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Market Weekly Review: Super heavy! The "reciprocal sanctions" between China and the United States and the formal withdrawal of the United States from WHO will be even more violent next week.
Jul 11,2020 17:16CST
The content below was translated by Tencent automatically for reference.

SMM News: July 6-10 week financial market summary: this week, the global market trend is surging: China's A-share surge triggered full attention, US stocks NASDAQ set a record high, spot gold "braving the wind and waves" courageously climbed the very important 1800 mark …. The grim situation of the global epidemic of new crown pneumonia, especially the surge of new confirmed cases in the United States, the United States officially announced its withdrawal from WHO, accompanied by the news of new crown virus treatment, and the so-called "unknown pneumonia" in the Central Asian country of Kazakhstan. As well as the "reciprocal sanctions" between China and the United States on Xinjiang-related issues, as well as the latest news on Sino-US trade, European and American trade, as well as the US Supreme Court's ruling that prosecutors in New York have access to President Trump's financial records, all of which have had an impact on the market trend.

Foreign exchange market: due to the rebound in risky assets, coupled with the technical factors of the dollar itself, the dollar continued to close down this week, recording a negative line of weekly K for the third week in a row, and the largest weekly percentage decline in a month, falling to 96.23 in the middle of the week, refreshing its lowest level since June 11. G10 currencies such as the euro, sterling and yen all rose this week, and the euro fell back after rising to close near the 1.13th mark, with the yen hitting as high as 106.63. The biggest volatility in the foreign exchange market this week came from the renminbi, which rose sharply this week, rising as much as 500 points on Tuesday and breaking the seven mark, ending four consecutive gains on Friday as A-shares fell and the dollar rebounded. However, long positions in the renminbi rose to a more than five-month high as investors bet on the recent influx of foreign capital into the Chinese stock market on optimistic expectations of an economic recovery.

Commodity market: spot gold "braved the wind and waves" this week, breaking the very important 1800 mark, reaching as high as $1818.06 / oz, boosted by the fall of the US dollar and the great uncertainty faced by the market, coupled with the strong increase in gold ETF holdings. However, it is worth noting that the gold price fell back above 1800 on Thursday, and although it pulled up and approached 1810 on Friday, it ended up below 1800, which may be a bad signal! Because FXTM analyst Lukman Otunuga pointed out that $1800 an ounce is a strong psychological barrier, if not maintained, it will fall back to 1765 support. In terms of crude oil, oil prices closed up more than 2% on Friday, reversing earlier declines, recording a "cross star" this week, closing at $40.55 a barrel.

Global stock markets: Chinese A shares-A shares rose sharply this week, especially in the first three trading days, and the turnover between the two markets exceeded 1.5 trillion in a row, mainly driven by government policy support, retail hot money and liquidity. Us stocks-the three major indexes in the United States closed higher on Friday, with the Dow and the S & P 500 wiping out Thursday's losses, emerging from Thursday's nearly one-week trough and the Nasdaq earning a new high for the third day in a row. This week, the Dow is up 0.96%, the Nasdaq is up 4.01%, and the S & P 500 is up 1.75%, less than last week. Tesla is up 27.9% this week. Meanwhile, the short position against Tesla is close to $20 billion.

Take stock of the important news of the week:

The situation between China and the United States: "reciprocal sanctions", Huawei and other new bans.

1. The United States announced sanctions on four Xinjiang officials on Thursday (July 9) local time, accusing them of seriously violating the human rights of the Uygur Muslim minority, according to comprehensive media reports. These sanctions are imposed under the Global Magnitsky Act.

The Global Magnitsky Act is a federal law that allows the United States government to freeze any assets in the United States against people who violate human rights around the world, prohibit Americans from traveling, and prohibit Americans from doing business with these people.

The US Treasury announced that four Chinese officials would be added to the US specially designated National list (SDN List), commonly known as property sanctions, while an agency was also added to the list. U.S. Secretary of State Pompeo said in a statement that he will also impose further visa restrictions on three of the officials, banning them and their immediate family members from traveling to the United States.

