Morning News

Source: Wall Street Journal

### Market Overview

The 30-year US Treasury bond auction was dismal, and the yields on long-term US Treasury bonds generally rose, putting pressure on US stocks. Milan, who is regarded as a dove, is about to become a member of the Federal Reserve, boosting the sentiment of technology stocks, and the Nasdaq narrowly closed higher. Apple rose another 3%, almost erasing all the declines since April 2. Eli Lilly's stock price plummeted 14% after releasing its earnings.

The yield on the 10-year US Treasury bond rose 2.43 basis points. The US dollar hovered around a low of 98. Trump signed an executive order allowing 401K accounts to invest in cryptocurrencies, etc. Bitcoin rose 2%, and Ethereum rose 5.6%.

Gold fluctuated and rose 0.76%, then fell back after hitting a resistance of $3,400. The news of the US-Russia meeting suppressed crude oil, and US oil fell nearly 2% from the daily high.

During the Asian session, the Shanghai Composite Index hit a new high for the year, rare - earth permanent magnets surged in the afternoon, the Hang Seng Index had a four - day winning streak and returned to 25,000 points, pharmaceutical stocks declined, and government bonds and commodities rose.

### Key Events

China's exports in July increased by 7.2% year - on - year in US dollar terms, imports increased by 4.1%, and the import and export of high - tech products in the first seven months increased by 8.4% year - on - year. Rare earth exports fell 23% month - on - month, soybean imports reached a record high, and iron ore imports remained above 100 million tons for three consecutive months.

China's foreign exchange reserve scale in July decreased by 0.76% month - on - month, and the central bank has increased its gold holdings for the 9th consecutive month.

OpenAI's most powerful model GPT-5 is here, and it is free to use. Altman exclaimed that it is a big step towards AGI, and Microsoft was the first to access it.

It is reported that Tesla disbanded its Dojo supercomputer team, and Musk's AI ambition suffered a setback.

Historic moment! Trump signed an executive order allowing 401K accounts to invest in cryptocurrencies, private equity funds and other alternative investments.

The US bond storm loomed. The 30-year US Treasury bond auction was dismal, and the three auctions this week were worse than each other.

Trump nominated Stephen Milan, chairman of the Council of Economic Advisers, to be a member of the Federal Reserve, with a term of office until the end of January next year. Federal Reserve Governor Waller is regarded as one of the top candidates for the chairman of the Federal Reserve by the Trump team.

Modi responded toughly: He will never compromise in the face of a 50% tariff and is ready to pay a heavy price. India was exposed to not planning to retaliate yet and is seizing the 21 - day window period to continue negotiations.

Trump's 39% tariff officially took effect. Switzerland: It has no plans to take counter - measures for the time being and will continue to consult with the United States.

Trump said that he may meet with Putin soon, even if there is no arrangement to be on the same stage as Zelensky.

SMIC's sales revenue in the second quarter increased by 16.2% year - on - year, and its net profit decreased by 19% year - on - year. Huahong Semiconductor's revenue in the second quarter increased by 18.3% year - on - year, and its capacity utilization rate reached a new high in recent quarters.

The Bank of England cut interest rates by 25 basis points as expected. The risk of rising inflation intensified internal disagreements, and there was a historic first two - round vote.

Eli Lilly's revenue in the second quarter increased by 38% and it raised its full - year guidance, but the effect of its oral weight - loss drug was lower than expected, and its stock price plummeted 14%.

### Market Close

European and US stock markets: The S&P 500 fell 0.08%, closing at 6,340 points. The Dow Jones Industrial Average closed down 0.51%, at 43,968.64 points. The Nasdaq rose 0.35%, closing at 21,242.70 points. The European STOXX 600 index closed up 0.92%, at 546.05 points.

A - share market: The Shanghai Composite Index rose 0.16%, closing at 3,639.67 points. The Shenzhen Component Index fell 0.18%, closing at 11,157.94 points. The ChiNext Index fell 0.68%, closing at 2,342.86 points.

