Morning News

Source: Wall Street News

Market Overview

Before the Federal Reserve's interest rate decision, U.S. stocks declined for two consecutive sessions. Palantir, which released its earnings report after the market closed the previous day, plunged 12%. After releasing its earnings report after the market, AMD surged initially but then retreated, and Advanced Micro Devices (AMD) fell sharply. Apple declined for two consecutive sessions. Chinese concept stocks outperformed U.S. stocks, closing up 0.42%.

According to CCTV News, He Lifeng will visit Switzerland and France and hold high-level Sino-U.S. economic and trade talks and the 10th China-France High-Level Economic and Financial Dialogue. In the early trading session on Wednesday during Asian hours, the offshore Chinese yuan once rose by a hundred points and broke through the 7.20 mark. The Nasdaq 100 rose by more than 1% after the market closed.

The auction of 10-year U.S. Treasury bonds was strong, and the yield of U.S. Treasury bonds accelerated its decline. After surging for two days, the New Taiwan dollar once fell by more than 3%. After Olaf Scholz was elected as the Chancellor of Germany, the euro refreshed its daily high.

Crude oil rebounded sharply, rising nearly 5% at one point. Spot gold soared above $3,400 again, and the futures price of gold rose by more than 3% during the trading session for two consecutive days.

During the Asian session, the Shanghai Composite Index rose by more than 1% and returned above the 3,300 mark. The rare earth permanent magnet sector soared. The Hang Seng Index in Hong Kong closed up 0.7%. Gold stocks were active, and most of the treasury bond futures turned down in the afternoon.

Top News

He Lifeng will visit Switzerland and France and hold high-level Sino-U.S. economic and trade talks and the 10th China-France High-Level Economic and Financial Dialogue. The spokesperson of the Ministry of Commerce answered reporters' questions regarding the high-level Sino-U.S. economic and trade talks.

At 9 a.m. on Wednesday, the People's Bank of China, the China Securities Regulatory Commission, etc. introduced the relevant situation of the "package of financial policies to support the stabilization of the market and expectations."

The European Union plans to expand its countermeasures: If the negotiations fail, it will impose tariffs on $100 billion worth of U.S. goods. The meeting between the U.S. and Canadian leaders: Justin Trudeau said that Canada will never sell, and Donald Trump said "never say never." Due to "rushing to import," the U.S. trade deficit expanded to $140.5 billion in March, reaching a record high.

Tesla suffered setbacks in Europe in April: There were double-digit declines in six major markets. The sales in the UK reached a two-year low, and those in Germany were close to being halved.

The CEO of NVIDIA: The Chinese AI market will reach $50 billion.

Driven by strong AI demand, AMD's revenue and guidance grew beyond expectations, but its stock price surged initially and then retreated after the market closed.

Paul Tudor Jones, a big shot on Wall Street: U.S. stocks are still very likely to reach new lows, and AI poses a threat to survival. Traders at JPMorgan Chase: U.S. stocks will first break the 6,000 mark and then reach new lows! Citibank: The impact of tariffs on the U.S. economy has three stages, and the second stage is about to begin. The market is too optimistic!

Goldman Sachs calculates that the U.S. dollar is overvalued by 16%. If there are "major changes" in the macro fundamentals, it may adjust rapidly or even overshoot.

Market Closing Quotes

European and American stock markets: The Dow Jones Industrial Average fell 0.95%, the S&P 500 Index fell 0.77%, and the Nasdaq Composite Index fell 0.87%. The European STOXX 600 Index closed down 0.18%.

A-share market: The Shanghai Composite Index rose 1.13%, the Shenzhen Component Index rose 1.84%, and the ChiNext Index rose 1.97%.

Bond market: The yield of the 10-year U.S. Treasury bond fell by 4.10 basis points, refreshing the daily low to 4.3023%. The yield of the two-year U.S. Treasury bond fell by 4.95 basis points, reporting 3.7848%.

Commodities: The COMEX gold futures rose 3.53%, refreshing the daily high to $3,440 per ounce. The WTI crude oil futures for June closed up 3.43%, reporting $59.09 per barrel. The Brent crude oil futures for July closed up 3.19%, reporting $62.15 per barrel.

Details of Top News

Global Highlights

He Lifeng will visit Switzerland and France and hold high-level Sino-U.S. economic and trade talks and the 10th China-France High-Level Economic and Financial Dialogue. The spokesperson of the Ministry of Foreign Affairs announced that at the invitation of the Swiss government, He Lifeng, a member of the Political Bureau of the Central Committee and Vice Premier of the State Council, will visit Switzerland from May 9th to 12th and hold talks with Swiss leaders and relevant parties. During his visit to Switzerland, as the Chinese lead in Sino-U.S. economic and trade affairs, Vice Premier He Lifeng will hold talks with Janet Yellen, the U.S. lead and U.S. Secretary of the Treasury. From May 12th to 16th, Vice Premier He Lifeng will go to France to co-chair the 10th China-France High-Level Economic and Financial Dialogue with the French side.

