Tan Yaling: The analysis of the international financial market from June to July is more expected

Tan Yaling is an independent economist at the China Foreign Exchange Investment Research Institute

In June, the international financial market went through the first half of the year, and the correlation trend under the characteristics of the US dollar appreciation intensified shock is the main trend and layout parameters, and it is expected that the reversal of the international financial market in July may be a major event, and has an important stimulus and change in the market logic and trend in the second half of the year. Looking back at the June forecast did not realize the depreciation of the dollar and the rise in oil, this will be the focus of the market that may be powerful in July, in which the Fed interest rate cut speculation is still the US dollar depreciation matching factor, the stock market decline is intended to be a technical correction and the US dollar depreciation, the US political factors will be the speculation of the US dollar depreciation environmental atmosphere, but the US economic resilience and volatility law is still a higher condition and support parameter for the peak of the US dollar interest rate.

1. Observation of market characteristics - in June, the international financial market highlighted the willingness and appreciation of the US dollar to depreciate, and the commodity prices rose and fell in batches under the benchmark.

Feature 1: The rise in the market value of U.S. stocks and stock prices restrain the appreciation of the U.S. dollar and promote trade depreciation. According to the current economic situation and corporate efficiency of the United States, the appreciation of the US dollar may further exceed 106 points, which is very stimulating. Especially compared with other basket currencies, the US dollar has very distinct advantages and qualifications. Among them, the rise of the U.S. stock market and corporate yields are the most beautiful focus of the market in June, and the market value and stock price level of the seven leading companies in the United States are the reasons for the appreciation of the dollar, and they are also the strategies to control the characteristics and combination factors of the appreciation of the dollar. The U.S. stock market rose in the month: the Dow rose 1.1%, the Nasdaq rose 6%, and the S&P rose 3.5%; Even on the last day of the weekend, the Nasdaq 100 index broke through 20,000 points for the first time, and the Nasdaq Composite Index broke through 18,000 points for the first time to a record high of 18,305 points. The Dow fell 0.15%, the Nasdaq rose 0.2%, and the S&P fell 0.1% in the last week of June. However, since the low point in late October, the U.S. stock market has now rebounded strongly by more than 33%, and the S&P has hit a new closing high completely opposite expectations. Although the S&P has fallen about 0.5% since investors began to sell and take profits since the S&P hit new all-time highs, the U.S. bull cycle is still at its beginning. Compared with the rise of the dollar index, it may be one of the main checks and balances in June, but this is not the demand and demand of the dollar's monetary policy. The U.S. dollar index rose from 104.6025 to 105.8575 for the whole month, appreciating by 1.19%; The range fluctuation is located at 103.9930-106.1306 points, with an amplitude of 2.05%. During the period, the market clearly saw that the dollar appreciation control force is strong, the dollar appreciation positive factors in the purpose of moderation appreciation is very clear, compared with the depreciation pursuit and stimulation is the focus of the promotion efforts, and then the dollar index at the beginning of the month for two consecutive 103 points upward, compared with 106 points rose was prevented 106 points low position moderation is very strong. The depreciation of the US dollar to promote trade and exports is the national strategy of the United States, and last year, the difference between the US exports and the first level of the mainland was only one percentage point, and it is expected that this year, the US stock export countries will surpass the mainland will be the precise goal and purpose of the US dollar depreciation strategy.

Feature 2: The gradual decline in the rise of oil has strengthened and the downward environment of gold correction is limited. The international oil price in New York futures rose by 6.3%, and the price level rose from $77.91 to $81.41, with the highest at $82.72 at the end of the month and the lowest at $72.48 at the beginning of the month, with an amplitude of 14.12%, indicating the potential and momentum of the upside. London oil futures rose 4.51% to $84.81 from $81.15; During the period, the highest was $86.18 and the lowest was $76.76, with an amplitude of 12.33%. The price of international oil New York futures rose by 13.7% in the first half of the year. The international oil upward trend is clear, and it is expected that the second half of the year will strengthen the rise is a high probability event, and the acceleration of the rise in international oil prices in the two places is an important month and a critical period, and it is expected that the inevitability of the oil rise in the second half of the year cannot be ignored. On the contrary, the price of international gold futures rose still, the increase was limited, and the shock intensified, during which the international gold futures price fell from $2347.60 to $2336.18, down 0.48% overall; During the period, the highest was $2406.20 and the lowest was $2304.20, with an amplitude of 4.23%. The rise in oil and the fall of gold run in the opposite direction, which is related to the double-sided moderation of the appreciation of the dollar, the gradual rise in oil is the convergence of the dollar appreciation, and the decline in gold to stimulate the depreciation of the dollar is a related policy.

