Morning News

Source: Wall Street News

### Market Overview

Ahead of Powell's crucial speech, the three major U.S. stock indices collectively closed lower for the first time this week. The S&P 500 extended its losing streak to five days, and both the S&P 500 and Nasdaq hit a two-week low. Walmart, which reported disappointing profits, fell 4.5%, leading the decline among Dow components. Chinese concept stocks rose more than 1%, outperforming the broader market for two consecutive days. XPeng Motors jumped nearly 12%, NIO rose more than 9%, while Bilibili (B站) dropped more than 6% after its earnings report.

PMI data and remarks from Federal Reserve officials dampened expectations of a September rate cut, causing U.S. bond prices to pull back. After a Fed official stated that a September rate cut might not happen, the 2-year U.S. Treasury yield neared a three-week high. The U.S. dollar index rebounded sharply, hitting a more than one-week high.

Cryptocurrencies pulled back, with Bitcoin once falling nearly $3,000, testing the $112,000 level, and Ethereum dropping nearly 4% at one point. Crude oil rose more than 1%, posting a second straight gain to a more than two-week high. Gold pulled back, hitting a nearly three-week low intraday.

During the Asian session, A-shares and Hong Kong stocks pulled back in the afternoon. The Shanghai Composite Index rose and then fell back, gaining only 0.1%. High-level stocks collectively plummeted. The Hang Seng Tech Index fell nearly 1%, Lao Pu Gold dropped 4%, national bonds rebounded, and commodities showed divergence.

### Key News

Ahead of Powell's speech at the Jackson Hole Symposium, a Fed voter for next year said a September rate cut might not occur, while this year's voters are hesitant to take action. Subsequently, the 2-year U.S. Treasury yield approached a three-week high. Brad, a candidate for Fed Chair, suggested an aggressive approach: cutting rates by 100 basis points this year, with the first move in September.

The U.S. Department of Justice pressured to remove Fed Governor Cook, and Trump prefers her to resign voluntarily.

The U.S. August manufacturing PMI flash reading was 53.3, unexpectedly hitting a more than three-year high, intensifying inflationary pressures. The U.S. labor market cooling has become more evident: initial jobless claims unexpectedly surged by 11,000 last week, and continuing claims rose to a four-year high.

Euro zone business activity hit a 15-month high, with the manufacturing PMI rising above 50, ending a three-year contraction, and Germany's manufacturing sector showing a strong recovery.

The U.S. and Europe reached an agreement on the framework of a trade deal. The U.S. reaffirmed a 15% tariff cap on the EU and stated that tariffs on EU automobiles might be reduced within weeks.

DeepSeek-V3.1 was officially released, featuring a hybrid reasoning architecture and designed for next-generation domestic chips.

Walmart's quarterly profit fell short of expectations for the first time in three years, citing rising tariff costs, but raised its full-year sales guidance. Its stock price dropped 4.5%.

### Market Closing Quotes

- **U.S. and European Stocks**:

 - The S&P 500 fell 0.40% to 6,370.17 points.

 - The Dow Jones Industrial Average dropped 0.34% to 44,785.50 points.

 - The Nasdaq Composite declined 0.34% to 21,100.312 points.

 - Europe's STOXX 600 Index closed roughly flat at 559.07 points.

- **A-shares**:

 - The Shanghai Composite Index rose 0.13% to 3,771.10 points.

 - The Shenzhen Component Index fell 0.06% to 11,919.76 points.

 - The ChiNext Index dropped 0.47% to 2,595.47 points.

- **Bond Market**: By the end of the bond market session, the yield on the 10-year U.S. Treasury note was approximately 4.33%, up about 4 basis points intraday; the 2-year U.S. Treasury yield was around 3.79%, also up about 4 basis points intraday.

- **Commodities**:

 - WTI crude oil futures for October rose 1.29% to $63.52 per barrel.

 - Brent crude oil futures for October gained 1.24% to $67.67 per barrel.

 - COMEX gold futures for December fell 0.2% to $3,381.6 per ounce.

