Market Analysis
The situation in Iran continues to escalate. The US-Iran Memorandum of Understanding signed on June 18 has effectively stalled. On July 25, President Trump ordered a halt to the latest round of airstrikes on Iran that day, ending 13 consecutive days of daily strikes. The Iranian military subsequently stated that, due to the US ceasing strikes for the past two nights, Iran would also suspend its retaliatory strikes. Trump hinted at a possible deal with Iran, with reports suggesting Iran and Oman discussed reopening the Strait of Hormuz for shipping, causing crude oil prices to plummet. Yemen's Houthi forces announced a maritime blockade on Saudi shipping and attacked a Saudi oil tanker in the Red Sea. On the night of July 24, the Saudi-led coalition launched airstrikes on Houthi military targets in Hodeidah, reducing vessel traffic through the Bab el-Mandeb Strait to its lowest level in months. The risk of the conflict spilling over into the Bab el-Mandeb Strait and Red Sea shipping lanes is increasing.
Global crude oil inventories are currently at low levels, raising the risk of oil prices surging again, as well as the potential for a US military landing operation in Iran. This corresponds to upward risks for oil prices and some chemical products. Higher oil prices are boosting global expectations for interest rate hikes. The Federal Reserve's interest rate decision is scheduled for July 30. In his testimony at the July 14-15 Congressional monetary policy hearings, Fed Chair Jerome Powell stated that the Fed has "zero tolerance" for high inflation and is firmly committed to restoring price stability. The Fed's June meeting minutes showed heightened inflation concerns, with a minority of officials supporting a rate hike in June, and AI being cited as one of the three major inflation risks. On the data front, the US added 57,000 non-farm jobs in June, only half of market expectations, while the unemployment rate unexpectedly fell to its lowest level in a year. The US June CPI rose 3.5% year-on-year, well below expectations, and fell month-on-month for the first time in six years, with core CPI growth narrowing to 2.6%. The US July Composite PMI flash reading rose to 53.6, above the market expectation of 52.2 and the previous value of 51.9, reaching its highest level in eight months. The Services PMI flash reading surged to 53.6, far exceeding the expected 51.5 and the previous 51.2, hitting its highest since November 2025. The Manufacturing PMI flash reading was 53.8, slightly below the previous 53.9, marking a four-month low. The Eurozone's July PMI unexpectedly rose to a five-month high, with German manufacturing rebounding and French services recovering, though the recovery remains threatened by oil prices. The European Central Bank held interest rates steady, as expected. The Bank of Japan raised its policy rate by 25 basis points to 1%. The yen fell below the 163 level, hitting a nearly 40-year low, prompting Japan's Finance Minister to warn of "bold action." The Bank of Korea raised rates by 25 basis points to 2.75% on July 16, the first increase in three and a half years. The continued rise in oil prices is increasing global rate hike expectations.
On July 24, the Office of the United States Trade Representative announced "301" tariffs on dozens of countries, imposing tariffs of 10% to 12.5% to replace the expiring "122" tariffs. Domestically, policy is being deployed proactively, leading to economic structural divergence. China's June Manufacturing PMI rose to 50.3, returning to expansion territory, while the non-manufacturing business activity index continued to expand. China's June exports, denominated in US dollars, surged 27% year-on-year, far exceeding expectations, and imports grew 36.0% year-on-year. China's Q2 GDP grew 4.3% year-on-year, with first-half GDP up 4.7%. China's June retail sales rebounded to 1% year-on-year, with first-half growth of 1.3%. China's June value-added industrial output accelerated to 5.3% year-on-year, with the computer, communication, and other electronic equipment manufacturing sector growing 15.7%. China's June new social financing totaled 3.36 trillion yuan, new RMB loans were 1.61 trillion yuan, and M2 money supply grew 8% year-on-year. The State Council issued the "15th Five-Year Plan" Carbon Peak Action Plan, which sets a target for 2030 of reducing carbon dioxide emissions per unit of GDP by 17% from 2025 levels, with non-fossil energy consumption reaching 25% of the total, and promoting the use of non-fossil energy power for new computing facilities.
Commodity Sector Breakdown: Focus on Geopolitical Events and Reversal Opportunities
In energy, OPEC+ agreed to raise the oil production quota by another 188,000 barrels per day in August, with the next meeting scheduled for August 2, 2026. US crude oil inventories at Cushing, Oklahoma, have fallen to an operational low of around 20 million barrels, the lowest level since October 2014. US Strategic Petroleum Reserve crude oil inventories have dropped to their lowest level since 1983. The UAE announced it will exit OPEC and OPEC+ starting May 1, gradually increasing oil production, which could lead to increased oil price volatility. For agricultural products, focus on the expected El Niño climate pattern and its potential impact on crop yields. The US will impose a 25% tariff on certain Brazilian goods starting July 22, but will exempt beef, coffee, and some energy products from this tariff rate. For ferrous metals, focus on domestic policy expectations and the potential for a recovery from low valuations. Additionally, the National Development and Reform Commission and other departments have launched a three-year action plan for energy conservation and carbon reduction in key industries, including steel, electrolytic aluminum, cement, oil refining, and ethylene. This will constrain the supply elasticity of high-energy-consuming industries in the medium to long term, and it is recommended to closely monitor the evolving supply-demand dynamics in these sectors.
Strategy
For commodities and stock index futures: Go long on precious metals and select agricultural products at lower levels.
Risks
Geopolitical risks (upside risk for the energy sector); a sharper-than-expected global economic downturn (downside risk for risk assets); an unexpectedly aggressive Fed tightening (downside risk for risk assets); and overseas liquidity shocks (downside risk for risk assets).
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