Morning News

Source: Wall Street Journal  

**Market Overview**  

Hopes for a trade deal drove U.S. stocks to extend gains, with the S&P and Nasdaq hitting record highs again. The Nasdaq rose over 6% in June, marking three consecutive months of gains, while the S&P surged over 10% in Q2—its biggest quarterly gain in a year and a half. Apple reportedly considered external AI solutions, closing up 2%. Wall Street banks passed stress tests, with Goldman Sachs leading the Dow with a 2% gain. Nvidia hit record highs for four straight days, soaring nearly 46% in Q2. Tesla fell nearly 2%, extending its losing streak to five days and dropping over 20% in H1. Oracle closed up 4% at a record high, and solar stocks surged, with SunRun up 10%.  

The 10-year Treasury yield hit a nearly two-month low, falling nearly 20 bps in June. The U.S. dollar index hit a three-year low, declining for six straight months—the longest losing streak since 2017. In H1, U.S. bonds posted their best performance in five years, while the dollar index fell over 10%—its worst first-half drop since 1973.  

The euro hit a nearly four-year high. Offshore yuan rose over 100 points to breach 7.16, nearing a seven-month peak, with a quarterly gain exceeding 1,000 points. Bitcoin briefly approached $109,000 before retreating over $2,000 but still rose nearly 30% in Q2.  

Oil halted a three-day rally but gained over 6% in June, marking two straight months of gains. Gold turned higher after hitting a one-month low, with futures up 25% in H1.  

In Asian trading on the last day of H1, A-shares and Hong Kong stocks diverged. The Beijing Stock Exchange 50 Index surged 40% in H1, while the Hang Seng Tech Index gained nearly 19%. Lao Feng Xiang Gold skyrocketed over 320%.  

**Key News**  

- China’s June official manufacturing PMI rose for the second month to 49.7, with the new orders index returning to expansion territory. Non-manufacturing PMI continued expanding.  

- Trump: No need to extend the July 9 deadline; will assign tariffs to countries, with Japan facing a 25% auto tariff. He threatened tariffs on Japan for refusing U.S. rice imports. The EU reportedly accepts a U.S. "baseline tariff" but seeks exemptions for key sectors. Canada conceded by dropping its digital services tax, and U.S.-Canada trade talks will resume, aiming for a deal by July 21. South Korea’s priority is reportedly securing a tariff extension.  

- U.S. Treasury Secretary Yellen: Expects a series of new trade deals; sees no need for more long-term debt issuance now; stablecoin legislation may arrive by mid-July.  

- Trump expanded his criticism to include Fed Chair Powell; the White House said Trump wrote to the Fed about global rates.  

- Circle’s bearish report: JPMorgan says its profit model’s "scissors gap" erodes earnings, valuing it at $80 even with a 10% "sentiment premium." Goldman sees overvaluation but notes cross-border payments as a potential breakthrough.  

- Major shift: Apple reportedly considers external AI for Siri, possibly using Anthropic or OpenAI’s models. Analyst Ming-Chi Kuo says Apple is preparing a "big move"—seven headsets and AI glasses in development, with 2027 set for a major breakout.  

- After Meta poached eight employees, OpenAI fought back: optimizing pay to compete. Meta added 11 AI "experts," with Zuckerberg formally introducing its "superintelligence" team.  

- Oracle secured a major cloud deal worth $30 billion annually, sending shares up over 8% to a record high.  

**Market Closings**  

- **Stocks**:  

 - S&P 500: +0.52% to 6,204.95; +4.96% in June, +10.57% in Q2, +5.50% in H1.  

 - Dow Jones: +0.63% to 44,094.77; +4.32% in June, +4.98% in Q2, +3.64% in H1.  

 - Nasdaq: +0.48% to 20,369.73; +6.57% in June, +17.75% in Q2, +5.48% in H1.  

 - Europe STOXX 600: +0.42% to 541.37; -1.33% in June, +1.4% in Q2, +6.65% in H1.  

 - **A-shares**:  

   - Shanghai Composite: +0.59% to 3,444.43.  

   - Shenzhen Component: +0.83% to 10,465.12.  

   - ChiNext: +1.35% to 2,153.01.  

- **Bonds**:  

 - 10-year U.S. Treasury yield: ~4.23%, down ~5 bps on the day; -~17 bps in June, +~2 bps in Q2, -~34 bps in H1.  

