Market Analysis: Limited Upside with Mild Weakness Expected
Following the Federal Reserve’s “hawkish rate cut” early yesterday, market expectations for four rate cuts in 2025 have shifted to two. This adjustment triggered volatility across capital markets, with declines in U.S. equities, bonds, metals, and precious metals. Iron ore prices also fell, dragging steel prices downward. However, the downward impact from this event is beginning to wane.

Key Observations

  1. Steel Fundamentals Remain Resilient: The market for finished steel products continues to show stable fundamentals, though recent trends have been heavily influenced by raw material price fluctuations.
  2. Iron Ore Valuation: Iron ore remains at mid-to-high valuation levels, with a significant probability of gradual weakening.
  3. Short-Term Trend: The market is expected to exhibit limited upside, with a higher likelihood of mild, range-bound downward movement.

Trading Strategy: Focus on Short Positions

  • Maintain a sell-on-rallies approach, as short-term upward momentum is constrained.
  • Adjust positions to optimize risk management while taking advantage of potential price declines.

As market conditions evolve, disciplined positioning and an emphasis on technical and fundamental cues will be key to navigating this period of uncertainty.

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