Bond market: The yield on the 10-year benchmark US Treasury bond rose 2.43 basis points, to 4.25%. The yield on the two - year US Treasury bond rose 1.42 basis points, to 3.7279%.

Commodity market: COMEX gold futures rose 1.12%, closing at $3,471.70 per ounce. WTI September crude oil futures closed down 0.73%, at $63.88 per barrel. Brent October crude oil futures closed down 0.69%, at $66.43 per barrel.

### Details of Key News

#### Global Highlights

In July, China's exports denominated in US dollars increased by 7.2% year-on-year, and imports rose by 4.1%. From January to July, the import and export of high-tech products grew by 8.4% year-on-year. Rare earth exports fell 23% month-on-month, soybean imports hit a record high, and iron ore imports remained above 100 million tons for three consecutive months.

China's goods trade maintained a positive momentum. In the first seven months, imports and exports to ASEAN, the EU, Africa, and Central Asia increased by 9.4%, 3.9%, 17.2%, and 16.3% respectively, while those to the United States decreased by 11.1%. The import and export of high-tech products reached 5.1 trillion yuan, an increase of 8.4%.

Although the data for July alone declined, the total export volume of China's rare earths in the first seven months of this year still maintained a growth trend, with cumulative exports of 38,563.6 tons, an increase of 13% compared with the same period in 2024. The cumulative export volume of steel in the first seven months of this year was 67.98 million tons, setting the highest level since records began in 1990. In July, soybean imports were 11.67 million tons, a year-on-year increase of 18.5%, setting a new historical high for imports in July. Coal imports fell 23% year-on-year, but the import volume in July rebounded from the more than two-year low in June.

Three "surprises" in foreign trade in July: Exports to the United States weakened again after a brief rebound in June; despite the decline in exports to the United States and ASEAN (re-exports), the overall export growth rate rebounded significantly; imports rose more than expected against the background of a high base last year. Minsheng Macro stated that under the influence of re-export trade and domestic exporters actively expanding market share, exports are expected to remain resilient in the short term, but imports may be more inclined to short-term disturbances, and the recovery of domestic demand growth still requires policy support and data observation.

China's foreign exchange reserve scale in July decreased by 0.76% month-on-month, and the central bank has increased its gold holdings for the 9th consecutive month. China's gold reserves at the end of July were 73.96 million ounces, an increase of 60,000 ounces from the previous month. As of the end of July 2025, China's foreign exchange reserve scale was 3,292.2 billion US dollars, a decrease of 25.2 billion US dollars from the end of June.

OpenAI's most powerful model GPT-5 is here, free to use. Altman called it a big step towards AGI, and Microsoft was the first to access it.

GPT-5 is the first product of OpenAI that combines the reasoning of the o-series models and the fast response of the GPT series; it has the strongest coding ability so far, with an accuracy rate of 74.9% in benchmark tests, slightly exceeding Anthropic's Opus 4.1 launched on Tuesday; it shows better taste in creative writing; the hallucination problem has been greatly improved, with the misinformation rate in the health field being 1.6%, far lower than GPT-4o's 15.8%; the new safety training mode teaches the model to give the most helpful answers as much as possible within the safe range. Altman said it was the first time he felt like talking to an expert in any field.

GPT-5 was opened to users on Thursday. Pro users can use it unlimitedly and get the enhanced GPT-5 Pro. Microsoft has integrated GPT-5 into platforms such as Copilot and Azure AI Foundry since Thursday. OpenAI also launched four optional preset personalities for ChatGPT chats.

Report: Tesla disbanded the Dojo supercomputer team, and Musk's AI ambition suffered a setback. Disbanding the Dojo team forced Tesla to rely more on external technology partners. Tesla plans to strengthen cooperation with NVIDIA and AMD in computing, and carry out more in-depth cooperation with Samsung in chip manufacturing.

Historic moment! Trump signed an executive order allowing 401K accounts to invest in cryptocurrencies, private equity funds and other alternative investments. Trump signed an executive order on Thursday local time, allowing alternative assets such as private equity, real estate, and cryptocurrencies to enter the 401k retirement savings plan, opening the door to approximately 12.5 trillion US dollars in retirement account funds for these industries.