 - 2-year yield: ~3.72%, down ~3 bps; -~18 bps in June, -~16 bps in Q2, -~52 bps in H1.  

- **Commodities**:  

 - WTI August crude: -0.63% to $65.11/bbl; +~7.1% in June, -~8.9% in Q2.  

 - Brent August crude: -0.24% to $67.61/bbl; +~6.3% in June, -~10.7% in Q2.  

 - COMEX August gold: +0.61% to $3,307.7/oz; +~0.2% in June, +~5% in Q2.

**Key News Details**  

**Global Highlights**  

China's official manufacturing PMI rose for the second consecutive month to 49.7 in June, with the new orders index returning to expansion territory, while the non-manufacturing sector continued to expand. The manufacturing PMI, non-manufacturing business activity index, and composite PMI output index stood at 49.7%, 50.5%, and 50.7%, respectively, up 0.2, 0.2, and 0.3 percentage points from the previous month. All three indices showed improvement, indicating that China's economic activity generally remained in expansionary territory.  

**Minsheng Securities** noted that the June manufacturing PMI rose for the second straight month, benefiting from increased working days and a temporary easing of global trade uncertainties, with improvements in production, demand, and new export orders. However, given that the PMI has remained below the 50-point threshold for three consecutive months and the services PMI edged down, the necessity for further monetary easing and fiscal stimulus (e.g., faster special bond issuance and infrastructure investment) has significantly increased.  

**Guosheng Securities** pointed out that the June manufacturing PMI continued its low-level rebound, with most sub-indices showing improvement, likely due to factors such as sustained "front-loaded exports" and accelerated special bond issuance. However, the manufacturing PMI and export orders remain in contraction, and the services PMI is below seasonal levels, suggesting weak domestic economic momentum. Looking ahead, despite strong H1 GDP growth, real pressure may emerge in H2, particularly in August and September, compounded by a weakening domestic property market, necessitating stronger policy support.  

Trump stated, "No need to extend the deadline, will assign tariffs to countries," adding, "Dear Japan, you will pay a 25% auto tariff." With just 10 days left before the July 9 tariff deadline, Trump made it clear that he would not extend the deadline and would directly notify hundreds of countries of their tariff rates, bypassing further trade negotiations.  

Trump threatened tariffs on Japan for refusing to import U.S. rice.  

The EU is reportedly willing to accept a U.S. "baseline tariff" but seeks exemptions for key industries. Media reports suggest the EU has also urged the U.S. to provide quotas and exemptions to mitigate the impact of auto and steel/aluminum tariffs. The euro extended gains against the dollar, hitting a nearly four-year high. EU trade negotiators will travel to the U.S. for talks this Wednesday, while the European Commission denied rumors of potential concessions on tech legislation.  

Canada conceded by dropping its digital services tax, and U.S.-Canada trade talks will resume, aiming for a deal by July 21. Trump had previously halted talks over the tax, calling it a "blatant" attack on U.S. tech firms and accusing Canada of following the EU's lead. He said he would inform Canada within seven days of the tariffs it would face.  

With just a week left before the tariff suspension expires, South Korea's top priority is securing an extension. Reports indicate South Korea will seek a 90-day extension of the U.S. tariff suspension. A senior South Korean trade official stated that efforts would be made before July 8 to extend the negotiation deadline.  

**Yellen**: Expects a series of new trade deals; sees no need for more long-term debt issuance now; stablecoin legislation may arrive by mid-July. U.S. Treasury Secretary Janet Yellen said she anticipates new trade agreements before the July 9 deadline and that expanding long-term Treasury issuance is unnecessary given current yield levels. Regarding Powell's successor, Yellen mentioned two possibilities: appointing a new member or selecting from existing Fed governors. She also noted that stablecoin legislation could be finalized by mid-July.  

U.S. bonds staged a comeback, posting their strongest first-half performance in five years. The 10-year Treasury yield has fallen over 30 bps this year, including a ~15 bps drop in June. The core driver is the market's growing expectation of Fed rate cuts. Traders are betting weak jobs data will force at least two cuts this year, with Thursday's nonfarm payroll report potentially serving as a key catalyst for further bond gains.  

Musk flips again, hardliners oppose even if not seeking re-election—Trump's "Big Beautiful Bill" faces tough odds in Congress. Although Republican senators barely secured enough votes to start debate, the bill's passage remains uncertain due to concerns over its massive potential debt. Musk called it "absurd and destructive," while intra-party divisions between hardliners and moderates persist, with some senators not seeking re-election voting against it.  

