Author: Ye Zhen, Wall Street Insight
The trade negotiations between China and the United States have released positive signals, but the global market cannot be taken lightly. Starting from this Wednesday, the global market will enter a crucial 72 hours.
According to Xinhua News Agency and CCTV News, from July 28 to 29, He Lifeng, the Chinese lead negotiator and Vice Premier of the State Council, and the US lead negotiator, US Treasury Secretary Besen and Trade Representative Grill, held China-US economic and trade talks in Stockholm, Sweden.
Both sides conducted frank, in-depth, and constructive exchanges on China-US economic and trade relations, macroeconomic policies, and other issues of common concern, reviewing and affirming the consensus of the China-US Geneva economic and trade talks and the implementation of the London framework.
According to the meeting consensus, both sides will continue to postpone the 24% tariffs by the US and China's countermeasures for 90 days as scheduled.
Next, a series of intensive US economic data, tech giants' financial reports, and key trade policy nodes will take turns, and the accumulation of these events may set the tone for the market's direction in the remaining time this year.
The market test will begin on Wednesday, when the US will release the second-quarter GDP data, and hours later, the Federal Reserve will announce its interest rate resolution. Immediately after, tech giants such as Microsoft, Meta, Apple, and Amazon will successively release their financial reports after the market closes on Wednesday and Thursday, while the highly anticipated US July non-farm employment report will be released on Friday.
Any of these events could trigger market turbulence.
Against the backdrop of a significant rebound in US stocks from the April low point and high valuations, this "super week" is viewed by the market as a severe test.
Mike O'Rourke, an analyst at Jones Trading, said this week "may prove to be the most critical week this year" and its results will test Wall Street's determination.
Meanwhile, market attention is also focused on the East, with the Politburo meeting imminent, and investors are closely watching the new economic policy signals that China is about to release.
01 US Economic Data Intensively Released
In the latter half of this week, a series of heavyweight economic data will provide key clues to judge the health of the US economy. According to the Atlanta Fed's forecast, the US second-quarter GDP annualized growth rate is expected to be around 2.9%, mainly reflecting the decline in imports. Previously, in the first quarter, the surge in imports related to inventory had dragged down GDP.
In terms of monetary policy, although President Trump insists that interest rates should be significantly lowered, the market generally expects the Federal Reserve to maintain the interest rate range of 4.25% to 4.5% unchanged at the meeting on Wednesday.
Investors will focus on whether there is an increasingly widening divergence between Federal Reserve Chairman Powell and other decision-makers - one side wants to further assess the impact of tariffs on inflation before cutting rates, while the other wants to act quickly.
Finally, Friday's employment report is expected to show that the US added 115,000 jobs in July, a slowdown from the previous month's 147,000.
According to FactSet's survey, unexpected data in any direction could trigger cross-market fluctuations. Charlie McElligott, a derivatives strategist at Nomura Securities, noted that the "absolutely crowded data schedule" means there is "huge event risk" at the end of the month.
Tech Giants' Financial Reports Test Market Quality
Simultaneously with the data release, the US stock earnings season is entering its peak. Microsoft and Meta are scheduled to announce their performance after the market closes on Wednesday, with Apple and Amazon following on Thursday. These four tech giants have a total market value of over $11 trillion, and their stock performance has a crucial impact on Wall Street.
In recent weeks, the US stock market has repeatedly hit historical highs, boosted by the economy's resilience and optimistic expectations that artificial intelligence will drive strong growth in the giants' businesses.
However, the market's rapid rise has also made some analysts and investors uneasy. The S&P 500 has risen 8.3% this year, with a forward 12-month expected price-to-earnings ratio of 22 times.
In this context, the performance and outlook of tech giants will directly test whether the current high market valuation is reasonable.
Trump's Tariff Deadline Approaches
Uncertainty also comes from the trade realm. The Trump administration's deadline for imposing "reciprocal" tariffs on countries with which it has not reached a trade agreement is 12:01 AM Washington time on August 1.
In recent months, as the United States has reached trade agreements with major partners such as the EU, Japan, and the UK, and extended the tariff suspension with China for 90 days, investor sentiment has eased, and Wall Street banks have lowered their probability predictions for potential recessions. Investors generally bet that Trump will avoid implementing tariffs that could cause excessive market volatility or postpone them until an agreement is reached.
However, risks still exist. Matt King, global market strategist at Satori Insights, said: "Trump is still Trump, and the risk of tariffs and related uncertainties remain."
China's Policy Direction Draws Attention
In China, the upcoming Politburo meeting is another focus of market attention.
Huatai Research analysis believes that based on the economic data showing resilience in the first half of the year and the potential for marginal improvement in China-US relations before October, the focus of the Politburo meeting may be on:
1. Economic situation assessment: After the recent weakness in high-frequency data such as real estate, consumption, and exports, will the policy tone of stabilizing the property market and boosting consumption be further strengthened?
2. Will the judgment of real estate "bottoming out and stabilizing" be further reinforced, and can subsequent policy tools be clarified?
3. "Anti-involution" and de-capacity policy goals, task breakdown, and implementation path;
4. Fiscal and monetary policies may continue the policy tone since April, with market expectations relatively low.
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