Feature 3: The Fed's tightening and interest rate hikes are still firm, and the international trend of interest rate cuts is partially complicated or even differentiated. The Fed's interest rate unchanged throughout the month has been a stable state of interest rates for 1 year, but the Fed's position of not cutting interest rates is clearer, and the U.S. economic fundamentals and the healthy and vigorous situation of the U.S. stock market are the courage and confidence of the Fed to raise interest rates. In particular, at the end of the month, Fed Governor Bowman's speech at the international conference was more representative of the Fed's basic stance and future direction. On the contrary, the Bank of Canada, the European Central Bank and the Swiss National Bank cut interest rates a bit beyond reality and expectations, especially the sudden and driven by the Bank of Canada's interest rate cuts, which makes the world's developed countries lead the trend again, and further exacerbate the differences and differentiation of developed countries. It is expected that the Fed's interest rate hike will remain unchanged in 2024, but the Fed's interest rate cut will be basically ruled out, and the high level of US dollar interest rates will be further increased. During this period, Europe is facing increased passive risk pressure, and the rebound of global inflation will be a complex and more risky situation in the second half of the year when the international trend of interest rate cuts is inevitable.

The above-mentioned main characteristic performance is not only the complex situation of the international financial market in June, but also the parameters that exceed expectations and cooperate with the US dollar layout consideration, and it is more likely to be the basis and drive for the market in July to pave the way and even cater to the reference technology and strategy focus.

Second, the market distribution of cooperation - the most important trend in the international financial market in June is the change in the focus of commodity prices and the planning or potential driving force of the distribution rise, and this will not be ignored in the future, especially in the second half of the year, the impact on the economy and trade, and even will be the parameters and considerations for future price fluctuations.

1. The decline in precious metal prices has been corrected to suppress the pattern of competitors. The correction in precious metal prices in June is the adjustment stage for brewing increases

At present, the international competitive industry, products and technologies are the most important characteristics and targets of precious metal regulation. After all, the technical gold content of silver's rise is an important parameter for lithium battery or semiconductor technology, and new products such as new energy technology and electric vehicles with high copper prices are stimulus, and then the correction in June is very prominent after the surge in May. Among them, the price of June silver futures fell from $30.55 to $29.40, a decrease of 3.76%; The range is between $28.73 and $31.67, with an amplitude of 10.23%. The upward trend in silver is expected to continue, and the potential upside preparation for the June pullback is worth watching. The price of copper futures fell from $10,112.00 to $9,594.80, down 0.51%; The range is $10238.00-9551.00, with an amplitude of 6.71%. Compared with the upward trend of new technological elements of commodities, the upward trend needs to be strengthened, and the range adjustment needs to be vigilant and the possibility of reaching new highs again. On the contrary, the black and even industrial traditional raw materials are low or have limited growth in the future, or there is a possibility of rising in the future, which is driven by the logic of the price of precious metals and commodity prices, as well as the depreciation of the US dollar. In particular, the benchmarking price competition of new energy and new technologies in mainland China that has attracted overseas attention cannot be underestimated, and there are competition and benchmarking factors in the price promotion of the competition situation between industry and new technologies and new economies. Precious metals mainly refer to 8 metal elements such as gold, silver and platinum group metals (ruthenium, rhodium, palladium, osmium, iridium, platinum), most of which have strong chemical stability and are not easy to react with other chemicals under general conditions. On Friday, June 7, gold and silver futures plunged sharply, Wind data showed that as of the close of the day, COMEX gold fell 3.34% to $2311.1, London gold fell 3.45% to $2293.510, silver fell 6.69% to $29.270, and London silver fell 6.80% to $29.170.

