Morning News

**Source**: Wall Street Journal

### Market Overview

- With the threat of tariffs looming, U.S. stocks declined, and the S&P 500 ended its nine - day winning streak. Tariffs on the film industry are set to be imposed. At the beginning of trading, Warner Bros. dropped more than 5%, Netflix fell more than 3%, and both closed at least nearly 2% lower; Apple had two consecutive days of decline after releasing its results, closing down more than 3%. Buffett will step down as CEO by the end of the year, and Berkshire Hathaway closed down about 5%. The pan - European stock index rose for nine consecutive days, reaching the longest winning streak in nearly four years.

- The unexpected acceleration in the expansion of the U.S. ISM services index led to a narrowing of the declines in U.S. stocks and the U.S. dollar index, and the Dow Jones Industrial Average even turned positive at one point. The yield on the U.S. Treasury bond surged, reaching a new high in more than a week.

- The New Taiwan dollar once rose 5%, reaching its largest increase since 1988; the offshore RMB rose more than 300 points intraday, breaking through 7.19 and reaching a new high in five months.

- OPEC+ decided to accelerate production increase again, and crude oil prices hit a three - year low. U.S. oil prices fell more than 5% intraday but then narrowed more than half of the decline. Gold prices hit a one - week high intraday, and gold futures once rose more than 3%. New York copper prices rose nearly 2% intraday.

- During the Asian session, the mainland Chinese and Hong Kong markets were closed.

### Top News

- Pan Gongsheng attended and chaired the meeting of finance ministers and central bank governors of ASEAN+3. The meeting adopted the relevant arrangements for the newly established rapid financing facility funded by freely usable currencies such as the RMB.

- The New Taiwan dollar rose 5% intraday, reaching its largest increase since 1988. Taiwan's life insurance giants hedging their U.S. dollar exposure were pointed out as the driving force. The "Central Bank of the Republic of China (Taiwan)" said that the U.S. - Taiwan tariff negotiations did not touch on the exchange rate issue.

- The Hong Kong Monetary Authority (HKMA) defended the exchange rate for the third consecutive day, selling a record - high HK$60.543 billion on Tuesday.

- Xinhua News Agency: Trump said that he would impose a 100% tariff on all movies made in foreign countries. U.S. authorities said that the new tariff would kill the U.S. film industry.

- U.S. Treasury Secretary Bessent promoted betting on the United States: Trump's policy combination of tax cuts and other measures will attract investment in the United States. "By this time next year", the growth rate of U.S. GDP may be close to 3%.

- The U.S. ISM services index in April unexpectedly rose to 51.6 instead of falling, and the price index reached a new high in more than two years. Employment and new orders improved.

- The board of directors confirmed that Abel will replace Buffett as CEO on January 1, next year. Berkshire Hathaway once fell nearly 7%.

### Market Closing Quotes

- **European and American Stocks**: The Dow Jones Industrial Average fell 0.24%, the S&P 500 Index fell 0.64%, and the Nasdaq Composite Index fell 0.74%. The European STOXX 600 Index closed up 0.16%.

- **Bond Market**: At the end of the bond market trading, the yield on the 10 - year benchmark U.S. Treasury bond was about 4.34%, rising about 3 basis points during the day; the yield on the 2 - year U.S. Treasury bond was about 3.83%, rising about 1 basis point during the day.

- **Commodities**: WTI June crude oil futures fell 2%. Brent July crude oil futures fell 1.73%. COMEX June gold futures rose 2.4%. COMEX July copper futures closed up 0.56%.

### Details of Top News

- **Global Highlights**

   - Pan Gongsheng attended and chaired the meeting of finance ministers and central bank governors of ASEAN+3. The meeting adopted the relevant arrangements for the newly established rapid financing facility funded by freely usable currencies such as the RMB.

   - The New Taiwan dollar saw its largest intraday gain since 1988. The Hong Kong Monetary Authority defended the exchange rate for the third consecutive day.

   - Capital is flowing out of the U.S. dollar, driving Asian currencies higher. On Monday, the New Taiwan dollar once rose 5% against the U.S. dollar; the offshore RMB rose above 7.19 against the U.S. dollar intraday for the first time since last November, rising more than 300 points intraday.

