Morning News

**Source**: Wall Street News

### Market Overview

US stocks welcomed the progress of the China - US talks. The three major US stock indexes recorded their largest increases in a month. The Nasdaq rose more than 4% and returned to a bull market. Tech giants drove US stocks higher. Amazon closed up more than 8%, Meta nearly 8%, Tesla nearly 7%, and Apple more than 6%. Chinese - listed stocks performed even better. The China - stock index closed up more than 5%. Xiaopeng Motors rose more than 7%, Li Auto and Pinduoduo more than 6%, and Alibaba nearly 6%. The German stock index hit a new all - time high.

Risk appetite increased significantly. US bond prices plunged, and the yield on the two - year US Treasury bond rose more than 10 basis points intraday.

The US dollar index rose more than 1% intraday and hit a four - week high again. The Japanese yen fell more than 2% intraday. The offshore RMB surged nearly 500 points intraday and broke through 7.20. Bitcoin rose above $105,000 and then fell nearly $5,000 at one point.

Crude oil rose for three consecutive days to a two - week high, and US oil rose more than 4% intraday. Gold prices plunged and dropped to the second - lowest level this month, with gold futures once falling 4%.

During the Asian session, the ChiNext Index closed up 2.6%, military - related stocks surged, Hong Kong stocks soared, the Hang Seng Tech Index skyrocketed more than 5%, consumer electronics stocks rose sharply, and national bonds fell across the board.

### Top News

The "Joint Statement of the China - US Economic and Trade Talks in Geneva" was released. The Chinese Ministry of Commerce stated that China and the US each cancelled a total of 91% of the additional tariffs and suspended the implementation of 24% of the counter - tariffs. Xinhua News Agency's editorial said that the China - US economic and trade talks relieved pressure and increased confidence for the global economy.

The easing of the China - US trade situation boosted the strong rebound of US stocks. Traders currently expect the Federal Reserve to cut interest rates only twice this year. Goldman Sachs postponed the expected time of the Fed's interest rate cut from July to December.

Trump signed an executive order to slash drug prices, vowing to reduce them by 50% to 80% or even 90%, and targeting the European Union. However, the wording of the order is ambiguous and lacks specific implementation details, and it is not as bad as expected by pharmaceutical companies.

The US government's fiscal budget surplus in April increased by 23% year - on - year to $258.4 billion, and customs tariff revenue reached $16 billion, a record high.

Trump began his first foreign visit in his second term, with Riyadh, Saudi Arabia, as the first stop of his itinerary, and business giants such as Musk and Altman accompanied him.

Apple was reported to possibly raise the price of the new iPhone and avoid talking about tariffs. Trump said that he talked with Apple's CEO Cook on Monday, and Cook said that Apple would increase its planned investment in the US by $500 billion.

CK Hutchison responded to the port transaction, saying that it is absolutely impossible to conduct any illegal or non - compliant transactions.

### Market Closing Report

- **US and European Stocks**: The Dow Jones Industrial Average rose 2.81%, the S&P 500 Index rose 3.26%, and the Nasdaq rose 4.35%. The European STOXX 600 Index closed up 1.21%.

- **A - shares**: The Shanghai Composite Index rose 0.82%, the Shenzhen Component Index rose 1.72%, and the ChiNext Index rose 2.63%.

- **Bond Market**: By the end of the bond market trading, the yield on the 10 - year benchmark US Treasury bond was about 4.47%, rising about 9 basis points during the day; the yield on the two - year US Treasury bond was about 4.01%, rising about 12 basis points during the day.

- **Commodities**: WTI June crude oil futures closed up 1.52%. Brent July crude oil futures closed up 1.64%. COMEX June gold futures closed down 3.47%. The London aluminum price rose nearly 2.6%, the London tin price rose 2.2%, and the London nickel price closed down 1.1%.

### Details of Top News

- **Global Highlights**

   - The "Joint Statement of the China - US Economic and Trade Talks in Geneva" was released. Both sides promised to take the following measures before May 14, 2025:

       - The US will (1) modify the ad valorem tariffs imposed on Chinese goods (including goods from the Hong Kong Special Administrative Region and the Macau Special Administrative Region) as stipulated in Executive Order 14257 of April 2, 2025. Among them, the 24% tariff will be suspended for the initial 90 days, while the remaining 10% tariff on these goods will be retained as stipulated in the executive order; (2) cancel the additional tariffs on these goods imposed according to Executive Order 14259 of April 8, 2025 and Executive Order 14266 of April 9, 2025.

