A-Shares Plunge | Beijing Moves to Stabilize Markets | Oil Surges | Gold Reclaims $4,000

Market Overview

Global risk sentiment weakened last Friday, with policy developments and geopolitical tensions taking center stage as markets opened this week.

First, China's A-share market suffered a broad-based selloff. The ChiNext Index plunged 7.15%, the Shenzhen Component Index fell 5.40%, the Shanghai Composite Index lost 3.05%, while the STAR 50 Index dropped more than 7%. In response, the China Securities Regulatory Commission (CSRC) held a symposium on July 20 focused on promoting market stability and healthy capital market development. Meanwhile, state-backed institutions entered the market, with China Reform Holdings (Guoxin) deploying more than RMB 50 billion through its share buyback and stake increase refinancing program, alongside supporting capital.

Second, the U.S.-Iran conflict escalated for an eighth consecutive night. A U.S. military base in Jordan came under attack for the fourth time in five days, while Iran claimed that shipping traffic through the Strait of Hormuz had fallen to zero. WTI August crude oil surged 4.48% to $82.49 per barrel, extending its weekly gain to more than 15%, while Brent crude climbed 4.59% to $88.10 per barrel.

Third, rising demand for safe-haven assets pushed spot gold up 1.00% to $4,016.21 per ounce, reclaiming the $4,000 milestone. U.S. equities closed broadly lower, with the S&P 500 down 1.01%, the Nasdaq Composite falling 1.40%, and the Dow Jones Industrial Average slipping 0.77%. The Philadelphia Semiconductor Index (SOX) has now retreated 20% from its recent peak, officially entering bear market territory.

On the AI front, the World Artificial Intelligence Conference (WAIC) announced the establishment of the World AI Cooperation Organization, while DeepSeek V4 (Full Version) is expected to be officially released as early as today.

Market OutlookLPR Announcement and China's Market Stabilization Measures

China will announce its July one-year and five-year Loan Prime Rates (LPRs) today. Combined with the CSRC's market stabilization meeting and continued purchases by state-backed funds, policymakers have clearly signaled their commitment to supporting financial markets.

Investors will be watching whether policy support can translate into stronger trading activity and improved market sentiment, as well as whether additional coordination between monetary and fiscal policies emerges. These factors will likely determine whether the recent selloff proves to be a temporary sentiment-driven correction or the beginning of a broader trend reversal.

Geopolitics Driving Oil Prices

The U.S.-Iran conflict has entered its eighth consecutive day of escalation. If reports that shipping through the Strait of Hormuz has effectively halted are confirmed, the disruption could affect nearly 20% of global seaborne crude oil shipments.

With crude prices already surging more than 15% over the past week, a significant geopolitical risk premium has been priced into the market. Going forward, oil prices are likely to be driven more by whether tensions escalate or ease than by changes in underlying supply-demand fundamentals.

Key Events to Watch

• China releases July one-year and five-year Loan Prime Rates (LPRs).

• DeepSeek V4 (Full Version) could launch as early as today, introducing time-of-use (peak and off-peak) pricing for the first time.

• World Artificial Intelligence Conference (WAIC) concludes, with markets watching for follow-up policy initiatives and implementation of the newly announced AI cooperation organization.

• European Central Bank (ECB) interest rate decision on July 23, with investors focused on whether the central bank will pause further rate hikes.

• Ongoing developments in the U.S.-Iran conflict, shipping conditions in the Strait of Hormuz, and the outlook for global oil prices.