### Details of Key News

#### Global Highlights

**Guidance from Jackson Hole Central Bank Annual Meeting: Everything You Need to Know Before Powell's Speech on Friday**  

The market is focused on Federal Reserve Chair Powell's views on the July non-farm payroll data and whether it will open the door to a September rate cut. Money market traders briefly expected an 80% chance of a 25-basis-point rate cut in September on Friday. Several major investment banks predict that Powell may partially reverse the Flexible Average Inflation Target (FAIT) policy introduced at the 2020 meeting, rebalancing the Fed's dual mandate of employment and inflation.

**U.S. Department of Justice Pressures to Remove Fed Governor Cook; Trump Prefers Her Voluntary Resignation**  

Justice Department officials sent a letter to Powell, explicitly stating that Cook's case "requires further review" and urging her immediate removal from the Board. However, Powell has no authority to remove her. As a Fed governor nominated by the President and confirmed by the Senate, Cook can only be removed by the President for "good cause."

**Fed Voter for Next Year Says September Rate Cut Unlikely**  

In an interview at the Jackson Hole Central Bank Annual Meeting, 2026 FOMC voter Hamark stated that inflation is too high and has been rising over the past year, and she would not support a rate cut if the decision had to be made tomorrow. 2025 FOMC voter Schmid expressed hesitation about the market's strong expectation of a September rate cut, saying that cutting rates now would require very clear data, and he is not convinced that sufficient progress has been made in reducing inflation. After Hamark's remarks, the 2-year U.S. Treasury yield approached a three-week high.

**Fed Chair Candidate Brad Proposes Aggressive Rate Cut Path: 100 Basis Points This Year, First Move in September**  

Brad, a strong contender for Fed Chair, called for aggressive rate cuts of 100 basis points this year, starting with the September meeting. This view contrasts sharply with the moderate stance of Atlanta Fed President Bostic, who advocates only one rate cut this year. The market generally believes the probability of a 25-basis-point rate cut in September is high.

**U.S. August Manufacturing PMI Flash Reading 53.3, Unexpectedly Hits Over Three-Year High, Intensifying Inflation Pressures**  

The PMI showed manufacturing activity expanding at the fastest pace since March 2022, with the composite PMI rising to this year's highest level in August. Companies' pricing power has strengthened, increasingly passing on tariff-induced cost increases to customers. After the PMI release, traders reduced bets on two Fed rate cuts this year, with the probability of a September cut falling from over 80% on Wednesday to below 75%.

**U.S. Labor Market Cooling Becomes More Evident; Initial Jobless Claims Unexpectedly Surged by 11,000 Last Week, Continuing Claims Hit Four-Year High**  

U.S. initial jobless claims rose to 235,000 last week, the highest in two months, exceeding expectations and the previous reading, with the four-week average hitting a one-month high. The week before last, continuing jobless claims rose to 1.972 million, the highest since November 2021, indicating increased difficulty in re-employment.

**Euro Zone Business Activity Hits 15-Month High; Manufacturing PMI Ends Three-Year Contraction, German Manufacturing Shows Strong Recovery**  

The euro zone's August manufacturing PMI rose from 49.8 to 50.5, breaking above the 50 boom-bust line for the first time since June 2022, far exceeding the expected 49.5. Germany's manufacturing PMI jumped sharply from 46.9 in July to 49.9, approaching the boom-bust line. Affected by Trump's tariffs, foreign orders for euro zone manufacturing fell for the second consecutive month.

**U.S. Reaffirms 15% Tariff Cap on EU, Says Tariffs on EU Automobiles May Be Reduced Within Weeks**  

The White House issued a statement saying that the U.S. and the EU have reached an agreement on the framework of a trade deal. Under this framework, the EU has committed to eliminating all tariffs on U.S. industrial products, plans to purchase $750 billion worth of U.S. liquefied natural gas, oil, and nuclear energy products, and will additionally buy $40 billion worth of U.S.-made AI chips.

