On Monday, SPY slipped 0.03%, QQQ fell 0.30%. Over the past 5 trading days, SPY has still risen 2.03%, QQQ has risen 2.97%, so the broader market is not in panic; the divergence looks more like sector rotation.

Today’s main themes: the market is watching two things. First, the US-China tariff topic has resurfaced. Second, China has consecutively sent signals aimed at stabilizing growth, stabilizing funding, and stabilizing energy. Putting these pieces together points to one sentence: external frictions have not disappeared, but internal support measures are ramping up, and the market is recalculating “who can hold up better.”

First look at external pressure. The Office of the United States Trade Representative announced on 7/23 that it will impose comprehensive tariffs of 10% to 12.5% on 60 categories of goods from Chinese trading partners. Plainly speaking, the US has raised the import threshold another notch. Tariffs may look like just a change in rates, but the transmission chain is direct: tariffs rise, import costs rise; if importers face higher costs, they either take lower margins themselves or pass prices on to consumers; further downstream, this will affect retail, manufacturing, and the pace at which companies replenish inventories.

Why is this important today? Because it is not single-company news; it will affect a string of industries. Imagine a store that used to buy goods for 100 now faces costs of 110 to 112.5 because of tariffs. If consumers are unwilling to pay more, profits get squeezed; if merchants raise prices, sales may be affected. So the market will immediately ask two questions: who can pass costs through, and who will be crushed by costs.

At the same time, China’s signals form another transmission chain. Latest data show foreign exchange reserves were 34188 billion USD at the end of 7, up 25 billion USD from the end of 6, and have stood above 3.4 trillion USD for 4 consecutive months. Put simply, foreign exchange reserves are like a country’s stock of foreign currency; when the stock is stable, market worries about the exchange rate and external shocks are usually smaller. The foreign exchange authority noted that the dollar index’s decline and changes in global asset prices drove this slight rebound.

This news looks bland, but its meaning is “stability.” When external trade frictions exist, the market fears two things most: capital outflows and large exchange rate swings. Foreign reserves remaining stable at a high level at least indicate the cushion is still there. Plainly put, when storms come, the ship still has enough ballast.

Looking further, bottom-supporting actions are not only at the financial level. Major domestic projects are also accelerating, including a batch of projects accelerating that involve the "six networks", and local special bonds and new types of policy financial instruments are also likely to be issued more quickly. Put simply, infrastructure and project investment are still being pushed forward, with a clear purpose: if external demand is uncertain, then rely more on domestic demand and investment to take over. The transmission chain is that if projects start a bit faster, upstream raw materials, equipment, and construction orders will benefit first; if orders increase, they can stabilize some companies’ revenues and employment.

Another item that is easy to overlook but is actually somewhat bullish is the acceleration of cancellation-style share repurchases. In the first half, A-share listed companies’ cap on this type of repurchase involved an amount limit of 379.68 billion, a year-on-year increase of about 14%; by the end of 7, the year-to-date planned amount limit had already exceeded 1000 billion, accounting for over 60%. Put simply, cancellation-style repurchases do not buy shares back and hold them, but directly reduce share capital, which is equivalent to reducing the number of people sharing the cake. Companies willing to do this usually indicate management thinks their stock is not expensive and are more willing to use cash to return value to shareholders.

So a few lines connect: external tariffs raise global trade costs, adding pressure to retail and the manufacturing chain; China is hedging external uncertainty with stable foreign reserves, faster project investment, and stronger buyback activity; and on energy, the coal "15th Five-Year" plan fills in another base layer, raising the share of large modern coal mine capacity to 87% by 2030 and the share of intelligentized coal mine capacity to 75%. Put simply, this is not short-term stimulus, but a message to the market that the energy-security base will continue to be strengthened. For the economy, stable energy gives industry and infrastructure more confidence.

Of course, the market is not rising across all directions. On Monday semiconductors such as SOXX and SMH both pulled back noticeably, down 2.55% and 2.28% respectively. This reminds us of one thing: today’s funds are more biased toward sectors that can explain cash flow and resource security, rather than blindly chasing high-valuation growth. In other words, the stories remain, but valuations will be reselected.

That said, look at several representative directions in ETF Radar.