The spokesperson of the Ministry of Commerce answered reporters' questions regarding the high-level Sino-U.S. economic and trade talks. Recently, U.S. high-level officials have constantly hinted at adjusting tariff measures and have actively conveyed information to the Chinese side through various channels, expressing their hope to start talks with the Chinese side on issues such as tariffs. The Chinese side has carefully evaluated the information from the U.S. side. Based on fully considering global expectations, China's interests, and the appeals from the U.S. business community and consumers, the Chinese side has decided to agree to engage with the U.S. side. As the Chinese lead in Sino-U.S. economic and trade affairs, Vice Premier He Lifeng will hold talks with U.S. Secretary of the Treasury Janet Yellen during his visit to Switzerland.

At 9 a.m. on Wednesday, the People's Bank of China, the China Securities Regulatory Commission, etc. introduced the relevant situation of the "package of financial policies to support the stabilization of the market and expectations." According to a notice from the State Council Information Office on May 6th, the State Council Information Office will hold a press conference at 9 a.m. on May 7th, inviting the responsible persons of the People's Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission to introduce the relevant situation of the "package of financial policies to support the stabilization of the market and expectations" and answer reporters' questions.

The European Union plans to expand its countermeasures: If the negotiations fail, it will impose tariffs on 100 billion euros worth of U.S. goods. The negotiations officially launched between the European Union and the United States last month have made little progress. It is expected that most of the U.S. tariffs will remain unchanged. If the negotiations fail, the European Union plans to impose tariffs on U.S. goods worth 100 billion euros. The European Union said on Tuesday that the ongoing trade investigation by Donald Trump will increase the total value of EU goods facing tariffs to 549 billion euros.

The meeting between the U.S. and Canadian leaders: Justin Trudeau said that Canada will never sell, and Donald Trump said "never say never." According to CCTV News, Justin Trudeau said that the United States-Mexico-Canada Agreement is the basis for tariff negotiations. Donald Trump said that the United States does not consider withdrawing from the agreement for the time being, but also said that it may renegotiate.

Semiconductor tariffs will be seen this week, with few feedbacks. Will electronic products be "severely hit"? The public comment period for the U.S. tariff measures on semiconductors will end on May 8th. However, the industry feedback has been unusually quiet. During the public comment period, only 10 comments were submitted regarding semiconductor tariffs, which is far fewer than the nearly 300 comments on timber tariffs.

"Rushing to import"! The U.S. trade deficit expanded to $140.5 billion in March, reaching a record high. The U.S. trade deficit in goods and services expanded to $140.5 billion in March, far exceeding the expected $137.2 billion and increasing by 14% month-on-month compared with the previous value of $122.7 billion. Specifically, the import value surged by 4.4%, reaching a record $419 billion. The import volume of consumer goods reached a historical high, and the import volumes of capital equipment and motor vehicles also increased.

Tesla suffered setbacks in Europe in April: There were double-digit declines in six major markets. The sales in the UK reached a two-year low, and those in Germany were close to being halved. In Europe, Tesla has been boycotted due to Elon Musk's political views. At the same time, the decline in sales is also related to the intensifying competition in the electric vehicle market.

The CEO of NVIDIA: The Chinese AI market will reach $50 billion. Jensen Huang said that the market size of China's artificial intelligence chip market is expected to reach $50 billion in the next few years, making it crucial for U.S. companies to access this market.

Driven by strong AI demand, AMD's revenue and guidance grew beyond expectations, but its stock price surged initially and then retreated after the market closed. In the first quarter, AMD's revenue increased by 36% year-on-year, accelerating growth. The revenue of the client business where PC chips are located increased by 68%, accelerating growth, and reached a new single-quarter high again. The revenue of the data center increased by 57%, although the growth rate slowed down, it was still higher than expected. The median value of the revenue guidance for the second quarter slowed down to a growth rate of nearly 27%, still stronger than expected. After accounting for the impact of an $800 million expense caused by export controls, the gross profit margin for the second quarter is expected to drop to 43%. Without this impact, it will be the same as that in the first quarter. The stock price rose by more than 7% after the market closed initially and then turned down.

