a hundred stocks hitting the daily limit for two days in a row. Huadian Liaoning Energy achieved eight consecutive limit-ups, and the collective strength of computing power leasing concept stocks was evident. Many industry experts believe that the core of the Middle East geopolitical conflict is an external, temporary, event-driven disturbance, which does not fundamentally alter the core logic of the A-share market’s medium- and long-term operation.

Core supports remain unaffected

Regarding the impact of the US-Iran situation on the A-share market in terms of scope and depth, Yang Delong, chief economist at Qianhai Kaiyuan Fund, told CNR Finance that although this Middle East conflict has pushed up international oil prices and affected costs in some industries, it will not end the current slow and steady bull market in the A-shares. He emphasized: “The three main supports of this bull market remain intact—policy continues to exert influence, household savings are flowing into the market, and China’s technological innovation is attracting global capital inflows. These fundamental factors are unrelated to the Middle East conflict.” From the situation itself, the demands of the US and Iran are vastly different; Trump faces domestic anti-war pressure and hopes for a dignified conclusion, while Israel may have intentions to escalate the situation. Iran combines demands for a ceasefire with revenge sentiments, making short-term consensus difficult; geopolitical tensions may persist.

Tian Lihui, dean of the Financial Development Research Institute at Nankai University, believes that the US-Iran conflict and oil price fluctuations mainly impact the A-share market through three channels: first, the risk appetite channel, where geopolitical tensions suppress market sentiment, leading risk-averse funds to exit, putting short-term pressure on high-valuation sectors; second, the inflation expectation channel, where soaring oil prices raise concerns about “high oil prices, high inflation, and high interest rates,” prompting a reassessment of global risk asset valuations; third, the fundamentals channel, where high oil prices increase costs for downstream industries but benefit upstream and alternative sectors. He added: “The impact on the A-share market is less than on oil-dependent markets like Japan and South Korea. Domestic prices are low, policy space is ample, and external shocks only influence short-term rhythm, not the medium- or long-term trend.”

Regarding the market’s future trajectory, Yang Delong predicts: “In the short term, the market may continue to fluctuate and rebound from lows; the medium- to long-term upward trend remains unchanged.” Tian Lihui believes that after a sharp decline, the market’s further downward potential is limited, most likely evolving into a “oversold rebound—range oscillation” pattern. With a good start to the domestic economy, clear policy support, and the long-term trend of household savings shifting into capital markets, a solid foundation for a slow bull market in A-shares has been established.

Focusing on “defense + growth”

Against the backdrop of market structural differentiation, experts offer sector opportunities and investment strategies tailored to different scenarios.

Yang Delong states that the current market is highly differentiated, recommending a focus on two main themes: “Technology + HALO assets.” The technology sector benefits from AI empowerment, with long-term value in humanoid robots, semiconductors, computing algorithms, controllable nuclear fusion, and commercial aerospace. HALO assets (heavy assets with low obsolescence) are essential underlying resources in the AI era; sectors such as non-ferrous metals, precious metals, chemicals, coal, oil and gas, electricity, and power equipment are also worth allocating. He emphasizes that the current adjustment phase is an ideal window for deploying high-quality stocks, and the corrections in previously high-flying sectors create bottom-fishing opportunities.

Tian Lihui suggests differentiated strategies based on evolving circumstances: currently, opportunities are concentrated in three main lines—first, coal chemical, new energy, and power grid equipment benefiting from high oil prices and energy security logic; second, high-dividend defensive assets such as banks, power, and utilities; third, growth sectors like AI computing power and energy storage, which are less sensitive to geopolitical tensions. If tensions ease, market styles will shift significantly, with previously suppressed tech growth stocks showing the greatest resilience, and sectors like aviation and manufacturing, which are negatively correlated with oil prices, benefiting from cost reductions. However, even if conflicts cease, the global oil price center may have shifted upward substantially, and the long-term logic for new energy and energy storage remains firm. Technology growth remains the core theme to navigate volatility.

For ordinary investors, both experts agree: maintain rationality, avoid chasing highs or selling lows. Yang Delong recommends observing more and acting less, reducing frequent trading, and focusing on medium- to long-term layouts of quality stocks and funds, with equity holdings controlled around 50-60%. Tian Lihui advocates three principles: “Don’t chase highs, buy low,” “Control positions and stay flexible,” and “Dumbbell allocation,” suggesting one end to hold high-dividend defensive stocks and the other to deploy oversold cyclical and policy-driven sectors, accumulating quality assets through regular investment or phased deployment amid market fluctuations. Experts emphasize that external market noise is just that—noise. The true long-term value depends on the strength of the domestic economy and corporate profits. Staying committed to quality assets is the key to capturing core market opportunities.