At a regular press conference of the Chinese Ministry of Foreign Affairs on July 10, a reporter from Agence France-Presse reported that the Office of Foreign assets Control of the US Treasury Department announced sanctions on a Chinese government agency and four current or former government officials on July 9. Us Secretary of State Pompeo announced in a statement on the same day that he asked questions about China's "sanctions and visa restrictions on officials who continue to violate human rights in Xinjiang."

In response, Chinese Foreign Ministry spokesman Zhao Lijian said: in response to the erroneous actions of the US side, the Chinese side has decided to take reciprocal measures against institutions and individuals related to the United States who have behaved badly on Xinjiang-related issues. We urge the US side to immediately reverse the relevant erroneous decision and stop any words and deeds that interfere in China's internal affairs and harm China's interests.If the US side insists on acting recklessly, the Chinese side will resolutely fight back. With regard to the details of the sanctions against the United States, Zhao Li insisted that "you will know the relevant details soon."

According to comprehensive media reports, White House Chief of staff Mark Meadows said on the 6th that US President Donald Trump is preparing to issue a series of executive orders covering China, manufacturing, immigration and prescription drug prices. It is not clear what will be involved in any administrative order against China or the manufacturing industry. Meadows did not say when the orders would be issued, nor did he provide further details.

Us Secretary of State Pompeo said on the 6th that the United States is "considering" banning TikTok and other Chinese social media applications, CNBC reported. His comments come as tensions between China and the US continue to rise and US censorship of TikTok and Chinese technology companies continues to intensify.

On the same day, Fox News anchor Laura Ingram asked Pompeo in an interview whether the United States should consider banning social media applications in China, "especially TikTok?." In response, Pompeo hinted: "with regard to Chinese apps on people's mobile phones, I can assure you, Laura, the United States will take care of it. I don't want to declare my position before the president, but this is something we are considering."

Mr Pompeo's comments were interpreted as a sign that the US "wants to block social media apps in China, including TikTok", while Fox News believes that Mr Pompeo is "warning of potential restrictions on Chinese apps".

On the 9th, local time, a US official was quoted as saying that the Trump administration plans to finalize a rule this week. Any company that provides products or services to the US government is prohibited from using products from Huawei, Haekangwei, Dahua, Hyunda and ZTE.

It is reported that any US company that uses the equipment or services of these five companies in its daily operations will not be able to sell products or provide services to the US government unless exempted by the US government. If the rule is finalised, it will come into force on August 13 and is unlikely to be extended. It will also be very difficult for American companies to get exemptions.

In response to the news, Russ Vought, acting director of the White House Office of Management and Budget, issued a statement. He did not respond to the authenticity of the news, but said: "the Trump administration will enable the US government to continue to crack down on companies such as Huawei through the full implementation of the federal procurement ban." He also highlighted the baseless conspiracy theory that China is trying to infiltrate the US Internet.

U.S. president Donald Trump said on the 10th local time that he had not even considered the second phase of the trade agreement between China and the United States, adding that relations between the two countries had been "seriously damaged" by the new crown virus pandemic. "they could have stopped the epidemic. They could have stopped it. They didn't stop it, "Trump said on Air Force one to Florida.

Asked by reporters aboard Air Force one about the possibility of reaching a second phase after the implementation of the first phase of the U.S.-China agreement this year, Trump said: "I'm not thinking about this right now." He added that he had many other things to think about.

Global epidemic: the United States officially announced its withdrawal from WHO, the Central Asian country of Kazakhstan unknown pneumonia caused public concern.

1. At present, the global epidemic situation is very serious, especially the surge in the number of new confirmed cases in the United States, which has undoubtedly become the biggest concern: the number of new confirmed cases in the United States reached 60,000 on Wednesday and Thursday, the highest in the world, sparking concerns about the resumption of blockade measures, thereby harming the economic recovery. According to the Global New Crown pneumonia data Real-time Statistics system released by Johns Hopkins University in the United States, as of 6: 00 p.m. eastern time on July 10, a total of 3169611 cases of new crown pneumonia and 133885 deaths have been reported in the United States. In the past 24 hours, there were 80695 new confirmed cases and 799 new deaths.