Paul Tudor Jones, a big shot on Wall Street: U.S. stocks are still very likely to reach new lows, and AI poses a threat to survival. Paul Tudor Jones expressed a pessimistic view. He said that even if U.S. President Donald Trump eases the tariff policy, the U.S. stock market is still very likely to reach new lows, unless the Federal Reserve takes a very dovish stance and cuts interest rates significantly. He is increasingly worried about the possible dangers brought by artificial intelligence and warns that this risk is not limited to the impact on the stock market and the economy. He regards AI as a "survival threat."

Traders at JPMorgan Chase "draw a line": U.S. stocks will first break the 6,000 mark and then reach new lows! JPMorgan Chase expects that with the activation of the CTA strategy, the acceleration of stock buybacks, and other factors, the S&P 500 Index will first hit the 6,000 mark. However, if investors are pessimistic about the medium-term prospects under high tariffs, the market may retest the low level later. JPMorgan Chase agrees with the general view of the upcoming economic recession and expects that hard data such as non-farm payrolls and retail sales will decline significantly within the next 1-2 months.

The impact of tariffs on the U.S. economy has three stages, and the second stage is about to begin. The market is too optimistic! Citibank believes that with tariffs remaining at the current level for at least the next few months, the U.S. economy will experience three stages of impact: the "rush to buy" temporarily boosts economic data, uncertainty leads to a slowdown in investment and hiring, and supply constraints trigger a wave of layoffs and price increases. This process may force the Federal Reserve to start cutting interest rates as early as June, with a total interest rate cut of 125 basis points within the year, far exceeding market expectations.

Goldman Sachs calculates that the U.S. dollar is overvalued by 16%. If there are "major changes" in the macro fundamentals, it may adjust rapidly or even overshoot.

Goldman Sachs believes that the overvaluation and misallocation of the U.S. dollar are mainly driven by global funds chasing the prospects of excellent returns in the United States. As the return advantage of the United States gradually weakens, the overvalued state may be gradually corrected. The degree of overvaluation of the U.S. dollar highly depends on the assumption of the "standard level" of the U.S. current account. Currently, the actual current account deficit of the United States is about 4%. If it is to be reduced to 2%, it may lead to a 22% depreciation of the U.S. dollar.

The "mirror version" of 1998. Under the tariff threat of Donald Trump, the investment theme of "selling the United States and buying Asia" has become more and more intense. A large amount of capital has flowed back to Asia, driving a historic rebound in Asian currencies, and the stock market has also risen accordingly. Institutions have started a competition to find potential stocks in Asia. Morgan Stanley believes that under the background of the depreciation of the U.S. dollar, stocks mainly relying on domestic demand will benefit the most. Some analysts point out that the markets that have previously fallen into a large trough may welcome the largest amount of capital inflows. There are also views that markets less affected by tariffs are more advantageous.

The onshore Chinese yuan rose to its highest level since November last year. How much room is there for further appreciation? Shao Xiang from Minsheng Macro believes that since the depreciation of the Chinese yuan was limited when the United States significantly increased tariffs, the appreciation expectation brought by the easing of negotiations should also be restrained. It is more inclined to be between 7.10 and 7.20. The collective "abnormal movement" of Asian currencies recently may reflect the signal of a change in the exchange rate paradigm, which also means that the pressure on the U.S. dollar will be structural.

Domestic Macroeconomy

Xi Jinping exchanged congratulatory messages with Charles Michel, President of the European Council, and Ursula von der Leyen, President of the European Commission, on the 50th anniversary of the establishment of diplomatic relations between China and the European Union. Xi Jinping emphasized that currently, the once-in-a-century changes in the world are accelerating, and human society has once again come to a crucial crossroads. A healthy and stable China-EU relationship not only benefits each other but also illuminates the world. I attach great importance to the development of China-EU relations and am willing to work together with President Charles Michel and President Ursula von der Leyen. Taking the 50th anniversary of the establishment of diplomatic relations as an opportunity, we will summarize the experience of the development of China-EU relations, deepen strategic communication, enhance mutual understanding and trust, consolidate the partnership position, expand mutual opening up, properly handle frictions and differences, and open up a more beautiful future for China-EU relations. The two sides of China and the EU should adhere to multilateralism, safeguard fairness and justice, oppose unilateral bullying, jointly address global challenges, jointly promote the equal and orderly multipolarization of the world and the inclusive economic globalization, and make greater contributions to world peace, stability, development, and prosperity.

China's Caixin Services PMI in April was 50.7, and the growth rate of new orders slowed down. The growth rate of new orders in the service industry in April slowed down to the lowest level in 28 months. Costs increased, but the sales prices in the service industry declined, and the optimism of the service industry dropped to the second-lowest level in history.