   - The Hong Kong dollar hit the strong - side convertibility undertaking of the trading range for the third consecutive day. After buying U.S. dollars for the first time in five years last Friday, the Hong Kong Monetary Authority took action again on Monday and Tuesday to defend the exchange rate of the Hong Kong dollar. It injected HK$9.532 billion into the market on Monday and sold a record - high HK$60.543 billion in the market on Tuesday.

   - A long - simmering financial storm has quietly arrived. Taiwan's life insurance giants collectively hedged their U.S. dollar exposure in a panic, which may be the driving force behind the sharp rise in the New Taiwan dollar. The NT $460 - billion currency mismatch of Taiwan's life insurance companies is like a time - bomb, which is exploding with the depreciation of the U.S. dollar. As the U.S. dollar enters a possible long - term depreciation channel, this financial storm may be just the prelude to the global financial reconstruction.

   - The media reported that the Financial Supervisory Commission of the Republic of China (Taiwan) has required the largest life insurance companies to discuss the impact of the rapid appreciation of the New Taiwan dollar on their operations. These life insurance giants are collectively hedging their U.S. dollar exposure. At present, it is difficult for regulators to make large - scale interventions in the foreign exchange market. However, Yang Jinlong, the governor of the "Central Bank of the Republic of China (Taiwan)", reiterated that if exchange rate fluctuations endanger market stability, it will intervene. Taiwan also said that the U.S. - Taiwan tariff negotiations did not touch on the exchange rate issue.

   - Is there really a "Mar - a - Lago Agreement"? JPMorgan Chase believes that the weakness of the U.S. dollar does not come from a coordinated agreement, but is driven by fundamental changes. In addition, the market generally believes that there is another powerful driving force behind the strong Asian currencies - the huge amount of U.S. dollar assets accumulated from years of trade surpluses have begun to flow back, creating a strong foreign exchange hedging pressure.

   - UBS believes that the driving forces are the exchange rate hedging by insurance companies, enterprises, etc. and the stop - loss of the previous New Taiwan dollar financing arbitrage transactions. The market equilibrium has been broken. Insurance companies and exporters may increase their hedging ratios when the New Taiwan dollar corrects. Just restoring the foreign exchange hedging / deposits to the trend level may lead to a sell - off of up to US $100 billion.

   - According to Xinhua News Agency, Trump said on the 4th that he would impose a 100% tariff on all movies made in foreign countries. U.S. authorities criticized it, saying that it would kill the U.S. film industry. Industry media pointed out that the practice of imposing tariffs on foreign - made movies would have a significant impact on the U.S. entertainment industry.

   - U.S. Treasury Secretary Bessent promoted betting on the United States: Trump's policy combination of tax cuts and other measures will attract investment in the United States. Bessent said that the trade, tax cuts and deregulation in the economic agenda of the Trump administration are not independent policies, but "interlocking parts of an engine", aiming to promote long - term investment in the U.S. economy and make the United States more attractive to investors; the U.S. market has the characteristics of "antifragility" and has rebounded after experiencing the financial crisis and other blows in the past; "by this time next year", the growth rate of U.S. GDP may be close to 3%.

   - The U.S. ISM services index in April unexpectedly rose to 51.6 instead of falling, and the price index reached a new high in more than two years. Employment and new orders improved. After the sharp decline in March, the activities of U.S. service - sector enterprises recovered somewhat in April. The rate of employment decline slowed down. New orders were the highest since the beginning of this year. The business activity index fell to the lowest since last June. The import index had the largest decline since June. The inventory index climbed to the highest since last October.

   - A major shift in OPEC+'s strategy: "Angry Saudi Arabia" = "long - term low oil prices"? OPEC+ has significantly increased production for two consecutive months. International oil prices once fell more than 4% on Monday. OPEC+'s strategy has undergone a key shift, giving priority to production discipline rather than price stability. The message from the market is clear: long - term low oil prices are not a prediction, but a plan.

