The three major A-share indices continued their adjustment today, with the Shanghai Composite falling below the 4000-point mark.
The Shenzhen Component Index and the ChiNext Index both dropped over 3%, while combined market turnover shrank to 2.8 trillion yuan compared to last Friday.
Last Friday, the US released its May non-farm payroll data, which significantly exceeded market expectations, and the employment figures for March and April were also revised upwards.
The average job growth over the past three months represents the strongest performance in nearly two years.
Following the data release, prices of major assets experienced sharp fluctuations on the day and in subsequent trading sessions, as the market quickly shifted to pricing in pressures from "strong employment + rate hike expectations + AI bubble concerns."
CME's FedWatch Tool indicates market expectations for the Fed holding steady and raising rates by year-end are 41.6% and 57.7%, respectively.
Against this backdrop, the difficulty of lowering interest rates is putting pressure on valuations, with technology stocks that had seen significant gains earlier being the first to feel the impact.
US Treasury yields continue to fluctuate at high levels, and commodities are generally under pressure.
For the domestic equity market, risk appetite continues to decline amid overseas disturbances, and the short-term outlook may remain weak with volatility.
In terms of allocation, a combination of "dividend stocks for defensive positioning + growth in prosperous sectors" could be considered.
Key Developments
The US non-farm payroll report for May, released by the Labor Department on the 5th, showed an addition of 172,000 jobs, far exceeding market expectations of 85,000 to 88,000, even with a combined upward revision of 93,000 jobs for March and April.
Job growth over the past three months is the strongest in over two years.
The unemployment rate remained unchanged at 4.3% for the third consecutive month, with the number of unemployed persons decreasing by 66,000 month-on-month to 7.307 million.
In summary: The May non-farm data far exceeded expectations, and the substantial upward revisions for previous months have suddenly intensified market expectations for a Fed rate hike within the year.
For the A-share market, the strengthened expectations for Fed tightening may suppress the valuation levels of high-valuation tech sectors, and the pace of foreign capital inflows could slow.
However, the domestic monetary policy stance of "acting based on our own conditions" remains unchanged, potentially enhancing the relative allocation value of export-related and defensive sectors.
On the evening of June 7, Iran's Islamic Revolutionary Guard Corps launched at least three rounds totaling 10 ballistic missiles at the Ramat David Airbase in northern Israel, in response to Israel's escalation of military operations in southern Lebanon.
This marks Iran's first direct missile attack on Israel since the ceasefire in April.
The Israeli military stated that all incoming missiles were intercepted.
In the early hours of June 8, the Israeli Defense Force launched airstrikes using air-launched ballistic missiles against military targets in western and central Iran.
In summary: The trigger for this Iranian attack was Israel's military actions in Lebanon, reflecting Iran's strategic framework of coordinating with the "axis of resistance."
In the short term, the US is still striving to control the risk of the situation spiraling out of control, and the upper limit of conflict intensity may be limited.
Subsequently, it will be necessary to observe whether Israel accepts the US advice for "restraint." Geopolitical uncertainty is likely to remain a core variable in the pricing of global risk assets.
On June 7, updated official reserve asset data from the People's Bank of China showed that as of the end of May, China's gold reserves stood at 74.96 million ounces (approximately 2,331.52 tonnes), an increase of 320,000 ounces (approx. 9.95 tonnes) from the end of April.
This marks the 19th consecutive month of gold accumulation.
Concurrently, data from the State Administration of Foreign Exchange showed China's foreign exchange reserves were $3.4422 trillion at the end of May, an increase of $31.7 billion, or 0.93%, from the end of April.
In summary: The central bank has increased its gold holdings for 19 consecutive months, with the pace of monthly accumulation accelerating significantly to 320,000 ounces, sending an important signal of the official sector accelerating the optimization of its reserve asset structure.
During a window where US Treasury yields are rebounding and international gold prices are experiencing a periodic correction, the central bank's strategy of "buying on dips" serves both to solidify the credit foundation for the internationalization of the renminbi and as a strategic choice to enhance the safety of reserve assets in a volatile international macroeconomic environment.
Market Performance
On June 8, the three major A-share indices closed lower.
At the close, the Shanghai Composite Index was at 3,959.34 points, down 1.70%.
The Shenzhen Component Index was at 14,821.19 points, down 3.22%.
The ChiNext Index was at 3,811.79 points, down 3.69%.
The STAR 100 Index was at 1,834.26 points, down 2.12%.
Among Shenwan primary industries, only banking and coal recorded gains, rising 0.60% and 0.39% respectively.
Non-ferrous metals, electronics, and national defense and military equipment were among the biggest decliners, down 5.46%, 4.33%, and 4.06% respectively.
899 individual stocks advanced, while 4,591 declined.
Fund Flows
Market turnover was 2,823.644 billion yuan, lower than the previous trading session.
The balance of margin trading and securities lending closed at 2,906.688 billion yuan last Friday, a decrease from the previous day.
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