The US debt storm is looming. The 30-year US Treasury bond auction was dismal, and the three auctions this week were worse than each other. Financial blog Zerohedge commented that the last interest-bearing US Treasury bond auction this week was also the worst one, and the bond market saw this clearly, causing the 10-year US Treasury yield to soar to an intraday high of about 4.25%. More worryingly, today's auction results indicate that once Powell finally starts cutting interest rates, the market will immediately reprice inflation expectations, and long-term yields will rise sharply, showing a surprising steepening trend.

Trump nominated Stephen Miran, chairman of the Council of Economic Advisers, to be a Federal Reserve governor, with a term until the end of January next year. This nomination is only to fill the term of Federal Reserve Governor Kugler, which is about to expire in January next year. Trump said that at the same time, he will continue to look for a permanent replacement.

Federal Reserve Governor Waller is regarded by the Trump team as one of the top candidates for the Federal Reserve Chair. It is reported that current Federal Reserve Governor Waller is gradually becoming one of the most likely candidates for the next Federal Reserve Chair. Stephen Miran, chairman of the White House Council of Economic Advisers, said that Federal Reserve Governor Waller has accumulated an impressive track record and that Waller is not suffering from tariff confusion syndrome.

Bessent strongly supported Trump's firing of the US Labor Secretary, saying the agency "is long overdue for rectification". Bessent said that the data released by the US Bureau of Labor Statistics last week had an error of 5 to 6 standard deviations, questioning that the statistical data may have been "contaminated". He also criticized the Bureau of Labor Statistics for adhering to outdated methods against the background of the continuous decline in the survey response rate, which is a typical case of "lazy governance". Bessent revealed that the new director of the Bureau of Labor Statistics will be a top statistician or labor economist.

Modi responded toughly: He will never compromise in the face of a 50% tariff and is ready to pay a heavy price. Although Modi did not directly respond to US tariffs at a meeting of the agricultural department in New Delhi on Thursday, he clearly stated that he "will never compromise on the interests of farmers, livestock owners and fishermen". He emphasized: "I know I will pay a heavy price for this personally, but I am ready to bear it."

India is reported to have no plans to retaliate yet and is seizing the 21-day window to continue negotiations. Media said that Indian officials are seeking diplomatic and trade channels to resolve the dispute before considering countermeasures. They are evaluating whether they can make concessions in the agricultural and dairy sectors while minimizing the impact on domestic producers, such as allowing limited imports of genetically modified corn for non-human consumption and implementing strict traceability requirements; the goal is to reach a bilateral agreement that maintains India's strategic autonomy.

Trump's 39% tariff officially took effect. Switzerland: No plans to counter for the time being, will continue to consult with the United States. On August 7 local time, the US policy of imposing a 39% tariff on Swiss products officially took effect. The Swiss Federal Council stated that Switzerland has not yet considered countermeasures against the US tariff increase, as this will bring additional costs to the Swiss economy. Switzerland will continue to work towards diversifying trade relations with all international partners.

Trump said he may meet with Putin soon, even if there is no arrangement to be on the same stage as Zelensky. Earlier, White House officials said that a US-Russia meeting would require Putin to agree to meet with Zelensky. Analysts believe that Trump's statement shows that he is more willing to meet the Kremlin's request for a one-on-one talks. But Trump said that additional penalties against Russia may still be imposed as early as Friday. Crude oil continued its decline from yesterday, with WTI crude oil falling below $64 a barrel.

Putin: The UAE is one of the suitable locations. Putin said that Russia has many friends who are willing to help organize the meeting, and one of them is the President of the UAE. Russia will decide the meeting place, and the UAE is one of the suitable places for the meeting.

With a 100% tariff on semiconductors, for the market, there are more questions than answers now. Trump has not provided key details of the policy, such as: How much manufacturing capacity do companies need to invest in the US to be eligible for tariff exemptions? What categories will be included in the exemption scope? What impact will chip tariffs have on the already complex supply chain?