**DeepSeek-V3.1 Officially Released, Equipped with Hybrid Reasoning Architecture, Designed for Next-Generation Domestic Chips**  

The core highlight of the V3.1 version is the adoption of a new hybrid reasoning architecture, allowing the model to support both "thinking" and "non-thinking" modes within a unified framework, and using UE8M0 FP8 Scale parameter precision. DeepSeek simultaneously upgraded its API interface, expanding the context window to 128K and adding support for Anthropic API format to simplify migration.

**Walmart's Profit Falls Short of Expectations for First Time in Three Years, Citing Sustained Rising Tariff Costs, Raises Full-Year Sales Guidance**  

Walmart's adjusted EPS for the second quarter was $0.68, compared with the expected $0.74, missing expectations for the first time in three years. The company raised its 2026 fiscal year net sales growth forecast from 3%-4% to 3.75%-4.75%, and slightly increased its adjusted EPS forecast to $2.52-$2.62. After the earnings report, Walmart's stock price plummeted 4.5%.

**Howard Marks: U.S. Stocks in "Early Stage" of Bubble, Though Key Correction Point Not Yet Arrived**  

"I'm certainly not sounding the alarm; the key is that market prices are indeed expensive." U.S. stock valuations are at historical highs, especially the ratio of total U.S. stock market capitalization to GDP, which has hit a record. He compared the current market to the "irrational exuberance" period of the late 1990s, warning that although the risk of a market correction is not imminent, it is real, and suggested investors shift to defensive strategies to cope with potential volatility.

**Era of "Fiscal Dominance" Arrives; Central Banks Can Only "Passively Cooperate," While Markets "Stand Ready"**  

From Trump publicly pressuring the Fed to cut rates to the abnormal divergence of U.S. Treasury yield curves, the market has issued warnings through prices. Dalio and others have further warned of the risk of a "debt death spiral," suggesting that if central banks are forced to print money to buy bonds, it may trigger currency depreciation and long-term inflation.

#### Domestic Macroeconomics

**Goldman Sachs: A Large Amount of "Existing Funds" Have Not Entered the Market; Chinese Stock Market Still Has Room to Rise, Optimistic About Small and Mid-Cap Stocks**  

Goldman Sachs estimates that Chinese households hold 55 trillion yuan in "excess deposits," with only 22% allocated to equity funds, and potential capital inflows exceeding 10 trillion yuan. This indicates that China's stock market, especially small and mid-cap stocks, still has significant room to rise. Small and mid-cap indices such as CSI 1000 and CSI 500 deserve focus, benefiting from higher retail ownership and exposure to high-tech manufacturing.

**Stock Market Capital Outflows; New Taiwan Dollar Hits Lowest Level Against U.S. Dollar Since May**  

Affected by large-scale capital outflows triggered by tech stock sell-offs, the New Taiwan dollar exchange rate came under pressure, hitting its weakest level against the U.S. dollar since May this year. Sharp stock market fluctuations were the main reason; on Wednesday, global investors net sold $2.38 billion worth of Taiwanese stocks, the largest capital outflow in about 11 months.

#### Domestic Companies

**Kuaishou's Q2 Revenue and Net Profit Both Exceed Expectations; Keling AI Revenue Surpasses 250 Million Yuan, Declares 2 Billion Hong Kong Dollar Special Dividend**  

Kuaishou's total revenue in Q2 was 35.05 billion yuan, a year-on-year increase of 13.1%; adjusted net profit was 5.62 billion yuan, a year-on-year increase of 20.1%. It declared its first special dividend of 0.46 Hong Kong dollars per share, totaling approximately 2 billion Hong Kong dollars. E-commerce GMV increased 17.6% year-on-year to 358.9 billion yuan, and daily active users rose 3.4% year-on-year to 409 million, both hitting record highs. Keling's full-year revenue in 2025 is expected to double compared to the target set at the beginning of this year.