Luo Wen, Minister of Finance: China will adopt more proactive and effective macro policies and is confident of achieving the growth target of about 5% in 2025. Luo Wen pointed out that China is both a beneficiary and a contributor to economic globalization. In recent years, China's contribution rate to global economic growth has remained at around 30%. In the first quarter of this year, GDP increased by 5.4% year-on-year, achieving a good start. China will adopt more proactive and effective macro policies and is confident of achieving the growth target of about 5% in 2025. China will continue to build a unified domestic market, expand high-level opening up to the outside world, share China's development opportunities and dividends with the world, especially with Asia-Pacific members, jointly address the challenges of the times, and create a better future for the Asia-Pacific region.

Fund managers have been "taught a lesson": It is "consumption differentiation" rather than "consumption downgrade"! Many of the past consumption narratives seem to be being broken. Mass consumption has become more rational, and people are more pursuing cost-effectiveness and quality-value ratio. High-net-worth individuals hope to have better products, not large and comprehensive ones, but fewer and more refined ones. The enthusiasm of Generation Z consumers for consumption related to their interests and self-pleasure has spread from trendy toys and collectibles to some daily consumer goods, and even to gold jewelry.

Domestic Companies

The Chinese version of Apple's AI may be launched with iOS 18.6, with technical support from Baidu and Alibaba. It is reported that Baidu's Ernie Bot large language model will serve as the core cloud intelligent engine of Apple's AI in the Chinese version. At the same time, to ensure that the AI-generated content complies with domestic regulations, Apple will also introduce a review mechanism provided by Alibaba to conduct local compliance reviews of the AI-generated content.

Overseas Macroeconomy

The 10-year US Treasury bond auction has returned to "calm": All indicators are robust, and overseas demand is "back". Compared with the tense sentiment of almost "zero liquidity" during the last 10-year US Treasury bond auction, the market is significantly calmer this time. After the auction results were announced, the yield of US Treasury bonds dropped sharply. Michael Faulkender, Deputy Secretary of the US Treasury, said that today's 10-year US Treasury bond auction was very successful.

Bessent said that the United States is in the "warning stage" of the debt ceiling, and the US government will never default. Bessent did not give the crucial "X date", that is, the day when the US Treasury Department cannot pay all government bills on time. He also said, "Currently, the federal budget is on an unsustainable track, and the debt data is indeed terrifying. A crisis will manifest as a sudden halt to the economy because credit will disappear, and I am committed to preventing this from happening."

The New Fed News Agency: Worried about inflation getting out of control, the Federal Reserve may put off interest rate cuts. Nick Timiraos said that facing the dilemma of an economic recession and inflationary pressure, the Federal Reserve will be more inclined to "control inflation" and may not cut interest rates until clear signs of a slowdown in consumer spending and an increase in the unemployment rate are seen.

The significance of the decline in global shipping data: The Federal Reserve will cut interest rates even later, and global growth will be worse in the coming year or two. Morgan Stanley said that historically, tariff policies usually drive up prices a few months later and reduce economic growth a few quarters later. The decline in shipping data confirms that this disruption is occurring, and its impact has not been fully manifested, which also validates Morgan Stanley's view that the Federal Reserve should be patient, running counter to the market's expectation of an interest rate cut in June.

Before the listing of the "First Lady Coin", a group of traders "laid in wait in advance" and made nearly 100 million US dollars in just 2 minutes! It is reported that within just 2 and a half minutes before the official announcement of the "First Lady Coin", 24 digital wallets purchased 16.7 million tokens of this coin in advance, worth 2.6 million US dollars, and quickly sold them after Melania officially launched this token, making a profit of up to 99.6 million US dollars. According to US financial regulations, the "First Lady Coin" is not considered a security and is not subject to federal disclosure and insider trading rules.

Spanning three continents, Trump's two sons are "competing to make money quickly". From luxury hotels in Dubai to high-end residential buildings in Jeddah, Saudi Arabia; from two cryptocurrency projects in the United States to a new golf course and villa area in Qatar; and then to a new private club in Washington, the Trump family's business tentacles extend globally.

The golden age of private equity has passed, and it is too difficult to exit. There has been no cash return in the past five or six years. Major investors are frustrated. In the slowdown of post-pandemic transactions and IPOs, private equity funds find themselves sitting on a large number of assets but struggling to find an exit. For the private equity model that relies on asset exits to realize returns, this is a survival crisis.