The New York Times reported that the average death toll in the United States over the past seven days reached 608, up from 471 in early July, but still a fraction of the average of 2200 per day in mid-April. The White House coordinator for the new crown virus, Dr. Deborah Burkes, said on the 10th that the number of confirmed cases in the United States has been increasing in the past three weeks, and no increase in the death toll has been seen, but as the epidemic continues to spread in the United States, the death toll is likely to increase in the near future.

At the same time, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said in an interview on the 10th: "I want to know how the president got the number that 99% of the cases are harmless." I think he was told that the overall mortality rate was about 1%, so he didn't think 99% of the cases were a problem. This is obviously not the case. even if it doesn't kill you or put you in the hospital, it will make you very ill. "

On the 10th, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said at the academic conference on the new crown pneumonia epidemic sponsored by the International AIDS Association that the new crown pneumonia epidemic is a "truly historic global pandemic." and the United States is facing very serious problems. "I have never seen a virus in which up to 40% of infected people are asymptomatic with little change in the same pathogen."

The surge in new confirmed cases in the US comes amid a sharp rise in deaths from the new crown virus this week, bringing health resources in many states to the brink of collapse and forcing many states to suspend or cancel their plans to return to work. New deaths in Texas, Arizona and South Carolina have all risen by more than 100% in the past four weeks, according to media analysis of state and county health data. During this period, the new death toll in Mississippi, Tennessee, California and Louisiana increased by at least 10%.

At a time when the epidemic in the United States is severe, the US Immigration Service announced on the 6th local time that if all courses in the fall semester of international students are conducted online, international students must leave the United States or transfer to a school with all offline courses. Otherwise, international students will face deportation. This rule applies to holders of Fmur1 and Mmur1 visas. According to the Immigration Bureau, the State Council issued 388839 F visas and 9518 M visas in fiscal year 2019. On the 7th, Harvard University and the Massachusetts Institute of Technology said they had filed a lawsuit against a Trump administration directive requiring international students in the United States to leave the country.

At the same time, US President Donald Trump has sent a series of social media messages asking schools to start in the fall, or cut off funding! "if the school is not open, funding may be cut off," Trump wrote on social media on July 8, according to FX168.

At a news conference held at the White House on July 9, Trump once again asked American schools to open. He classified children as people at low risk of infection. "the children's immune system is so strong that many countries in Norway and Germany have reopened school. It's going well, so we have to start school, too."

'now we have witnessed large-scale virtual learning, which has proved to be scary compared to learning at school or on campus, 'Trump said on social media on July 10. It's not even closed! School must start in autumn. If it is not open, why does the federal government provide funds? It won't!

2. This week, the United States officially announced its withdrawal from WHO: according to Capitol Hill, a senior US government official confirmed on July 7 local time that the White House had formally withdrawn the United States from WHO. The official said that the withdrawal of the United States will take effect on July 6 and has been notified to the Secretary-General of the United Nations.

Congress has been informed that the President of the United States formally withdrew the United States from WHO during a global pandemic. " Robert Menendez, a member of the US Senate Foreign Relations Committee, said on July 7 that Trump had shown "confusion and inconsistency" in his response to the new crown epidemic, and that his withdrawal from the WHO "will not protect the lives or interests of the American people, but will make Americans sick and make the United States helpless."

In addition, on the afternoon of July 7, local time, UN Secretary General spokesman Diarik (Stephane Dujarric) said that the United States had informed the UN Secretary General on the 6th that the United States would withdraw from the World Health Organization. "on July 6, 2020, the United States informed the Secretary-General that, as the depositary of the 1946 World Health Organization Act, the United States withdrew from the World Health Organization with effect from July 6, 2021," Diarik said in an email to reporters. "

3. According to comprehensive media reports, the Ministry of Health of Kazakhstan said on July 10 that "some Chinese media claimed that the information of a new type of pneumonia in Kazakhstan was wrong." it also stressed that the country's statistics on bacterial, fungal and viral pneumonia infections are in line with WHO guidelines, including unexplained pneumonia.

