Morning News

Source: Wall Street Journal  

**Market Overview**  

Iran's retaliatory attack on the U.S. was less severe than expected, leading to a brief dip followed by a rebound in the three major U.S. stock indices, with the S&P 500 and Nasdaq hitting one-week highs. The energy sector fell 2.5%, the only declining sector. Tesla surged over 8%, marking its biggest gain in nearly two months. European weight-loss drug giant Novo Nordisk dropped over 5% after disappointing clinical trial results for its next-generation weight-loss drug.  

A dovish statement from a Federal Reserve governor triggered a jump in U.S. bond prices, with yields falling more than 10 basis points from their intraday highs. The U.S. dollar index, which had hit a three-week high earlier, reversed course. The yen fell over 1% to a nearly six-week low before briefly rebounding after Iran's attack on U.S. bases.  

Following Trump's call to lower oil prices, crude accelerated its decline. After Iran's attack, oil prices plunged, closing over 10% below their intraday highs. Gold turned positive during the session, moving away from its lowest level in over a week, but gave up gains after Iran's attack.  

During Asian trading hours, A-shares and Hong Kong stocks rallied in the afternoon, with the Shanghai Composite up 0.65%. Stablecoin concepts surged again, while the Hang Seng Tech Index rose 1%. The "new consumption trio" rebounded, while commodities and government bonds fell.  

**Key News**  

**Global Highlights**  

- Iran attacked a U.S. base in Qatar but did not target energy infrastructure. Trump thanked Iran for "notifying the U.S. in advance," calling its response "very weak." Oil prices plummeted during the session.  

- Trump stated that Israel and Iran have fully agreed to a comprehensive ceasefire, to be implemented in phases. Iranian officials confirmed the ceasefire to media. Israeli media reported that Israel informed Iran it seeks to end the conflict "within days."  

- Trump urged lower oil prices, and the U.S. Energy Secretary responded, "We're on it."  

- Following Fed Governor Waller's dovish remarks last Friday, another Fed governor, Bowman, signaled support for a rate cut as early as July due to rising risks in the labor market.  

- U.S. June Markit manufacturing and services PMIs remained in expansion, with price indices posting their largest gains in four years. The eurozone's June services PMI hit a yearly low, while manufacturing PMI remained in contraction, dragged down by Germany and France.  

- Tesla officially launched its Robotaxi service, with 10 vehicles operating in Austin, Texas, equipped with safety drivers and limited-range capabilities. Its stock surged over 8% on Monday.  

- Germany and Italy are urged to repatriate gold from the U.S., with calls to "keep critical assets in their own hands."  

- Ele.me and Fliggy merged into Alibaba's e-commerce China business group, marking Alibaba's shift toward a broader consumer platform. Alibaba Cloud introduced an autonomous driving model training and inference acceleration framework, cutting training time by 50%.  

**Market Closes**  

- **Stocks**: The S&P 500 rose 0.96% to 6,025.17; the Dow gained 0.89% to 42,581.78; and the Nasdaq added 0.94% to 19,630.98. Europe's STOXX 600 fell 0.28% to 535.03.  

- **A-shares**: The Shanghai Composite rose 0.65% to 3,381.58; the Shenzhen Component gained 0.43% to 10,048.39; and the ChiNext Index added 0.39% to 2,017.63.  

- **Bonds**: The 10-year U.S. Treasury yield fell nearly 3 basis points to ~4.35%, while the 2-year yield dropped ~5 basis points to ~3.86%.  

- **Commodities**: WTI August crude fell 7.22% to $68.51/barrel; Brent August crude dropped 7.18% to $71.48/barrel. COMEX August gold rose 0.27% to $3,395/oz. LME zinc gained 2.1%, aluminum rose 1.5%, while nickel fell nearly 1.4%.  