First XRT, the US retail ETF. XRT actually rose 3.13% over the past 5 trading days. The ETF Radar model is biased positive for the next 1 to 3 months, with fairly consistent signals. This ETF is indeed related to today’s tariff theme, because tariffs directly affect retailers’ purchasing costs and pricing power. The first quantitative read supporting this judgment is that since 2026/8/3 real creation/redemption net inflow was +323M USD, accounting for +43.65% AUM. Put simply, real creation/redemption means real money flowing in and out of the ETF, not just verbal optimism; such a high share indicates obvious buying. The second read is 30-day cumulative net inflow +46.39% AUM, which shows it is not a one-day impulse but sustained inflows. The third is XRT’s excess return versus XLY +1.79%. Put simply, excess return means it has outperformed its peer segment by 1.79%. There is a bit of counterintuitive evidence here: tariff news sounds like a headwind, but the model is positive, indicating the market is betting more on "strong retailers passing through costs while weak ones are cleared," not a simple view that the whole industry gets hurt.

Next KWEB, the China internet ETF. KWEB actually rose 1.32% over the past 5 trading days. Looking forward, the ETF Radar model is biased positive for the next 1 to 3 months, with multiple pieces of evidence aligned. It also has a real transmission channel to today’s themes, because stable foreign reserves, project advancement, and insurers’ asset allocation tilting more to long-term growth all improve risk appetite for Chinese equity assets. The first quantitative read is KWEB’s excess return versus FXI +5.79%. Put simply, it has outperformed the broader China large-cap index by 5.79%, indicating capital preference for platforms and growth. The second is short interest 42,669,108 shares, +20.3% versus the prior period, with days-to-cover at 1.99. Put simply, short interest is the bet-on-decline chips; days-to-cover can be understood as how many days of volume it would take for shorts to cover together — this number isn’t low, making a short-squeeze more likely. The third is emerging markets volatility indicator VXEEM 29.64, z=-2.09. Put simply, a low volatility indicator means the market is not pricing very high for major risks currently; the risk appetite environment is relatively calm. Note that KWEB had one-day net outflows of -0.24% AUM, so short-term flows are not entirely unanimous, but mid-term readings remain positive.

Third, look at VDE, the US energy ETF. VDE actually rose 2.53% over the past 5 trading days. For the outlook, the model points to a positive bias for the next 1 to 3 months, with focused evidence. This theme is not directly caused by China’s coal plan; it is driven more by Middle East and crude supply logic, so it should be discussed separately. The first quantitative read is WTI front month 82.38 versus the 12-month contract 71.50, with curve slope about +15.107%. Put simply, the front-month crude is much more expensive than the later month, indicating nearer-term oil is tighter. The second is CFTC COT net long 86,958 contracts. Put simply, COT shows the net long positions after big players’ longs minus shorts in the futures market; this number is not small. The third is VDE one-day net inflow +1.05% AUM, indicating there was real money flowing in behind Monday’s rise. It also rose 4.74% on Monday alone, and 6.19% over 20 days; short- to mid-term prices are currently validating this theme.

Finally one more, BNO, the Brent oil ETF. BNO actually rose 4.77% over the past 5 trading days. For the outlook, the ETF Radar model is biased positive for the next 1 to 3 months, with fairly consistent signals. The first quantitative read is that prediction markets show a 0.97 probability that the Senate will pass a Russia sanctions bill before 8/31. Put simply, prediction markets involve real-money bets on whether an event will occur; 0.97 means the market almost certainly expects it to pass. The second is also the COT net long 86,958 contracts, indicating speculative money is still betting on stronger oil. The third is BNO having already risen 8.93% over 20 days, indicating part of this logic has been realized. One divergence to point out: today’s news theme is more about tariffs and China’s support measures, whereas BNO is driven by Russia-Ukraine and supply risk; it is not directly related to today’s main theme and represents an independent intermediate-term stance.

Taken together, the core meaning of this group of news for Tuesday is not unilateral optimism nor a full-on turn to bearishness, but that after external frictions intensify, the market is more willing to put money into directions that have policy support, cash-flow backing, or resource-constraint advantages. In ETF Radar’s readings, retail, China internet, and energy correspond to these three lines. Reminder: the above are system quantitative model directional forecasts for the general market and do not constitute personalized investment advice; consult a licensed investment advisor before investing.