In addition to Cook, Trump also met with "Lao Huang" (presumably referring to Jensen Huang, CEO of NVIDIA) yesterday, so is the market not afraid of the "semiconductor tariff"? Trump will announce drug and chip tariff policies "around next week". Related companies including NVIDIA and Apple are stepping up lobbying efforts to strive for favorable conditions before the final policy is introduced. South Korea's trade envoy said that Samsung Electronics and SK Hynix will be exempt from the US 100% chip tariff because the country enjoys "most-favored-nation treatment" in this field.

SMIC's Q2 sales revenue increased by 16.2% year-on-year, and net profit decreased by 19% year-on-year. The Q3 revenue guidance is a 5%-7% month-on-month increase, and the gross profit margin guidance is 18%-20%, while the market expectation for the latter is 21%. Capital expenditure was $1.885 billion, a significant increase of 33.2% from Q1, indicating active expansion of production capacity.

Huahong Semiconductor's Q2 revenue increased by 18.3% year-on-year, and its capacity utilization rate hit a new high in recent quarters. Huahong Semiconductor's revenue in the second quarter was $566.1 million, a year-on-year increase of 18.3%, with a net loss of $32.8 million, and the loss narrowed by 21.4% year-on-year; the monthly capacity of 8-inch wafers was 447,000 pieces, with a utilization rate of 108.3%; the monthly capacity of 12-inch wafers was 1.305 million pieces, a year-on-year increase of 18.0%, and revenue increased by 43.2% year-on-year.

The Bank of England cut interest rates by 25 basis points as expected. The risk of rising inflation intensified internal differences, and there was a historic first two-round vote! The latest forecast of the Bank of England shows that the UK's inflation peak in September will reach 4%, higher than the previous forecast of 3.7%; and the time for inflation to fall back to the 2% target level will be delayed to the second quarter of 2027, three months later than originally expected. The Bank of England also issued a rare risk warning about its quantitative tightening (QT) plan, suggesting that it may decide to slow down the pace of balance sheet reduction in September to avoid exacerbating tensions in the government bond market.

Eli Lilly's Q2 revenue surged 38% and it raised its full-year guidance, but the effect of its oral weight-loss drug was lower than expected, and its stock price plummeted 14%! Eli Lilly's Q2 revenue was $15.56 billion, a year-on-year increase of 38%, exceeding the market expectation of $14.7 billion, and at the same time raised its full-year revenue expectation to $60-62 billion. Among them, Mounjaro performed relatively steadily, with global revenue of $5.2 billion, an increase of 68%. It is particularly worth noting the explosive growth of its overseas market. However, the company's weight-loss pill orforglipron only helped patients lose about 11% of their weight in phase III clinical trials, which was lower than Wall Street's expectations, triggering investor disappointment.

#### Domestic Macroeconomics

Yao Yang: It is suggested to establish a China Storage Housing, which first accepts 1 million sets of judicial auction houses. Yao Yang pointed out that there were 750,000 judicial auction houses last year, and it is expected to exceed 1 million this year. A large number of houses are overstocked in banks and pull down market prices. It is suggested that China Storage Housing first purchase these 1 million sets of judicial auction houses, and let the original residents pay rent to continue living, which can not only solve the problem of bank overstocking but also stabilize housing prices. Yao Yang believes that real estate and government expenditure account for 50% of domestic total demand. Instead of subsidizing personal consumption, investing in these two fields can more effectively drive demand with half the effort.

Ministry of Finance: The policy of exempting nursery education fees covers all children in the senior class of kindergartens. The policy of exempting nursery education fees is expected to benefit about 12 million people in the autumn semester of this year, reducing family expenses by 20 billion yuan accordingly; in the future, policy measures will be studied and improved in a timely manner so that more children can enjoy the policy dividends.

