Crazy Weekend! How will the market unfold on Monday? The script is here!

The biggest news over the weekend was naturally the Israel-Palestine conflict. This event was not entirely unexpected for the market; there were already anticipations. On February 24th, the European shipping futures rose by 13 points intraday, and on Friday, the market saw continuous developments in safe-haven assets and oil & gas shipping sectors. The U.S. issued multiple warnings for citizens to evacuate, indicating that the market had some degree of expectation for sudden events. Therefore, the overall impact is considered limited, mainly resulting in a lower opening state.

Regarding oil and gas, the market likely expects a gap-up opening, but the sustainability remains uncertain and needs to be observed. For shipping, the expectation still revolves around the strategic game over the Strait of Hormuz. However, one point to note is that a blockade of the Strait would further drive up chemical raw material prices. Given the strong cyclical upward trend in chemical prices, the sector and direction remain the most straightforward. The temporary expectation is that prices could reach 25,000.

On Friday, the weakest sectors in the market were electronic currencies, electronic paper, and fiberglass—fiberglass being a material used in electronic fabrics. The most severely impacted sector in market expectations is likely semiconductors and chips, as Friday’s market already reflected some risk and sentiment adjustments.

Market sentiment has strengthened for two consecutive days. Generally, the sustainability of a small-scale main rally lasts about 3-5 trading days. Based on the recent continuous limit-up performances, it’s difficult for sentiment to stay overly strong; fewer than ten stocks experienced a decline of more than 5% during two consecutive trading days’ opening auctions. Tomorrow, we’ll observe whether the market experiences a rapid negative feedback or if any stocks face sudden liquidity shortages. Sentiment can be directly quantified by the decline leaderboard tomorrow.

Since last week, Huawei Ascend Chain and the market’s existing domestic computing power substitution and exceeding expectations in domestic hardware shipments have been trending. The token-related developments from last week are part of this broader trend. Over the weekend, there was a fermentation related to the US military’s use of Anthropic’s AI tools, where the competition is no longer just about missile accuracy but involves GPU clusters, distributed computing centers, and data fusion models. Computing power equals power, and the trend of domestic computing power remains strong. This is expected to run parallel with price increases, and the conversion of electricity into computing power for overseas profits will also continue to influence sentiment. The computing power strength on Friday was driven by Tuowei; we’ll see if this continues. The main focus remains on these key points.

Partial trading:

Additionally, the recent price surge of strontium carbonate is notable: The risk of the Israel-Hamas conflict has significantly increased, which will severely impact strontium carbonate supply:

1. Concentrated reserves: Globally, high-grade celestite mines are mostly in Iran, accounting for 85%.
2. Supply dependence: China is the world’s largest producer of strontium carbonate, with about 70% of its raw materials imported from Iran.
3. Transportation bottlenecks: Iran’s important non-oil trade port, Bandar Abbas (handling 55% of non-oil cargo), could cease operations due to war, directly cutting off celestite exports. Domestic and international processing capacities are facing capacity reductions:
4. Domestic capacity decline: The domestic strontium carbonate industry has already seen capacity exits, such as Hebei Xinji Chemical (60,000 tons) bankruptcy restructuring and Ningxia Danske’s shutdown for technological upgrades. Effective domestic capacity has fallen to about 160,000 tons/year, while annual demand is around 200,000 tons, leaving a 20% gap.
5. Overseas supply reduction: Mexico’s Kandelium plant (40,000 tons capacity), one of the largest global producers, will cease operations in March 2025 due to a fire, further reducing global supply. This sector was also affected on Friday but is expected to be at a similar level of impact as shipping.