It is reported that the storm in which Kazakhstan accused the Chinese media of spreading "false news" originated from a message from the Chinese Embassy in Kazakhstan on the evening of July 9. At that time, the Chinese Embassy in Kazakhstan issued a message through its official website and WeChat official account to remind Chinese citizens in Kazakhstan to "pay attention to the prevention of unknown pneumonia."

Pictures from a previous report by FX168 show that the official website of the Chinese Embassy in Kazakhstan revised the information released the day before after the Kazakh Ministry of Health issued a rebuttal statement on July 10. In the statement on July 9, the term "ha pneumonia" was replaced by "non-new crown pneumonia in Kazakhstan"; the expression "the fatality rate of the disease is much higher than that of new crown pneumonia" was deleted.

On July 10, local time, WHO held a regular press conference on new crown pneumonia. Michael Ryan, head of the WHO Health Emergency Project, said that WHO has noted unexplained pneumonia in Kazakhstan. There are many explanations for the recent increase in pneumonia cases in Kazakhstan, and WHO is working with local agencies to conduct an investigation.

Michael Ryan pointed out that there has also been a surge in new crown pneumonia cases in Kazakhstan, with more than 10,000 laboratory confirmed cases reported in the past seven days. Who is studying the actual local testing conditions and quality in case there are false negative samples of new crown pneumonia in other pneumonia samples, and many cases of unexplained pneumonia may be cases of new crown pneumonia. Who is also studying X-rays of cases of unexplained pneumonia to see if they are consistent with the symptoms of new crown pneumonia.

Michael Ryan also stressed that atypical pneumonia could occur anywhere at any time and could be caused by microbes or diseases such as Legionella, chlamydia and influenza. So although WHO believes that many cases of unexplained pneumonia in Kazakhstan are actually new crown pneumonia cases, it will remain open until it is fully diagnosed.

Other big news this week: trade between Europe and the United States, the U.S. Supreme Court ruled that prosecutors in New York have access to Trump's financial records, the border conflict between China and India.

In addition to the situation between China and the United States and the global outbreak of new crown pneumonia, the market was also affected this week by trade between Europe and the United States, as well as news such as the US Supreme Court's ruling that prosecutors in New York had access to Trump's financial records and the border conflict between China and India.

1. trade between Europe and the United States: the United States reportedly announced a 25 percent tariff on a range of French goods worth about $1.3 billion on Friday, deepening a long-running struggle between the two countries over taxing technology giants.

The Office of the US Trade Representative said the tariffs against France would be delayed by no more than 180 days because France had not yet begun to collect digital taxes. The Trump administration has also given the OECD more time to continue to discuss a global agreement. The French products targeted by the United States this time include cosmetics, soap and handbags, without the wine and cheese in the Trump administration's proposed list.

France has been unyielding and plans to resume a digital tax, which will hit technology giants including Amazon, Google and Facebook. France said earlier Friday that it would not be swayed by U. S. sanctions. "France's reaction will not change," Finance Minister Le Maire said in Brussels. "if there is no international solution by the end of 2020, we will tax as we have always said."

2. On July 9, local time, the U.S. Supreme Court ruled that prosecutors in New York had access to President Trump's financial records, including tax returns. Unlike recent presidents, Trump has refused to release his tax returns and other financial documents, making it impossible for outsiders to know the details of his wealth and family business.

However, the US Supreme Court overruled a previous court decision to allow a Democratic-led congressional committee to have access to Trump's financial records, and the case was sent back to a lower court. In both cases, the verdict was 7 to 2, and Chief Justice Roberts (John Roberts) wrote the Supreme Court opinion. The judge dismissed the president's charge that he was exempt from a state criminal subpoena in the New York case.

After the Supreme Court announced the decision, Trump vented his anger through a series of posts on Twitter.

"our previous administration was completely corrupt, including a president and vice president, and they monitored my campaign and got the news, but nothing happened to them," Trump said angrily on Twitter. "

"this crime happened even before I was elected, and everyone knew it, but everyone froze with fear. No judicial response from the Republican Senate, no "justice", no FBI, nothing. The main horror show reported on Comey and McCabe, very guilty, nothing happened. " "Muller's three-year, $45 million scam failed-everything was investigated," Trump wrote. "

"now, the Supreme Court has made an extension decision, and they would never make such a decision on another president. This is about the misconduct of the prosecutor. We found each other spying on my campaign, the biggest political crime and scandal in American history, but nothing happened. But in spite of this, in the first three and a half years, I have done more than any other president in history! " Trump wrote in his tweet.