Trump expands his targets, criticizing the Fed board including Powell. On Monday, Trump posted on social media, saying "Too Late" Fed Chair Powell and the entire board should be "ashamed" for not cutting rates. The post included what appeared to be a letter. White House press secretary Karine Jean-Pierre confirmed the letter was sent to the Fed on Monday, noting it referenced global interest rates.  

The New Taiwan dollar suffered its worst single-day drop in 24 years—has the "invisible hand" reached its tolerance limit? The late-session rapid depreciation mirrored a similar move last Friday when the currency hit a three-year high, prompting speculation that the central bank intervened heavily to curb gains. Analysts say such counter-trend actions can only slow but not reverse appreciation.  

**Circle's bearish reports arrive!**  

- **JPMorgan**: Its profit model's "scissors gap" (falling rates + rising distribution costs) erodes earnings. Circle's business is highly rate-sensitive, with 97% of revenue from reserve income, making profits vulnerable to monetary policy shifts. Distribution costs are rising, potentially squeezing margins from 39% to 34%. However, integrating stablecoins into banking channels could make it a "Swift for stablecoins."  

- **Goldman Sachs**: Following JPMorgan, Goldman set an $83 target, citing overvaluation and three yield pressures: rate cuts, USDC outflows to yield-bearing products, and higher distribution costs. But cross-border payments could be a growth avenue, though its Cross-Border Payment Network (CPN) is still nascent.  

**Major shift**: Apple reportedly considers external AI for Siri, possibly using Anthropic or OpenAI's models. This would mark a significant pivot, acknowledging Apple's struggles in generative AI and potentially enabling Siri to rival Android assistants.  

**Ming-Chi Kuo**: Apple is preparing a "big move"—seven headsets and AI glasses in development, with 2027 poised for a breakout. The analyst noted Apple sees headsets as the next consumer electronics frontier, with Ray-Ban-like smart glasses likely to gain traction first, potentially driving annual shipments past 10 million by 2027.  

After Meta poached eight employees, OpenAI fights back: optimizing pay to compete. Last week, eight top researchers, including four Chinese core members leading projects like o3 and GPT-4, left OpenAI for Meta. OpenAI's 80-hour workweeks created opportunities for rivals. Chief Scientist Mark Chen called it "like someone broke into our home and stole something."  

Meta adds 11 AI "experts," Zuckerberg formally introduces "superintelligence" team. Zuckerberg announced a major Meta AI reshuffle, with Scale AI's ex-CEO Alexandr Wang and GitHub's ex-CEO Nat Friedman co-leading the new "Meta Superintelligence Lab." The 11 new hires include researchers from Google DeepMind, OpenAI, and Anthropic. Zuckerberg said superintelligence is imminent, calling it "the dawn of a new era for humanity."  

**OpenAI shifts to TPUs—what it means for Google, Nvidia, and Amazon**:  

- **Morgan Stanley**: For Google, this is a key endorsement of its AI infrastructure, boosting cloud growth and solidifying its ASIC ecosystem lead.  

- For Nvidia, despite capacity constraints, it will remain the GPU market leader.  

- For Amazon, OpenAI's partner list excluding AWS may highlight its capacity limits and Trainium chip shortcomings.  

**Oracle lands a mega cloud deal**, adding $30 billion in annual revenue, sending shares up 8% to a record high. CEO Safra Catz said fiscal 2026 started strong, with multi-cloud database revenue growing over 100% yearly. The company signed several large cloud contracts, including one contributing $30+ billion annually from fiscal 2028. Stifel upgraded Oracle to "buy," raising its target price ~40% on cloud growth optimism.  

**Domestic Macro**  

**PBOC-affiliated media**: China's "moderately loose" monetary policy stance remains unchanged. The central bank's Q2 policy meeting removed the phrase "cut RRR or interest rates at an opportune time," sparking market attention. The *Financial Times* clarified over the weekend that the policy orientation aligns with Q1. Experts noted that despite H1's stable growth, external challenges, weak domestic demand, and a sluggish property market necessitate maintaining an accommodative stance.  

**China Securities Journal headline**: Fiscal stimulus reserves may be rolled out as needed. Experts expect H2 fiscal policy to focus on expediting ultra-long special bond and local government special bond issuance. Additional measures, such as more special bond issuance or new政策性 financial tools, may be introduced to boost demand if economic conditions warrant.  