Seven departments: Strengthen the research on basic software and hardware for brain-computer interfaces, and initially establish technical systems, industrial systems, and standard systems by 2027. The Ministry of Industry and Information Technology and other seven departments stated in a document that by 2027, key technologies of brain-computer interfaces will make breakthroughs, and the performance of electrodes, chips, and complete machine products will reach the international advanced level, creating 2 to 3 industrial development clusters. By 2030, 2 to 3 leading enterprises with global influence will be cultivated, and an internationally competitive industrial ecology will be built. Create high-performance products and accelerate the research and development breakthrough of implantable devices. Promote the mass production and iteration of non-implantable devices. Innovate product forms such as forehead stickers, ear stickers, earphones, and hair clips, and promote the development of non-implantable products towards lightweight, high-speed, and low power consumption.

#### Domestic Companies

MSCI: Included China CITIC Bank and Laopu Gold in the Emerging Markets Index.

Traditional businesses are under pressure. China Mobile's first-half revenue decreased slightly by 0.5% year-on-year, and net profit increased by 5% year-on-year. China Mobile's digital intelligence transformation has shown results. In the first half of the year, digital transformation revenue reached 156.9 billion yuan, a year-on-year increase of 6.6%, and China Mobile Cloud revenue was 56.1 billion yuan, an increase of 11.3%. Traditional businesses continue to be under pressure: voice service revenue was 34.2 billion yuan, a decrease of 5.7%; wireless internet service revenue was 195.5 billion yuan, a decrease of 4.7%.

#### Overseas Macroeconomics

Federal Reserve: US consumer inflation expectations rose in July, and views on the job market improved. The New York Fed's July survey showed that people's inflation expectations for the next year rose to 3.1% from 3% in June, the three-year inflation expectations remained unchanged at 3%, and the five-year inflation expectations rose to 2.9% from 2.6%, the highest level since February this year. In July, more consumers were willing to take the initiative to leave their jobs, and they thought that the probability of finding a job in the next three months had increased slightly.

The number of continuing jobless claims in the US hit the highest level since the end of 2021. As of the week ending July 26, the number of continuing claims for unemployment benefits in the US rose to 1.974 million, the highest since November 2021, indicating that the US job market is cooling, strengthening expectations of a rate cut in September. As of the week ending August 2, the number of initial claims increased slightly to 226,000 but remained stable for a long time.

Goldman Sachs macro trading team: "A 50 basis point rate cut in September" should be the baseline scenario, and the market has underestimated this possibility. Goldman Sachs believes that last week's unexpectedly weak non-farm payroll data showed that the US job market has "clearly turned around", which will push the Federal Reserve to consider a larger rate cut in September. As long as CPI does not re-accelerate next, the Federal Reserve may implement a 50 basis point or even larger easing policy.

The bubble risk in the US stock technology sector is accumulating, with both valuation and concentration reaching new highs. The valuation of the US stock TMT sector has reached a new high since 2009, and the correlation within the sector is also rising, reflecting the accumulation of systemic risks. The key to supporting high valuations lies in profit growth expectations. The market is pinning its hopes on strong profit growth to justify extreme valuations. If the TMT sector fails to maintain profit growth momentum that outperforms the broader market, its valuation premium may face compression risks, which will then impact the overall market.

"Fund tokenization" is popular overseas. What does Wall Street see? Goldman Sachs said that the scale of tokenized asset management in the first half of this year reached $23 billion, a surge of 260%, and is expected to exceed $600 billion by 2030, reflecting a significant increase in institutional investors' recognition of the application of blockchain technology in traditional financial fields. Wall Street giants are competing to layout the fund tokenization market, with money market funds taking the lead, and BlackRock's BUIDL fund leading with a scale of over $2.9 billion. Alternative assets such as private equity are following up, and the market is predicted to reach $317 billion by 2028.

### Overseas Companies  

Trump pressured Intel's CEO to resign, claiming he "has a conflict of interest," with Intel's stock price dropping 3.4% at one point. Trump publicly demanded that Intel CEO Pat Gelsinger resign immediately on social media, without specifying the reason. Analysts believe Gelsinger's downsizing strategy may run counter to the Trump administration's goal of expanding U.S. semiconductor production capacity.  