Has the gold-silver ratio failed, and is silver doomed to never catch up with gold? Goldman Sachs believes that after Russia's reserves were frozen, the central bank's gold purchases increased fivefold, which is the core factor driving the structural upward shift of the gold-silver ratio. Although China's solar energy industry has boosted the demand for silver, it is still not enough to bridge the performance gap with gold. It is expected that the price of gold will reach $3,700 per ounce by the end of 2025 and may climb to $4,000 per ounce by the middle of 2026.

The Federal President of Germany officially appointed Merz as the new Chancellor. On the afternoon of May 6, local time, the German Bundestag held the second round of voting. Friedrich Merz, the Chancellor candidate of the German Union Party, received the support of the majority of the members of the Bundestag and was officially elected as the new Chancellor of Germany. German Federal President Frank-Walter Steinmeier presented the letter of appointment to Friedrich Merz at the presidential palace, and Merz officially became the Chancellor of the new federal government of Germany.

Trump: The United States will stop bombing the Houthi rebels, Israel: Surprised. US President Trump said that the Houthi rebels have announced that they will no longer attack and blow up ships, and the United States will respect their commitment and believe what they say.

India launched missiles at three places in Pakistan, and Pakistan vowed to respond. Pakistan said that Indian fighter jets failed to enter Pakistani airspace, and the Pakistani Air Force was on high alert throughout the process and had successfully prevented any intrusion. After India launched an attack on Pakistan, Pakistan announced the closure of its national airspace for 48 hours, and all flights across the country have been immediately cancelled.

Overseas Companies

Microsoft's AI PC responds to the tariff shock: The thinnest and lightest Copilot+ is here, and the new Surface computers are cheaper. The Surface Pro with a 12-inch screen, starting at $799, is claimed to be the thinnest and lightest Copilot+PC, and the Surface Laptop with a 13-inch screen, starting at $899, is called the thinnest Surface laptop. The prices are $200 and $100 cheaper respectively compared to their previous-generation versions last year. The screens are smaller than the previous generations. They are equipped with the Snapdragon X Plus 8-core processor instead of the 10-core processor of the previous generation, and have a longer battery life.

Saudi Arabia launches a price war, and two major US shale oil giants announce cuts in capital expenditures. US shale oil giants Diamondback Energy and Coterra Energy both said that they will cut their 2025 capital budgets and reduce the number of drilling rigs. Travis Stice, CEO of Diamondback Energy, warned: "Due to the reduction of drilling rigs, US onshore oil production is likely to have peaked and will start to decline this quarter."

Facing the headwind of tariffs and seizing the opportunity to buy at a low price, 3G Capital agreed to acquire Skechers for $9.4 billion, with a premium of 30%. Skechers warned last week that the tariff policy "poses a significant risk" to its business operations.

Industry/Concepts

1. Database: Minsheng Securities pointed out that the development of AI Agents is driving the transformation of software forms. Databases play an irreplaceable and important role. They are not only an important carrier for storing data but also can help large language models avoid problems such as "hallucinations" and untimely data updates during reasoning. They are expected to become an irreplaceable "necessity" in the AI era. At the same time, AI empowers the upgrade of databases themselves and plays an important role in intelligent operation and maintenance, etc., promoting the accelerated development of the database industry.

2. Permanent Magnet Materials: The joint servo motor is the core of the movement ability of humanoid robots. As the core component of the servo motor, the design and adaptation of the magnetic components will build a core barrier, and the voice and product added value of magnetic material enterprises will be higher. A new era of material design for magnetic components may be coming.

3. Military Industry: According to a research report by Founder Securities, the military industry was disturbed by multiple unfavorable factors in 2024, and the overall fundamentals of the industry were under significant pressure. Both revenue and profit were at relatively low levels in recent years, and the negative factors in the industry have been digested relatively thoroughly. In Q1 2025, industry orders were gradually issued, and the significant improvement in inventory and contract liabilities demonstrates the subsequent development potential. The industry's prosperity is expected to be quickly transmitted to the downstream from Q2 to Q3.

4. Industrial Control: According to a research report by Soochow Securities, by sorting out the industry revenue data in the first quarter, it was found that the bottom of the industrial control industry has been reached, and the recovery has started. The overseas expansion of industry companies and the layout of businesses such as robots may bring more increments. The profit of the leading company Inovance Technology greatly exceeded expectations, and the second-tier industrial control companies also achieved steady growth under the overall good demand in the OEM market.

Preview of Today's Major News

China's foreign exchange reserves in April.

The Federal Reserve announces the interest rate decision, and Powell's press conference.

Retail sales in the eurozone in March.

The change in EIA crude oil inventories in the United States last week.

Novo Nordisk, Uber, Disney, Arm, and Applovin announce their financial reports.

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