Today, the three major A-share indices experienced another collective decline, with sectors such as power equipment and building materials leading the losses. The geopolitical situation between the US and Iran has taken a new turn, with US forces launching strikes and revoking Iran's oil export authorizations. International oil prices surged significantly, fueling inflation expectations. The yield on the 10-year US Treasury note exceeded 4.5% this week, putting pressure on the valuations of global risk assets. As the mid-year reporting season for the technology sector unfolds, the market focus is shifting from speculative anticipation to verifying actual performance. In the short term, with geopolitical tensions unresolved, US bond yields facing upward pressure, and mid-year earnings verification still ongoing, the market is likely to remain in a weak and volatile pattern.
Where to begin
Tactically, a defensive short-term approach is recommended, emphasizing a balanced portfolio allocation. Leading companies within specific sectors that demonstrate genuine earnings delivery capabilities and stronger, more certain growth prospects still hold investment value. Furthermore, low-valuation, high-dividend sectors offer defensive characteristics during this phase of style rebalancing.
Key Developments
The US military has initiated significant strikes against Iran. US Central Command announced on social media on July 7th that it had begun a "series of powerful" strikes against Iran in response to previous Iranian attacks on three commercial vessels transiting the Strait of Hormuz. Explosions were reported in multiple locations in southern Iran, including Qeshm Island, Sirik, and Bandar Abbas. Iran's Foreign Ministry issued a statement condemning the actions and stated it would take all necessary measures to safeguard its interests and national security.
In summary: The US-Iran military conflict has escalated abruptly, sharply increasing geopolitical risks in the Strait of Hormuz. International oil prices surged in response, with WTI crude breaking above $72 per barrel. Global risk-off sentiment is rising. For the A-share market, the energy sector may receive a short-term boost from higher oil prices, but increased geopolitical uncertainty will likely suppress overall risk appetite. The shipping sector may face concerns over route safety. In the medium to long term, attention is needed on whether the conflict expands further and its transmission to global inflation expectations.
China has increased its gold reserves for the 20th consecutive month. Data released by the State Administration of Foreign Exchange on July 7th shows that as of the end of June, China's foreign exchange reserves stood at $3,416.3 billion, a decrease of $26 billion from the end of May, representing a decline of 0.75%. This marks the third consecutive month that China's foreign reserves have remained above $3.4 trillion. Data released on the same day also shows that China's gold reserves reached 75.44 million ounces by the end of June, an increase of 480,000 ounces month-on-month, marking the 20th consecutive month of gold accumulation.
In summary: The decline in foreign exchange reserves in June was primarily influenced by currency translation effects due to the rise in the US dollar index. The fact that reserves have remained above $3.4 trillion for three consecutive months indicates that China's capacity for international payments balance remains robust. The central bank's continuous gold purchases for 20 months reflects a strategic intent to optimize the reserve asset structure and promote diversification amid a complex international environment. For the A-share market, the foreign reserve data is largely in line with expectations, having a neutral impact; the sustained increase in gold reserves may provide some sentiment support for the gold and precious metals sector.
The National Development and Reform Commission (NDRC) has outlined five key work priorities for the artificial intelligence industry during the "15th Five-Year Plan" period. At a press conference held by the Shanghai municipal government on July 7th, the NDRC disclosed these priorities: first, accelerate independent innovation and strengthen research and development in key technologies such as models, computing power, and data; second, strengthen application traction, focusing on opening high-value scenarios in areas with significant economic contribution and strategic value; third, deepen ecosystem collaboration; fourth, adhere to open cooperation and mutual benefit; fifth, ensure safety and controllability.
In summary: The NDRC has clearly elevated the AI industry to a strategic height for the "15th Five-Year Plan," with the three keywords "models, computing power, data" placed at the forefront, indicating a clear orientation towards independent innovation. This represents another important policy signal following the previous State Council executive meeting's elevation of "the construction of ultra-large-scale intelligent computing clusters" to a national strategic level. For the A-share market, sectors related to the AI industry chain are expected to continue receiving policy catalysts, further solidifying the long-term development logic for areas such as computing infrastructure and AI applications.
Market Summary
On July 8th, the three major A-share indices declined. At the close, the Shanghai Composite Index was at 3970.88 points, down 0.49%; the Shenzhen Component Index was at 14939.73 points, down 1.87%; the ChiNext Index was at 3845.35 points, down 1.70%; and the STAR 100 Index was at 2161.29 points, down 0.86%. Among the primary Shenwan industries, Computer, Coal, and Banking were among the top gainers, rising 2.44%, 1.20%, and 0.94% respectively. Power Equipment, Building Materials, and Basic Chemicals were among the top decliners, falling 4.15%, 3.68%, and 3.44% respectively. 1,568 stocks advanced, while 3,558 stocks declined.
Capital Flows
The total market turnover was 2,581.20 billion yuan, a decrease from the previous trading day. The balance of margin trading and securities lending closed at 2,979.012 billion yuan yesterday, also down from the prior session.
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