2. The competitive strength of enterprises with rising capital value is the macroeconomic support force of developed countries. In addition to the above-mentioned rise in the U.S. stock market in June, the advantages and advanced technology of U.S. companies are the main driving forces, especially the Nvidia stock index rose significantly in the month, and the market value rose to $3 trillion is the focus of U.S. stocks. In contrast, the rise of European and Japanese stocks is also the basic feature of June, which is related to the synchronous upward trend of US stocks and the economic strength and corporate foundation of developed countries, but the slight difference between the three is the characteristics and personality of European stock markets, and the strong force of regionalized personality is the true color of Europe. Among them, the British stock index was basically flat at 8,100 points, the German stock index rose from 17,000 points to 18,000 points, and the French stock index fell from 7,984 points to 7,479 points. The Italian stock index fell from 33,777 points to 33,128 points, but the European pan-European stock index rose to an all-time high, basically stable in line with the rise of US stocks. Japan's Nikkei 225 index rose from 38,274 points to 39,535 points, Singapore's stock index rose from 3,292 points to 3,332 points, and mainland A shares fell from 3,140 points to 2,967 points, breaking 3,000 points again. At present, the rise of the stock market in developed countries comes from the charm of capital value and profit power, which is the real economic force, and it is also the support of the competitiveness and quality of enterprises. The world economic growth is mainly focused on the economy of developed countries, the strong economy of the United States and the stable economy of Europe and Japan are the focus, the stability of the economic cycle is not only the support of enterprises, but also the logical reality and structural characteristics of environmental protection enterprises, and the strong enterprises of developed countries standing in the world economy are the basic structure and logic of the stock market.

3. The confrontation between geopolitical events and international relations is the stimulus of trade and circulation turmoil. The deterioration of the Russia-Ukraine incident in June was the focus, especially the West's support for Ukraine and sanctions against Russia were the triggers and triggers for the turmoil in the international financial market. Among them, the rise in oil prices is related to the attack on Russian oil facilities by Ukraine, and the US-Saudi oil long-term agreement has caused suspicion and controversy about the termination or disengagement of the contract, which is the background environment of the international oil price increase environment and the promotion of technical logic, including the subjective planning of the chaotic situation caused by the application of tactics. In particular, at the end of June, the EU Council passed the 14th round of sanctions against Russia, and the new round of EU sanctions aimed at the Russian energy sector, aimed at restricting or completely blocking Russia's supply of oil and gas to the world market, including banning the use of EU infrastructure to supply Russian LNG to any country outside EU member states. At the same time, the EU's sanctions against Russia have hit third countries and undermined the stability of the global oil and gas market, which has undermined the energy security of developing countries, and is also the inevitable and trend of rising international oil prices. In addition, the increase in shipping costs is also an environment and condition that cannot be ignored. According to the latest data released by the Shanghai Shipping Exchange, the average reading of China's Export Container Composite Freight Index (CCFI) further increased to 3,184.87 points on June 7, 2024, an increase of 140.10 points from the previous reporting period, while the CCFI also reached 1,592.57 points, an increase of 6.5% from the previous period. Freight rates have risen significantly around the world, and this is especially evident in the container shipping market. Although global spot rates continue to rise, their growth has slowed down from May and early June, and major shipping companies have raised rates to Europe for the rate adjustment plan to Europe routes, up to $9,800 per large container. At the same time, Maersk Line's freight rate per large container will be increased by $2,000 to a maximum of $9,400. Mediterranean Shipping Company also announced that the freight rate adjustment for the US East route will increase by $2,000 per large container from July 1, and the freight rate will exceed $10,000 to $10,400. The increase in global freight rates is the result of a combination of factors, including the recovery of the global economy, geopolitical shifts, and changes in transportation routes.

The main performance of the market, the expansion of the scope and the diversification of the correlation are the reference for the change strategy of the US dollar depreciation problem and application, especially the extraordinary complexity of the situation, which will be the main focus of the US dollar in the future to strengthen the support policies and strategies.

3. Analysis of the main reasons - due to the large contrast between the moderate and stable comparison between June in the first half of the year and the previous months, the gradual rise in June or the adjustment to be made is the trend and cycle plan of the international financial market in June. Therefore, the technical factors of market changes and adjustments are dominant, which is also the layout of the logic and stimulus factors that may increase the rise of the entire market in the second half of the year.

Reason 1: The law of the technical cycle is the inevitable that determines the trend. In the first half of the year, the phenomenon of the logical synchronization of the appreciation of the dollar, the rise of the stock market, and the rise of commodities is a kind of arrangement and plan of strategic and tactical combination, in which the objective and subjective design plan of the law of nature is the key point worthy of vigilance. After all, the advantages and excellence of the objective environment of the United States factor are the foundation and background of the development of technology, and the growing strength and position of the dollar are the basic backup and support factors for this technology to be brought into play. With the Federal Reserve's interest rate hike giving priority to the interest rate of developed countries, the basis and objective for strengthening the share and proportion of the US dollar, including the stable or rising trend of US dollar foreign exchange reserves and the use rate of international payments.

