Capital Market This week, global capital markets have fallen consecutively. The Hang Seng led the decline, while the NASDAQ also experienced significant retracement, with the Dow Jones holding up the best. The key issue still lies in the triangular relationship between the US dollar, gold, and crude oil. The price of crude oil has been relatively stable, one reason being the risk of global recession is diminishing, and the second reason is the upcoming winter. Gold prices, after a brief surge, have continued to decline, consistent with our earlier assessment that gold prices have reached an inflection point. The US dollar index has risen unexpectedly, climbing from 99 on July 14 to 103.5. This period also marks the beginning of the global capital market’s gradual pullback. After this round of adjustment, the main indices have all returned below the levels of July 15, and the US dollar index remains the key to all issues. After the July Federal Reserve interest rate meeting, the general market consensus was that there would be no more rate hikes within the year. However, the US dollar index has continued to rise since the meeting. This can be interpreted as: 1) over this month, the US dollar index bulls have had the upper hand, 2) after the July rate hike, the US dollar interest rate has become more attractive compared to securities. The trajectory of the US dollar index is crucial for judging the overall market. Whether it can continue to rise from the current 103.5 level, considering its previous highs in early March 2023 of 105.7 and the end of May 2023 of 104.5, it probably won’t surpass the March 2023 level because the expectations of a US “hard landing” were high and the level of panic was significant. Currently, there is an opinion that the slowdown in the Chinese economy will have some impact on the global capital market, intensifying the capital’s risk-averse nature.
Real Estate Thunderstorm Recently, companies such as Country Garden, Evergrande, and Oceanwide have all experienced varying degrees of negative news. In our previous reports, we have repeatedly emphasized that the real estate issue is far from over, and the balance sheets of real estate companies are far from shrinking. Recently, as Evergrande Group submitted a bankruptcy application to the US Bankruptcy Court for the Southern District of New York, the company continues its efforts to address its massive debt problems. As of the end of last year, Evergrande and its subsidiaries owning assets in the US had a total debt of 335 billion US dollars.
The following are high-frequency data for this week:
*Translated by ChatGPT