The AI talent war: Apple is "bleeding heavily," with its core team nearly "emptied" by OpenAI and Meta. Since the start of this year, over a dozen AI researchers from Apple have jumped to rival companies. Analysts note that companies now view elite AI talent as strategic assets, on par with intellectual property and even entire business units, and are pursuing such talent "with the intensity and valuation frameworks once reserved for acquisitions."  

SoftBank's profits far exceeded expectations. Masayoshi Son bet correctly on NVIDIA, TSMC, and Oracle, raking in $4.8 billion in Q2. Benefiting from the general rebound in tech stock valuations—especially NVIDIA's surging share price—the Vision Fund posted a profit of 451.4 billion yen this quarter, driving SoftBank's net profit to 421.8 billion yen, more than double analysts' average expectations and a year-on-year turnaround from losses.  

"The Gig Economy Era": Four major U.S. "freelance" platforms reported earnings on the same day, with free cash flow surging across the board. Uber, DoorDash, Lyft, and Airbnb released Q2 earnings on Wednesday, all exceeding expectations and generating a combined $4.2 billion in free cash flow. Uber led with $2.475 billion in cash flow, up 44% year-on-year. Data shows that from 2012 to 2023, the number of U.S. businesses without employees grew 2.7% annually, far outpacing the 1.1% growth of traditional businesses, as the gig economy reshapes employment patterns.  

Rhine Metal, Europe's hottest defense stock, reported earnings below expectations. Rheinmetall's H1 and Q2 2025 revenues both missed forecasts. While increased defense budgets in Germany and Europe have been announced, most new orders have not yet been finalized or converted into revenue. However, the company maintained its full-year 2025 sales growth guidance and stated that order prospects remain strong.  

Shipping giant Maersk: Demand outside the U.S. is strong, upgrading its outlook for container market demand. Maersk's Q2 results exceeded expectations, with the decline in North American imports offset by strong growth in imports from Europe, Latin America, West Asia, Central Asia, and Africa. The company also raised its global container market growth forecast to 2%-4% from the previous -1%-4%. The Red Sea crisis continues to support profits for container shipping companies, as shipowners adopt longer routes around southern Africa, easing the industry's oversupply of vessels.  

### Industries/Concepts  

1. **Computer sector**: China Merchants Securities notes that in July, the broader market index broke through to the upside, with tech stocks dominating. Amid bullish market expectations and industrial trend catalysts, the computer sector is expected to benefit in August from AI applications (resonance between domestic and foreign policies and commercial implementation), Huawei's industrial chain (ahead of Huawei's Full Connect Conference in September), and fintech (growing account openings and active trading).  

2. **Methanol**: As of August 6, formic acid prices stood at 3,550 yuan/ton, up 300 yuan/ton from the previous day (+9.23%), +35.50% week-on-week, and +54.35% month-on-month. Debon Securities points out that due to phased capacity收缩 on the supply side and surging exports, China's formic acid market is in a tight supply-demand pattern.  

3. **Tungsten**: As of August 5, according to SMM, the price of black tungsten concentrate was 194,500 yuan/ton, up 12% from early July; APT prices were 285,000 yuan/ton, up 13% from early July; tungsten carbide powder prices were 422,500 yuan/ton, up 14% from early July. In the short term, tungsten prices are expected to show elasticity driven by rigid demand restocking and export recovery. In the medium to long term, the supply-demand contradiction for tungsten products remains unresolved, and resource scarcity is expected to drive up the central price of tungsten.  

4. **Securities**: Two key indicators in the capital market have attracted attention recently: First, on August 5, the balance of margin trading and securities lending exceeded 2 trillion yuan for the first time in nearly a decade. Second, the average daily turnover of A-shares and H-shares in 2025 hit a new high since 2010. Incremental capital inflows are opening up growth space for securities firms' brokerage, margin trading, asset management, and investment banking businesses, putting the securities industry on track for a new growth cycle.  

### Today's News Preview  

- The U.S. demands that Russia and Ukraine reach an agreement by August 8.  

- St. Louis Fed President Musalem delivers a speech.  

- The Bank of Japan releases the summary of opinions from its July monetary policy meeting.  

- 2025 World Robot Expo.  

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