Reason 2: Speculation is an inevitable price anomaly. In particular, the mainland RMB market is the focus of speculation in the international financial market, the exchange rate difference, interest rate difference and time difference plus the policy, market and scale disparity, the offshore RMB depreciation and the US dollar trend echo, which not only deviates from the internal logic of the RMB, but also is not conducive to the mainland policy and market psychology, price selection and economic application, the negative effect of the mainland exchange rate and stock index logic highlights the characteristics of international speculation targeted crackdown and speculation. The depreciation trend of the RMB remains unchanged, but the technical cycle and logic of the RMB are facing urgent appreciation adjustment, especially the depreciation of the US dollar may be the risk and competitive pressure that will intensify the adjustment and appreciation of the RMB.

Reason 3: Monetary policy impatience stimulates interest rate cuts to be reversed. In particular, the policy uncertainty risk of the European Central Bank and the Bank of Canada is a short-term adjustment factor that leads to the appreciation of the US dollar, and the passivity of monetary policy detached from the parameters of real data has the intention of cooperation, and the real monetary policy risk is increasingly unfavorable to the operation and manipulation of the active market of the currency. The future depreciation of the US dollar is bound to stimulate and guide the appreciation of basket currencies will be an objective environment and subjective factors, so it is worth paying attention to the speculation and planning.

The above reasons and logic are not the demand and reference basis for the dollar, but the opposite will be the key parameter of the future US dollar combination.

4. Judgment of future trend - after the analysis and comparison of the international financial market in June, it is expected that the reversal of the market trend in July will be the key month, especially the reversal of the US dollar may be the main impact of all price adjustments.

Trend 1: The probability of a depreciation of the US dollar increases. It is expected that the subjective depreciation of the US dollar in July will be in a favorable situation, especially in the gap between the Fed's regular meetings, which is an opportunity and condition for the depreciation of the US dollar, and then the market speculation that the Fed will cut interest rates will be the main focus. In addition, the layout and technology of the US dollar quotation mechanism have already planned the atmosphere and environment in which the summer seasonal factors will fuel the prices, including the timing of the increase in oil prices, the timing of the correction of precious metal technology, and the logical factors related to the rise in commodity prices, which are all planned under the layout and operation plan of the US dollar mechanism. However, the appreciation of the factors and conditions of the US dollar itself has sufficient basis and parameters, and the probability of US dollar appreciation is the resistance and obstacle to the depreciation of the US dollar. Therefore, it is expected that the subjective depreciation of the US dollar in July is a high probability, of which the US stock market decline or plunge is the main factor of the US dollar depreciation, and the US dollar depreciation may focus on whether to break through 100 points, which is an important reference indicator for the market in the second half of the year. However, the appreciation of the dollar in July is also unavoidable, and it is expected that the dollar appreciation may not be as high as 107 points, and it is not surprising that the dollar index is expected to be slightly repeated at 105-106 points. In contrast, the appreciation of the major basket currencies is mainly due to commodity prices and the economic environment. Among them, the appreciation of the British pound, the Canadian dollar and the Japanese yen is the key to the focus and driving effect. The inertia of the appreciation of the Australian dollar and the New Zealand dollar is one of the matching logics and conditions. In short, the active depreciation of the US dollar is the inevitable downward logic of all related currencies or other factors.

Trend 2: U.S. stock markets are falling, and technical support is increasing. It is expected that the upward trend of U.S. stocks in July will be limited, and the pullback and plunge are not only inevitable of their own cyclical factors, but also a necessary stage correction to prevent the stock index from being too high. Among them, the profits and income increase of U.S. stocks are the guarantee conditions for the adjustment of U.S. stocks, and the valuation potential promoted by technical forces will be an important basis and support for the bold correction and decline of U.S. stocks. At present, the conditions for the strength of U.S. stocks are quite sufficient, and the strong competitiveness of enterprises has been the peak of the world's position, with the performance and profits of the seven major technology stocks and the five major technology companies not only monopolizing the world, but also promoting the U.S. economic boom cycle and the Federal Reserve's interest rate hike guarantee mechanism. The back-and-forth of the U.S. stock correction in the future will be an important month for technical corrections. Usually July is the stock market correction inertia cycle, the summer holiday and the off-season caused by the climate may be conducive to the recovery of the stock index, and the asset bubble digests the valuation risk is an important period. At present, the U.S. stock technology bull market cycle has just begun, the technical correction of U.S. stocks has sufficient reasons and space, the decline of U.S. stocks will be the main hype theme of market panic factors, but it is not a bad situation of the market value and value of the U.S. stock market, technical factors are the characteristics and cyclical characteristics of U.S. stocks in July, U.S. stocks hit a new high, highlighting the Nasdaq trend, U.S. stocks have increased the strength and magnitude of the Dow Jones and S&P's decline, and the emphasis is different between the three. It is expected that the global stock market will play an important role in the price adjustment of the financial market, and it is also an important month for price adjustment. Among them, the decline of European stock markets is dominated by currency appreciation, the decline of Asian stock markets is followed by currency appreciation, and the correction of global stock markets is closely related to the rise of commodities.