**Bilibili's Q2 Revenue Grows 20% Year-on-Year, Net Profit 218 Million Yuan, Game Business Revenue Up 60%**  

Bilibili's total revenue in Q2 increased 20% year-on-year to 7.34 billion yuan, with GAAP net profit of 218 million yuan, compared with a net loss of 608 million yuan in the same period last year. Growth was mainly driven by advertising and game businesses, which increased by 20% and 60% year-on-year respectively.

**GoerTek's First-Half Revenue Drops 7% Year-on-Year, Net Profit Attributable to Parent Company Rises 15.6%**  

The biggest drag in this earnings report was the smart acoustic整机 business, with first-half revenue plummeting 34.92% year-on-year to 8.324 billion yuan. The precision components business performed brilliantly, with revenue of 7.604 billion yuan, a year-on-year increase of 20.54%. The rapid development of the AI smart glasses market helped the smart hardware business grow steadily.

**PCB Leader沪电股份's First-Half Revenue Surges 56.6% Year-on-Year, Net Profit Rises 48%**  

Benefiting from strong demand for artificial intelligence and high-speed network infrastructure, 沪电股份's enterprise communication market board business surged, achieving operating income of 6.532 billion yuan in the first half, a significant year-on-year increase of 70.63%. The automotive board business performed relatively steadily, with first-half operating income of 1.422 billion yuan, a year-on-year increase of 24.18%.

**iFlytek's First-Half Revenue Grows 17.01% Year-on-Year, Net Loss Narrows by 40.37%**  

In the first half of 2025, iFlytek reported a net loss of 239 million yuan, compared with a loss of 400 million yuan in the same period last year. Revenue from iFlytek's AI learning machines continued to double in the first half. The company plans to raise no more than 4 billion yuan through a private placement, which will be used for the Spark Education Large Model and typical products, as well as supplementary working capital.

**Sinopec's First-Half Revenue Drops 10.6% Year-on-Year, Net Profit Falls 39.8%; Company Lowers Capital Expenditure Plan**

**EVE Energy's First-Half Revenue Drops 5.73% Year-on-Year, Non-GAAP Net Profit Rises 19.32%; Energy Storage Battery Shipments Double**

**MINISO's Q2 Revenue Grows 23.1% Year-on-Year, TOP TOY Revenue Surges 87.0%, Same-Store Sales Turn Positive**

#### Overseas Macroeconomics

**U.S. July Existing Home Sales Rebound 2% More Than Expected, Home Price Increase Hits Two-Year Low**  

U.S. existing home sales rose 2% month-on-month to an annualized 4.01 million units in July, exceeding expectations. The median home price was $422,400, up 0.2% year-on-year, the smallest increase in two years. Analysts said that over the past two years, U.S. existing home sales have stayed around 4 million units. The reality of high interest rates and a cooling labor market still leaves the housing market "stuck," lacking real momentum to break through. Experts predict that the housing market will continue to face the dual pressures of high interest rates and high inventory in the coming year.

**Fiscal Concerns Persist; Japan's 10-Year Government Bond Yield Hits Highest Level Since 2008**  

Japan's bond market suffered a violent sell-off, with the benchmark 10-year government bond yield surging to its highest level since 2008, and yields on ultra-long-term bonds such as 20-year and 30-year bonds also approaching multi-decade highs. The market generally expects the Japanese government to introduce new fiscal stimulus measures, leading to an increase in bond issuance. Coupled with rising expectations of a Bank of Japan rate hike and weakened demand from overseas investors, these factors have collectively put enormous pressure on the bond market.

**U.S. and Europe Discuss Providing "Security Guarantees" to Ukraine; Russia Says Any Security Guarantees to Ukraine Must Include Russian Participation**  

According to media reports, the U.S. and Europe are formulating a security guarantee plan for Ukraine. The U.S. will provide "air support" but will not send ground troops, while Europe is focusing on discussing plans to send troops to Ukraine. Russia explicitly opposes the arrangement of NATO troops as peacekeepers, emphasizing that any security guarantees to Ukraine must include Russia. Russian Foreign Minister Lavrov warned that discussing security issues without Russian participation is "fantasy" and a "dead end."

