🔹 Macro & Market Drivers
Since last Friday, the market’s main trading theme has shifted toward expectations of a Federal Reserve rate cut. Current external conditions suggest a 90%+ probability of a 25bp cut in September. Domestically, the A-share index has risen for three consecutive weeks, breaking above 3,800 points. Together, these macro tailwinds are providing strong support for both capital markets and commodity markets.
Of particular note, Rio Tinto announced on its official website that a Simandou mine site has halted production due to a safety incident. This development significantly increases the likelihood of a gap-up opening for iron ore today.
🔹 Event Watch
This week, traders should keep an eye on potential “parade-related production curbs”, though current assessments suggest their impact will be limited.
The next major event risk is the U.S. Non-Farm Payrolls report on September 5:
- Sharp downside miss → If rate-cut expectations rise to a 50bp cut with >50% probability (vs. current 15%), recession fears could spark a broad market selloff.
- Slight miss or in line → Market impact likely muted.
- Strong upside surprise → If employment data is robust and probability of a 25bp cut falls below 50%, this would be bearish, potentially triggering a modest market pullback.
🔸 Trading Strategy
Overall, the market is expected to remain in a range-bound pattern this week. However, supported by both domestic and international macro tailwinds, the upper bound of the trading range may edge higher. Strategy remains unchanged: sell into strength (short on rallies) while closely monitoring upcoming macro events.
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