Trend 3: The Fed cut interest rates and speculation is the main force. It is expected that the Fed will cut interest rates in July, and the U.S. economic fluctuation cycle will be mainly coordinated with the Fed's interest rate cut adjustment, but the basic stance and direction of the Fed's tightening interest rate hike will not change. On the one hand, the downward volatility of the U.S. economy has been amplified, and the U.S. employment data has become the norm with the inertia of the holiday and summer patterns, and the speculation of the U.S. recession will be the key strategy for the Fed to cut interest rates. On the other hand, the U.S. election has entered a critical period of debate, and the focus of the presidential campaign is also the key to speculating on the Fed's interest rate cut. In addition, it is possible that U.S. inflation will rise according to the trend of oil, but the depreciation of the U.S. dollar is the focus of inflation parameter adjustment, and oil prices are not the basis for inflation rise, on the contrary, the U.S. dollar market is the correlation between stimulus and balancing inflation data.

Trend 4: The correlation between oil and gold rises and falls is reversed. It is expected that the probability of international oil prices rising in July is high, among which geopolitics will exacerbate the lack of oil supply and the increase in oil demand in summer, which may be the main reason for the basic logical stimulus of international oil prices. In addition, the tension of geopolitical factors may be difficult to resolve or subside, and the potential risk of increasing the concentration of oil producers and the turmoil situation will be the main logical relationship between oil factors to stimulate the rise. Especially at present, OPEC's influence is declining, and the risk of divergent opinions and divided organizational structure will be the potential driving force for high oil prices, and the U.S. oil strategic plan is at an important juncture during the upward period. On the one hand, oil prices are among the structural plans to cater to and support the Fed's interest rate hike and tightening policy, and it is the right time for oil prices to rise in the long-term low cycle and roundabout preparation stage. On the other hand, the geopolitical layout with oil as the axis is facing a worse situation than a mitigation possibility, the oil environment and related factors stimulus rise, there is inflation to support the international interest rate hike trend driven, which is the most severe blow to the euro area, and even hurt the European Central Bank's monetary credibility is the potential rise in oil to promote inflation to rise again layout competition. It is expected that the international oil price will rush to $90 or higher, the oil price will turn to a low level around $80, and there is even a possibility that the price of oil futures in New York will be higher than the price in London in July.

Trend 5: Asset prices and capital flows have adjusted. It is expected that the adjustment of the basic support of global asset prices in July is an important moment, and the roundabout of asset prices will be a period of frequent transfer of capital flows, including the transition between assets and commodity markets, and the price variables will be an uneasy month. Geopolitics, technological cycles, policy divergence, and economic comparisons are all parameters related to asset prices, and they are important months and possible opportunities for capital flow adjustment. Compared with the U.S. factor, the U.S. dollar is dominated by the U.S. dollar or has a strategic overall consideration, the purpose of the U.S. dollar depreciation is the focus of the U.S. correlation factors this year, and the layout of asset prices and capital flows is mainly to assist the U.S. dollar adjustment, which is a key period in July. It is expected that the triangle combination of the depreciation of the US dollar, the collapse of US stocks and the rise of US bonds will be the policy parameters and basis of the US in the second half of the year. The external stock market, commodity market and speculative factors will be the strategy for the US dollar to play its potential use, and the US factor is the inevitable logic and structural mechanism of international finance.

It is expected that July will be of great significance and reference to the trend of the international financial market in the second half of the year, and the trend and guidance of the U.S. strategic restructuring will be the focus of the second half of the year.