3. Sino-Indian border conflict: the Chinese Ministry of Foreign Affairs issued a statement on July 6, saying that on the evening of July 5, 2020, Wang Yi, Chinese special representative, state councilor and foreign minister on the Sino-Indian border issue, had a phone call with Indian Special Representative and Indian National Security adviser Dovar (Ajit Doval). The Ministry of Foreign Affairs of China and the Ministry of Foreign Affairs of India have issued statements. Judging from the contents of the statement, the confrontation in the border conflict between China and India has eased somewhat. Sources said on July 6 that Chinese and Indian troops had withdrawn from three friction sites on the line of control, including the site of violent clashes on June 15, India's News18 website reported.

On the evening of July 6, CCTV International Channel released for the first time a number of evidence of India's cross-line provocation against China on the program "focus Today". It shows that the Indian side is carrying out the construction of infrastructure, including roads and bridges, on one side of the line of actual control of the Chinese side, and is also trying to set up outposts in relevant areas. In its program, CCTV released pictures of India crossing the line to build bridges, helipads and tents, as well as pictures of Indian front-line troops riding lines and carrying simple steel bridges across the line.

At a regular press conference held by the Ministry of Foreign Affairs on 9 July, Chinese Foreign Ministry spokesman Zhao Lijian said: "at present, in accordance with the consensus reached at the military level talks, the border defense forces of China and India have taken effective measures to disengage from front-line contacts in the (Galwan Valley) and other areas in the western part of the Sino-Indian border, the Caribbean River Valley. The border situation between China and India is generally stable and tends to ease. The two sides will continue to maintain dialogue and communication through military and diplomatic channels, including a new round of military-level talks and a meeting of the working mechanism for consultation and coordination on Sino-Indian border affairs. It is hoped that the Indian side and the Chinese side will face each other, take practical actions to implement the consensus reached by the two sides, and jointly promote the further relaxation and cooling of the situation in the border areas. "

In addition, the Hindustan Times reported on July 10 that the fourth meeting of senior Indian and Chinese generals scheduled for next week (July 13-19) is expected to focus on key Finger area and strategic Depsang plains, according to two officials familiar with the matter.

Next week's market outlook:

Next week, the market will welcome the release of a number of economic data, including China and the UK GDP, China's import and export and trade balance, house price index, US industrial production, CPI, retail sales and so on. Next week, the central banks of Japan, Europe, South Korea, Canada and Indonesia also announced interest rate decisions, and a number of major central bank officials spoke. It is worth noting that US stocks will enter the second earnings season this year next week, in which bank stocks will be the first to announce results. At present, the market sentiment is very positive, but there are also market voices warning that US stocks are about to usher in their worst earnings season in 12 years.

On economic data: the United States will release indicators such as CPI, PPI, and retail sales. With regard to macroeconomic data, there is growing concern that the U. S. economic recovery will stagnate after June, said Michael Pearce, a senior U. S. economist at Capital Macro. "there are more and more indicators that the economic recovery stalled at the end of June and early July, in part because of the resurgence of viral infections," he said. It is clear that there is a risk that the virus will continue to spread indefinitely in the coming weeks, pushing the economic recovery back. "

On the central bank decision: the Bank of Japan, the European Central Bank and the Bank of Canada will all announce the latest interest rate decisions next week. In response to the ECB resolution and the Bank of Canada decision, according to analysts at (National Bank of Canada), the National Bank of Canada, the Bank of Canada will keep interest rates unchanged and negative interest rates are not in the plan. The monetary policy meeting and monetary policy report of the Bank of Canada became a bright spot. President Markham (Tiff Macklem) said in a recent comment that the Monetary Policy report could provide a central planning plan for output and inflation and discuss associated risks that would not have been seen in previous reports. "

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