Good morning to all our readers as we begin a new trading week. In the latest market action, silver futures on the New York exchange have opened higher and continued to climb, posting a gain of over 4% at the time of writing.
Here are the key developments currently influencing the markets.
Prime Minister Netanyahu Highlights India's Support for Israel
In a recent interview with Fox News, Israeli Prime Minister Benjamin Netanyahu addressed his relationship with the U.S. administration, stating he does not perceive a rift with President Trump and emphasized that Israel is "fighting side by side" with the United States. Netanyahu also countered remarks made by U.S. Vice President Vance, who suggested Trump was the only world leader sympathetic to Israel. Netanyahu asserted that Israel maintains "many friends" internationally, specifically citing the "small country" of India with its 1.4 billion people. He added that numerous leaders have contacted him seeking cooperation, advice on military tactics, and to share Israel's expertise in AI and cybersecurity.
Hormuz Strait Traffic Data Shows Significant Decline
Data released by the U.S.-led Combined Maritime Information Centre and published by the UK Maritime Trade Operations office indicates that over a 72-hour period from July 2nd to 4th, only 70 commercial vessels were escorted through the Strait of Hormuz by U.S. forces. This daily average is far below the pre-conflict level of 138 vessels. The daily figures show a continued decline: 33 vessels on July 2nd, 29 on July 3rd, and just 18 on July 4th. The Strait currently has two passage routes, with traffic in the southern route (escorted by the U.S.) not showing sustained growth, while the total traffic in the Iranian-controlled northern route is difficult to accurately count. The advisory maintains a "high" threat level for the entire Strait, noting that Iran's Islamic Revolutionary Guard Corps continues frequent radio hails, drone surveillance, and routine control of the channel.
Medvedev Warns of Potential Mandeb Strait Disruption
Following a public memorial for Iran's late Supreme Leader Khamenei, Russian Security Council Deputy Chairman Dmitry Medvedev commented that while Iran does not possess nuclear weapons, it has found a weapon of comparable potency—the Strait of Hormuz. He further warned that Iran holds another "thermonuclear weapon"—the Mandeb Strait. Medvedev stated that in the event of a military conflict, this strait could be blocked, halting all oil and other transportation, and urged all nations attempting to provoke conflict in the region to remember this risk.
OPEC+ Agrees to Increase Oil Production Quotas from August
OPEC has released a statement confirming that seven member countries of the OPEC+ alliance held an online meeting to review global market conditions and prospects. The members agreed to increase the oil production target by 188,000 barrels per day starting in August. Additionally, they will hold monthly meetings to review market conditions, compliance, and compensation mechanisms.
Kremlin Reiterates Openness to Peace Talks
In a televised program, Russian Presidential Press Secretary Dmitry Peskov stated that Russian forces are establishing a security buffer zone along the border, which is showing concrete results, and are making steady progress in the special military operation zone. He noted that Ukraine's intensified attacks on Russian infrastructure are a response to the deteriorating frontline situation. Peskov added that the EU's transformation into a military-political bloc has further complicated the Ukraine issue, and Russia hopes the EU will not undermine prospects for peace negotiations. He reiterated that Russia remains open to peace talks and expects the United States to play a mediating role, maintaining contact through existing channels.
Significant Adjustments to A股 Trading Rules Take Effect Today
Investors in stocks and funds should take note: major adjustments to A股 trading rules are now in effect. Previously, only the STAR Market and the ChiNext board had a "post-market fixed price trading" session from 15:05 to 15:30, where trades were executed at the day's closing price. This mechanism is now extended to the A股 main board and ETFs. This change means: First, ETF trading time at the market close is extended, allowing for more deliberate operations. The previous 3-minute closing call auction, with its limited time and liquidity, was prone to price volatility from large orders. The additional 25 minutes of fixed-price trading lets investors place orders at the closing price, avoiding rushed decisions in the final minutes, which is particularly beneficial for strategies like dollar-cost averaging or those requiring execution at the closing price. Second, closing prices are expected to be more stable and less susceptible to manipulation. Another notable change is that the daily price limit for main board ST and *ST stocks has been adjusted from 5% to 10%.