   - The crude oil market in 2025 is likely to be in a comprehensive surplus. Goldman Sachs and Morgan Stanley revised their forecasts overnight. Goldman Sachs lowered its price forecast for Brent crude oil this year and next year by $2 - 3 per barrel respectively. Morgan Stanley lowered its quarterly price forecast for this year by $5 and expected that the surplus in crude oil supply would worsen. In the second half of this year, the daily surplus in crude oil supply would reach 1.1 million barrels.

   - Buffett's stepping down as CEO, combined with the performance falling short of expectations, led to Berkshire Hathaway once falling nearly 7% intraday.

   - The board of directors of Berkshire Hathaway passed a resolution on Sunday that Abel will replace Buffett as CEO on January 1, next year, and Buffett will continue to serve as chairman. Buffett announced his hand - over when the company's stock price hit a record high last Friday, which can be regarded as a curtain - call at the peak.

   - Analysts believe that at the operational level, there is not expected to be much change in Berkshire Hathaway. Under Abel's leadership, its corporate culture and strategy will also remain unchanged. Wall Street bigwig Bill Ackman expects that Berkshire Hathaway may increase the cash return to shareholders in the future and has confidence in Abel's ability to manage Berkshire Hathaway.

   - Back to square one! CITIC Securities: "Trading facts, not expectations" should be the first principle to deal with uncertainty. CITIC Securities said that looking ahead to May, "signing for the sake of signing" may become the overseas narrative logic. It is expected that there is still room for the risk appetite to pick up. The A - share market will continue to show the characteristics of a warming - up risk appetite and theme rotation, mainly focusing on the theme - based trading opportunities with low institutional holdings. From the economic level, the real impact has quietly occurred. It is expected that the Chinese and U.S. economies may face new variables at the end of the second quarter.

- **Domestic Macroeconomy**

   - How to rate the May Day consumption? Minsheng Securities believes that several unusual aspects of this year's May Day holiday consumption are worthy of attention: First, the extension of this year's May Day holiday is another concentrated release of consumption after the Spring Festival. Its passenger traffic, per - capita consumption and other data are comparable to those of the National Day holiday, which also has a relatively long holiday. Second, under the influence of policies such as transit visa - free and "buy - and - refund - on - the - spot" to expand opening - up, the "consumption boom" during this year's May Day holiday is not small driven by foreign friends. Third, the film box office has cooled down. The disappearance of the phenomenal viewing boom after *Ne Zha* shows that the innovation of consumer supply still needs to be polished. Fourth, the real estate market needs further repair, and the incremental policy hedging has also entered the observation period.

   - During the May Day holiday, the sales of key retail and catering enterprises across the country increased by 6.3% year - on - year. The trade - in - for - new program was very popular. During the holiday, the sales of home appliances, automobiles and communication equipment of the retail enterprises under the key monitoring of the Ministry of Commerce increased by 15.5%, 13.7% and 10.5% year - on - year respectively. Service consumption continued to heat up, and the catering and cultural tourism markets were booming.

   - The online and offline consumption in Shanghai increased by 13.1% during the May Day holiday. From April 30 to May 4, the total online and offline consumption in Shanghai was 59.46 billion yuan.

   - The Shanghai property market had a lively start on May Day: all the staff in the sales offices were on duty, and the popular properties continuously triggered the point - based system. According to The Paper, during this year's May Day holiday, many popular properties in Shanghai performed outstandingly. Many popular projects such as Feiyun Yuefu and Xipai Haishang successively triggered the sales - restriction and point - based system, and projects such as Lvcheng Chaoming Dongfang and Angao Shenglongyuan triggered the sales - restriction. At the same time, after the hot sales in the first batch, the popular projects firmly grasped the opportunity to launch the second - batch additional sales.

- **Domestic Companies**

   - Hon Hai's revenue in April reached a new high, with a year - on - year growth of 25.5%, driven by the strong demand for AI servers. Hon Hai's revenue in April increased by 25.5% year - on - year to NT $641.37 billion, the highest in the same period in history, with a month - on - month growth of 16.16%. Looking ahead to the second quarter, the company said that cloud network products will maintain a growth trend, and the revenue is expected to show a quarterly - on - quarterly and year - on - year increase, but it still needs to continuously pay attention to the impact of changes in the global situation.