#### Overseas Companies

**NVIDIA Earnings Report Looms; Wall Street Optimistic, Nine Analysts Raise Target Prices This Week**  

Among analysts from nine institutions, the highest target price was raised by 60%, with the highest target price at $240, expecting the stock price to rebound nearly 37% from Wednesday's closing price. NVIDIA's average target price thus rose 3% to nearly $194, a new high, and currently nearly 90% of analysts covering NVIDIA have given buy-equivalent ratings.

**NVIDIA's Earnings Report Next Week Focuses on Three Key Points: AI Demand, Blackwell Production Capacity, and Chinese Market**  

Morgan Stanley raised its expectations for NVIDIA's Q2 revenue from $45.2 billion to $46.6 billion, exceeding Wall Street's consensus expectations. Market focus is on three dimensions: changes in the demand structure for AI chips, the ramp-up of Blackwell chip production capacity, and the progress of resuming shipments to the Chinese market.  

However, some analysts predict that due to significant uncertainties in its China business, NVIDIA's Q3 earnings guidance may fall short of market expectations, and this business could have brought NVIDIA incremental revenue of $2 billion to $3 billion.

**"Sensitive Moment" for Tech Stocks; Meta Stops "Heavy Spending on Talent Recruitment"**  

Amid a broad sell-off of U.S. tech stocks this week, Meta announced it has suspended hiring in its AI department, triggering market sensitivity about the "AI bubble." Analysts believe that Meta's move is entering a "digestion mode" after a large-scale spending spree to accommodate and evaluate its newly recruited talent.

**Investors Frenzy; Anthropic's Funding Target Doubles from $5 Billion to $10 Billion**  

Media reports say Anthropic is close to reaching a new financing agreement of up to $10 billion, doubling the previously reported target. The latest round of financing is led by Iconiq Capital, with several well-known investment institutions such as TPG, Lightspeed, Spark Capital, and Menlo Ventures intending to participate.

#### Industries/Concepts

1. **Chemical Industry**: Sub-sectors with high concentration (fewer industry players, less coordination resistance), high operating rates (limited idle capacity, load adjustments can quickly affect supply and demand), and low profit levels (companies have a strong willingness to support prices when operating at meager profits or losses) are actively resisting internal competition. Sub-sectors with high pollution, high energy consumption, and a high proportion of old and outdated production capacity will benefit more from policy-driven passive resistance to internal competition.

2. **Electric Heavy-Duty Trucks**: Shenwan Hongyuan pointed out that the market mostly focuses on the long-term trend of commercial vehicle electrification. The short-term penetration rate of electrified commercial vehicles, including electric heavy-duty trucks, may rise sharply, and the elasticity of rapid demand growth is expected to bring profit release across the entire industry chain.

3. **Automotive Seats**: Changjiang Securities' research report noted that the popularization of general configurations and the adoption of high-end innovations are advancing in parallel, and the value of seats continues to increase. The domestic seat market is expected to exceed 155 billion yuan by 2030. In the new energy era, car companies have higher requirements for seat manufacturers' response speed and cost control capabilities, and domestic companies are expected to accelerate the localization of seats.

4. **Computing Power Interconnection**: ScaleUp networks have ScalingLaw. The second-layer network between ScaleUp cabinets will gradually emerge. The ratio of optical + AEC connections to chips will be 1:9, and the ratio of switches to chips will be 4:1, both doubling compared to ScaleOut networks.

#### Preview of Today's Key News

- The State Council Information Office holds a press conference to introduce the achievements of high-quality development of market supervision during the "14th Five-Year Plan" period.

- Jackson Hole Global Central Bank Annual Meeting. Federal Reserve Chair Powell delivers a speech at the Jackson Hole Global Central Bank Annual Meeting.

- Japan's July CPI.

- Hang Seng Index Company announces the results of the second-quarter review.

- 2025 China Computing Power Conference.

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