**China plans to invite Trump to Beijing's September military parade? Foreign Ministry responds**. When asked about a *Kyodo News* report that China intends to invite Trump to the event, spokesperson Mao Ning said details on foreign leaders' invitations for the WWII 80th anniversary commemorations were disclosed at a recent press briefing, with no further information available.  

**Domestic Companies**  

**Huawei's first open-source large model debuts!** Pro MoE boasts 72B parameters, trained on 4,000 Ascend chips. Huawei open-sourced its PanGu model for the first time. According to May's SuperCLUE benchmark, PanGu 72B ranks fifth among open-source Chinese models, trailing only DeepSeek-R1, DeepSeek-V3, Qwen3-32B, and Qwen3-235B. Analysts noted Huawei has built a full-stack ecosystem from chips (Ascend NPUs) to frameworks (MindSpore) to models (PanGu), proving viable alternatives to Nvidia's dominance exist.  

**Overseas Macro**  

**Historic post!** Trump warns "cost-cutting Republicans": "You still want re-election—don’t go crazy." Trump's rare public pressure on his party, explicitly linking fiscal policy to re-election politics, was dubbed a "historic post" online, with users noting it explains why U.S. debt never falls. The warning came as Senator Tillis, who opposed the "Big Beautiful Bill," announced he won’t seek re-election, highlighting GOP divisions.  

**U.S. earnings season faces its first tariff test**, with Goldman warning S&P 500 profit growth may slow sharply. The Q2 earnings season kicks off July 15. Goldman expects S&P 500 earnings growth to slow to just 4%, a two-year low, mainly due to margin compression. If firms absorb more tariff costs, margins will face further pressure. Goldman maintains its 2025 S&P 500 EPS growth forecast at 7%, predicting a 5% index rise to 6,500 in 12 months.  

**Tariffs + low water levels = Europe's worst port congestion since COVID!** Major European ports like Rotterdam, Antwerp, and Hamburg face wait times of 66–77 hours for container ships and barges. Asian goods diverted from U.S. tariffs have boosted European imports by ~7%, with congestion expected to last months.  

**German June inflation unexpectedly drops to 2%**, hitting ECB's target for the first time. The 2% YoY CPI reading, down from May's 2.1% and below forecasts, marks the first time in nearly a year inflation has met the ECB's goal. However, policymakers worry more about economic weakness dragging inflation lower. Markets expect the ECB to pause rate cuts in July.  

**Overseas Companies**  

**"iPhone father" + "GPT father" team up**—their first AI device: a pen? Altman revealed that OpenAI and Jony Ive's startup will debut a screenless, non-wearable AI device small enough for pockets or desks. Given Ive's Apple Pencil design role and personal pen collection, analysts speculate it may be a smart pen, possibly launching in 2026.  

**Apple, Meta, Google—who will build the "Android" of humanoid robots?** Morgan Stanley says tech giants aim to extend AI into the physical world via open-source tools while locking developers into their ecosystems. But the "Android of robots" winner is unclear, with China potentially领先 due to manufacturing and policy support. By 2050, humanoid robots could generate $5 trillion annually—double the top 20 automakers' 2024 revenue—with cumulative adoption reaching 1 billion units.  

**Sectors/Themes**  

1. **Aluminum**: Changjiang Securities notes电解铝 is a scarce resource in long-term tight balance, with strong cash flow, repaired balance sheets, and reduced capex, making the sector ripe for dividend waves.  

2. **Cybersecurity**: BOC Securities says cross-border payment便利化 will boost RMB internationalization and drive demand for financial data security, a core element of data utilization.  

3. **Exoskeletons**: CITIC Securities highlights rapid market growth as innovation, performance, cost reductions, and brain-computer interfaces advance. Medical exoskeletons are already commercialized overseas, with reimbursement driving adoption.  

4. **Card Games**: Card Games Ltd. filed for a Hong Kong IPO on April 14, 2025, passing the hearing on June 1. As a leading潮玩 segment, its listing progress may catalyze sector interest.  

**Today’s Preview**  

- China June Caixin manufacturing PMI.  

- U.S. and eurozone June manufacturing PMIs.  

- U.S. May JOLTS job openings.  

- Eurozone June harmonized CPI.  

- Panel discussion with global central bank governors.  

**Disclaimer**: Views expressed are solely the author’s and do not constitute investment advice. The platform disclaims accuracy, completeness, originality, and timeliness guarantees and is not liable for losses arising from reliance on this information.