A-Shares Rebound, Oil Climbs

Market Overview

Tuesday's market action was driven by three major themes.

First, Chinese and Hong Kong equities rebounded amid continued policy support. The Shanghai Composite Index closed at 3,796.28, up 0.85%, while the SSE 50 Index surged more than 3%, led by heavyweight sectors including coal, utilities, liquor, and energy. In Hong Kong, both the Hang Seng Index and the Hang Seng TECH Index gained more than 2%. Meanwhile, China's 1-year and 5-year Loan Prime Rates (LPRs) remained unchanged for the 14th consecutive month, and the China Securities Regulatory Commission (CSRC) held an investor symposium aimed at reinforcing market confidence and stability.

Second, geopolitical tensions between the United States and Iran entered their tenth consecutive day of escalation. Yemen's Houthi movement announced a maritime blockade targeting Saudi Arabia, fueling further gains in crude oil prices. Brent crude rose 1.27% to $89.22 per barrel, marking a one-month high, while WTI crude advanced 0.90% to $83.23. Spot gold briefly fell below the $4,000/oz level during intraday trading before recovering to close at $4,010.30, posting a slight daily decline.

Third, U.S. equities extended losses for a third straight session. The S&P 500 slipped 0.19%, while the Dow Jones Industrial Average fell to its lowest level in at least three weeks. However, the Philadelphia Semiconductor Index (SOX) snapped its three-day losing streak. Separately, Foxconn secured a $52 billion AI server order from SpaceX, highlighting continued strength in AI infrastructure demand.

Market Outlook● Earnings Season Takes Center Stage

The U.S. earnings season officially kicks off this week, with Alphabet and Tesla among the first mega-cap technology companies to report results.

As AI-related capital expenditures remain elevated, investors will closely watch cloud computing demand, digital advertising trends, electric vehicle deliveries, and profit margins. These metrics are expected to determine whether the technology sector can stabilize after its recent pullback.

● AI Memory and Chip Supply Constraints

The chairman of SK Group expects AI chip demand to double next year, while memory demand is projected to increase by more than 50%, despite no meaningful expansion in production capacity.

If this outlook proves accurate, rising memory prices could continue flowing through the supply chain, making supplier pricing power and inventory strategies key areas for investors to monitor.

Key Events to Watch

• China's State Council Information Office will hold a press conference on the 15th Five-Year Plan development agenda.

• The U.S. earnings season begins this week, with Alphabet and Tesla earnings in focus.

• The Eurozone July ZEW Economic Sentiment Index will be released this week.

• Ongoing U.S.-Iran tensions, the Houthi maritime blockade, and developments in Red Sea and Strait of Hormuz shipping routes, along with oil price movements.

• Follow-up market stabilization measures from the CSRC and the sustainability of government-backed market support funds.