Container Freight Market Shows Signs of a Turning Point
Reviewing last week's performance, the Containerized Freight Index (European route) futures market saw significant volatility. The main contract price followed a pattern of "rushing higher, plunging sharply, and then stabilizing." Although the EC2608 contract closed at 2663.5 points last Friday, up 3.70% for the day, it fell 3.53% for the week overall. Senior shipping and macro analyst Chen Zhen from Founder CIFCO Futures attributed the overall downward trend to three main factors. First, major shipping alliances like OCEAN, GEMINI, and Premier lowered their rates for the first half of July, with Maersk's Week 29 opening price notably lower than market expectations, signaling a potential turning point for spot rates and casting doubt on the implementation of July rate hikes. Second, indirect U.S.-Iran talks in Qatar showed some progress, improving traffic conditions in the Strait of Hormuz and causing international oil prices to retreat to around $70 per barrel, thereby cooling geopolitical risk premiums. Finally, as the EC2606 contract entered the delivery phase and the market switched to the new main contract, the EC2608, new positions were predominantly short, amplifying the downside movement.
Chen Zhen believes the dual headwinds of weakening spot rates and easing geopolitical risks were the main drivers of the market adjustment. However, after the rapid decline, the market viewed the short-term drop as somewhat excessive, leading to a partial recovery later in the week. Compared to the previous high focus on carriers' General Rate Increases (GRIs), analysts now emphasize the need to observe actual transaction prices and carriers' real implementation.
From the spot market perspective, Lei Yue, head of the shipping group at Haitong Futures, noted that the average spot quote for the European route in early July is around $5,350 per FEU, while actual booking prices range from $4,900 to $5,100 per FEU. Several carriers, including Maersk, MSC, and CMA CGM, have issued GRIs aiming to raise rates to $7,000 per FEU in late July, but the actual implementation remains highly uncertain. Chen Zhen stated that Maersk's weak Week 29 pricing suggests the peak freight rate for this year's peak season is likely to occur around mid-July, and he is skeptical about the effectiveness of the late-July rate hike plans.
He further added that historically, the EC2607 contract (near-month) still maintains a significant premium over EC2608, indicating the futures market remains relatively optimistic about peak season expectations. Lei Yue believes the spot market for the European route has shown clear topping signals. As Europe enters its summer holiday period, demand from Beneficial Cargo Owners (BCOs) has weakened. After FAK rates rose above $5,000 per FEU, traditional shippers' booking enthusiasm further declined. After digesting a backlog of rolling cargo, some carriers with higher spot exposure have begun returning to market-based pricing, offering discounts for specific voyages, ports, and cargo types, leading to noticeable softening in spot quotes.
However, she also pointed out that the cargo structure this peak season differs from previous years, with a higher proportion of high-value-added goods like automobiles and machinery, which are less sensitive to freight rates. This suggests the subsequent decline in freight rates may be slower than in past years, forming a "rounded top" rather than a sharp drop. Analysts believe that while the overall spot market is weakening, short-term supply-side factors still provide some support.
"According to the latest sailing schedules, the average weekly capacity for July is about 321,000 TEU, with blank sailings mainly concentrated in the OA Alliance. After last week's adjustments, the weekly capacity for Week 31 is about 292,000 TEU, the lowest level from June to July," Lei Yue said. She added that capacity supply remains tight from late July to early August, and if the actual decline in spot rates is less than market expectations, the futures market may see some premium recovery.
Chen Zhen also noted that despite some easing in U.S.-Iran tensions, traffic capacity through the Strait of Hormuz has only recovered to about one-third of pre-conflict levels, meaning geopolitical factors have not fully exited the market. Looking ahead, both analysts agree that the core variable for the market will shift back to spot freight rates themselves.
Lei Yue stated that the focus will now be on Maersk's Week 30 pricing and the PA and OA alliances' rate strategies for late July. If carriers adopt a traditional off-season discount model, a negative feedback loop could form in the market. If they continue with a phased price-support strategy, the pace of rate declines may slow, potentially providing some support to the futures market. Chen Zhen believes the market is now at a critical juncture transitioning from peak to off-season. While carriers' desire to raise rates is strong, the ultimate outcome depends on actual transaction conditions. Future movements in the futures market will depend more on the actual speed of spot price adjustments rather than the GRIs themselves.
Comments