**News Details**  

**Global Highlights**  

- Iran attacked U.S. bases in Iraq and Qatar, claiming to have launched "destructive and powerful" missiles in retaliation for the U.S. strike on its nuclear facilities. However, it did not target energy infrastructure. Reports suggest the U.S. was aware of the attack in advance, and Trump seeks to avoid further military involvement in the Middle East.  

- Qatar confirmed Iran fired 19 missiles at the U.S. Al Udeid Air Base, with no casualties. Trump thanked Iran for the advance notice, calling for peace afterward.  

- According to CCTV, Trump announced on social media that Israel and Iran have agreed to a comprehensive ceasefire, to be implemented in phases starting six hours later.  

- Israeli media reported that Israel informed Iran it seeks to end the conflict "within days." Iranian officials confirmed accepting a U.S.-proposed ceasefire mediated by Qatar.  

- The conflict escalated rapidly, with Israel intensifying airstrikes on Tehran, and U.S. bases in Syria coming under attack. Iran claimed its first use of "Qader-H" multi-warhead ballistic missiles against Israel.  

- Iran's parliament passed a proposal to suspend cooperation with the IAEA. The White House reiterated Trump's claim that Iran's nuclear facilities were "completely destroyed." IAEA's director-general stated the extent of damage to Iran's Fordow facility remains unclear.  

- Analysts suggest the Fordow facility was damaged but not destroyed. An advisor to Iran's Supreme Leader emphasized that enriched uranium materials remain intact, stating, "The game isn't over."  

- A supertanker made an emergency U-turn in the Strait of Hormuz as markets awaited Iran's response. RBC Capital Markets warned it could take days or weeks to assess Iran's true reaction, noting that targeted disruptions to oil shipping (e.g., harassing vessels or attacking key infrastructure like Fujairah port) are more likely than a full blockade.  

- Analysts estimate the probability of Iran blocking the Strait of Hormuz remains below 50%, though higher than last Friday. Increased harassment of ships (e.g., mine-laying or inspections) could delay shipments and raise freight costs.  

- Putin met with Iran's foreign minister, offering assistance and condemning the "unprovoked aggression" against Iran. He emphasized Russia's strong partnership with Iran.  

- Trump called for lower oil prices, tweeting, "Take note, bring oil prices down—rising prices help the enemy," and directly addressing the Energy Department to "drill now." The Energy Secretary responded, "We're on it."  

- Fed Governor Bowman signaled support for a rate cut as early as July, citing rising labor market risks. She noted tariffs and other policies haven't visibly impacted the economy yet, with inflationary effects likely delayed and smaller than initially expected due to preemptive stockpiling. Trade policy progress has significantly reduced economic risks.  

- U.S. June Markit PMIs showed manufacturing and services expanding, with price indices posting their largest gains in four years. Input costs surged, particularly in manufacturing, with firms passing higher costs (including tariffs) to consumers.  

- Eurozone June services PMI hit a yearly low (51.3), while manufacturing PMI (46.5) remained in contraction. Germany's composite PMI fell sharply to 49.8, and France's dropped unexpectedly to 45.7.  

- Tesla officially launched its Robotaxi service, initially deploying 10 vehicles in Austin, Texas, with safety drivers and limited operating hours/areas. Priced at $4.20 per ride, analysts noted it lags behind Waymo's fully autonomous services.  

- UBS detailed Tesla's Robotaxi business model, projecting a potential fleet of 2.3 million vehicles in the U.S. by 2040, generating $203 billion annually if regulatory approval is secured. Tesla's vertical integration (FSD + manufacturing + platform) gives it a unique edge.  

- Germany and Italy face growing pressure to repatriate over $245 billion in gold reserves held at the New York Fed, amid concerns over Fed independence and geopolitical risks. European taxpayer associations and lawmakers are pushing for direct control of these "anchor assets."  

- Ele.me and Fliggy merged into Alibaba's e-commerce China business group, signaling Alibaba's pivot toward a broader consumer platform.  

- Alibaba Cloud unveiled an autonomous driving model training/inference acceleration framework, cutting training time by 50%.  