   - The "intelligent driving" of Xiaomi cars has been renamed "assisted driving". According to the recent interviews by the reporters of China Fund News, the senior executives of car companies have changed from high - profile promotion at the beginning of the year to being more rational at present when talking about "intelligent driving", and revealed that they can no longer say "intelligent driving" and should change it to assisted driving or intelligent assisted driving.

- **Overseas Macroeconomy**

   - Tariffs and recession? The U.S. stock market "doesn't care"! On the one hand, Goldman Sachs believes that the probability of a recession in the next 12 months is 45%, while Apollo recently set it at 90%. On the other hand, the S&P 500 Index ended its longest nine - day winning streak since 2004 last Friday, and bond yields and the U.S. dollar have stabilized. However, there are also hidden concerns beneath the surface. The risk compensation for investors holding U.S. stocks is lower than the historical standard. The market is currently closely watching the credit card data, which will be one of the early warning signals.

   - Why did the U.S. - Japan negotiations on tariffs "collapse" again? Su Xiaohui, a special commentator for CCTV News, said that this shows that not only at the negotiation table does the United States want to maintain its psychological advantage and further increase its demands to achieve its goals. The essence reflected is that the United States, under the pretext of tariff negotiations, is actually engaged in blackmail and coercion. The intention of the United States is still to "knock over the dominoes" through a tariff war.

   - Will "tokenization of real - world assets (RWA)" be the "next ETF"? Institutional investors such as BlackRock and Libre are conducting large - scale tests and deployments of the infrastructure for RWA tokenization. Piscini estimates that by the end of this decade, more than 10% of the world's financial assets may be tokenized.

- **Overseas Companies**

   - President and Chief Operating Officer of Blackstone: There is still a large growth space for the demand of data centers. Jonathan Gray believes that there is still a large growth space for the demand of data centers. "I think it's a bit like there is a wall in front of us now. We have forgotten that there is a powerful technological revolution in the distance."

- **Industries/Concepts**

   - **AI Glasses**: Cathay - Haitong Securities pointed out that the sales of Ray - Ban Meta AI glasses grew strongly in the first quarter, with the monthly active users quadrupling. It is optimistic about the improvement of the interaction ability of AI + AR glasses by the multi - modal iteration of large models and the subsequent intensive release of AI + AR glasses by major manufacturers.

   - **Computing Power**: Guosheng Securities pointed out that Microsoft, Meta and Amazon have successively released their financial reports, providing a new window for the market to observe their investment and progress in the AI field. From the perspective of downstream applications, AI has promoted a significant growth in the relevant businesses of various enterprises, and their performance is gradually being realized. From the investment side, Capex still shows a strong demand for AI infrastructure construction. AI technology has penetrated from the underlying computing power to vertical applications, and the commercialization process is accelerating.

   - **PCB**: According to the research report of Guojin Securities, from 2024 to the first quarter of 2025, the demand of the entire PCB industry has seen a significant recovery and growth, and the prosperity in the second quarter of 2025 is still continuing. At present, the stock price and valuation of the sector have reflected the worst expectations. Under the situation of strong certainty in the fundamentals of the sector in the second quarter, the opportunity of the strong - alpha companies in the sector with outstanding short - term performance can be grasped first.

   - **High-end Instruments: According to the research report of GF Securities, the general-purpose electronic measuring instrument industry has high barriers to entry and broad development space, while the domestic production rate is low. Currently, the effects of high-end development and domestic substitution are gradually being reflected in the financial statements. Since the third quarter of 2024, there has been an inflection point in the quarterly revenue of enterprises. The contract liabilities reached a new high at the end of 2024, and it is expected that the future performance growth will accelerate.

Preview of Today's Top News

China's Caixin Services and Composite PMI in April.

Eurozone's Services and Composite PMI in April.

Eurozone's Producer Price Index (PPI) in March.

U.S. trade balance in March.

AMD's financial report.

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