**Domestic Macro**  

- Why has short-term risk appetite declined in A-shares? Shenwan Hongyuan Securities attributes it to: 1) a domestic economic support gap, with "front-loaded exports" weakening and stimulus delayed until Q4; 2) rising overseas disruptions (U.S. debt ceiling, geopolitics); and 3) weakening narratives in leading sectors (slow AI adoption, new consumption facing value concerns).  

- The "barbell strategy" (small-cap + dividends) is narrowing at both ends: How to interpret and respond? Xingye Strategy notes the strategy's recent outperformance but highlights rare "contraction" at both extremes. Near-term risks include liquidity shortages for micro-caps, while banks remain attractive. Medium-term, the barbell approach retains merit. Upcoming earnings previews may shift focus to export chains, AI, and financials.  

**Domestic Companies**  

- CATL-backed "Galaxy General" robotics raised 1.1 billion yuan in new funding, led by CATL. The company, a leader in embodied AI robotics, will use the funds to advance R&D and commercialization.  

**Overseas Macro**  

- Why are global markets unfazed by U.S.-Iran tensions? Analysts argue the escalation doesn't pose a systemic threat, with expectations of limited, deterrence-focused U.S. action and Iran's constrained retaliatory options (unlikely to disrupt global oil supply).  

- U.S. May existing home sales exceeded expectations but were the weakest for May since 2009, with prices hitting new highs. Sales rose 0.8% MoM (vs. -1.3% expected).  

**Overseas Companies**  

- Amid Circle's hot streak, crypto assets are "flocking to public markets," but traditional crypto investors remain skeptical, viewing the enthusiasm as driven by "traditional payment narratives" rather than crypto's growth logic. They argue stablecoins' 1:1 peg to the dollar limits utility (primarily for trading).  

- Apple is in final talks with the EU over App Store rule changes, potentially yielding to avoid hefty fines. The company may relax its "anti-steering" rules that block external purchase links. Failure to comply by Thursday could trigger fines up to 5% of global daily revenue. Discussions also cover Apple's "Core Technology Fee."  

- U.S. startup Ion Storage Systems has begun producing solid-state batteries, shipping samples to the Pentagon and electronics makers. The batteries offer 50% higher energy density, faster charging, and minimal fire risk, paving the way for mass commercialization.  

**Sectors/Themes**  

1. **Oil Shipping**: Rising Israel-Iran tensions and Iran's Strait of Hormuz blockade could disrupt global oil supply, forcing tankers to take longer routes and driving up freight rates. VLCC rates hit $53,449/day, with Middle East routes jumping to $62,552/day. If the blockade holds, TCE rates could exceed $100,000.  

2. **IoT Modules**: East Asia Securities notes the sector is buoyed by AI/robotics/5G trends and a broader IoT recovery, with potential for explosive growth alongside edge AI.  

3. **Stablecoins**: China Securities highlights Hong Kong's stablecoin law as a milestone for blockchain/crypto adoption, reflecting the region's pro-innovation stance. The U.S. "GENIUS" Act and Circle's 675% post-IPO surge (now ~$53B market cap) signal accelerating global competition.  

4. **Beef Cattle**: Guosen Securities notes China's beef prices are up 10.49% YoY, while fresh milk prices fell 7.88%, pushing the meat-milk ratio to a record 20.97. Post-supply crunch, the beef cycle is poised for a multi-year upswing (until 2027). Milk prices may rebound in H2 amid improving demand and rising global powder prices.  

**Today's Preview**  

- Fed Chair Powell's semi-annual monetary policy testimony to the House.  

- Speeches by NY Fed's Williams, Fed's Barr, Cleveland's Mester, and Boston's Collins.  

- ECB President Lagarde's remarks.  

- U.S. April S&P/Case-Shiller 20-city home price index.  

- Summer Davos Forum (June 24–26).  

- NATO summit in The Hague (June 24–25), with Trump attending.  

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