       - China will (1) correspondingly modify the ad valorem tariffs imposed on US goods as stipulated in the Announcement of the Tariff Commission No. 4 of 2025. Among them, the 24% tariff will be suspended for the initial 90 days, while the remaining 10% tariff on these goods will be retained, and the additional tariffs on these goods imposed according to the Announcement of the Tariff Commission No. 5 and No. 6 of 2025 will be cancelled; (2) take necessary measures to suspend or cancel the non - tariff counter - measures against the US since April 2, 2025.

   - The Chinese Ministry of Commerce stated that China and the US each cancelled a total of 91% of the additional tariffs and suspended the implementation of 24% of the counter - tariffs. This high - level China - US economic and trade talks have made substantial progress, significantly reducing the bilateral tariff level. The US has cancelled a total of 91% of the additional tariffs, and China has correspondingly cancelled 91% of the counter - tariffs. The US has suspended the implementation of 24% of the "reciprocal tariffs", and China has also correspondingly suspended the implementation of 24% of the counter - tariffs.

   - Xinhua News Agency's editorial said that the China - US economic and trade talks relieved pressure and increased confidence for the global economy. The holding of this talks and its positive results once again prove that equal - footed dialogue should be the basic attitude for major countries to solve problems. As two major countries with different national conditions, there are inevitably some differences between China and the US. The key is to respect each other's core interests and major concerns and find a proper way to solve problems. Through the equal - footed dialogue mechanism, both China and the US can clearly show their attitudes towards their respective main concerns, clarify relevant facts, explain the reasons for raising concerns, discuss the factors leading to relevant problems, and discuss possible solutions.

   - China - US negotiations: How much "ice - breaking" has been achieved? Minsheng Securities believes that within the next three months, the tariffs imposed by the US on China this year may be reduced to a minimum of 10%, but there is a possibility of a tariff increase on China after 90 days. The 20% fentanyl tariff may be cancelled, and the suspension of the 24% tariff may not be completely cancelled.

   - The easing of the China - US trade situation boosted the strong rebound of US stocks. The media believes that the easing of the situation has sent the clearest signal to investors so far: the Trump administration is taking a more moderate stance to deal with the conflicts that have shaken the global market in the past few weeks. The market is optimistic that the US economy will avoid a recession, and traders currently expect the Federal Reserve to cut interest rates only twice in 2025.

   - Goldman Sachs postponed the expected time of the Fed's interest rate cut significantly, from July to December. Citigroup postponed the expected time of the Fed's interest rate cut by one month, from June to July.

   - Trump signed an executive order to slash drug prices, vowing to target the European Union. He said that the principle of this executive order is to let Americans pay the lowest drug prices paid by other developed countries. "The prices of some prescription drugs and medicines will be reduced by 50% to 80% or even 90% almost immediately." The US Department of Commerce will start an investigation into how the European Union "extorts" pharmaceutical companies. Unless the European Union agrees to sell its drugs at a "very low" price, the drugs from the European Union will be prevented from entering the US. Pharmaceutical companies such as Eli Lilly turned up during the trading session. Analysts said that the wording of the executive order is ambiguous and has almost no specific implementation details.

   - The US budget surplus in April was $258.4 billion, higher than the same period last year, and customs tariff revenue reached a record high. Data released by the US Treasury Department shows that the US federal government's budget surplus in April increased by about 23% year - on - year. The customs tariff revenue in April reached $16 billion, a record high, an increase of $9 billion year - on - year, an increase of 130%. Data compiled by Bloomberg shows that this is the highest customs revenue in a single month in at least a decade.

   - Trump began his first foreign visit in his second term, with Riyadh, Saudi Arabia, as the first stop of his itinerary. Many business giants, including Musk and Altman, will also go there. According to media reports, Saudi Arabia may reach dozens of deals with Trump this week, covering various fields such as national defense security, artificial intelligence, rare metals, and transportation. Trump is seeking to reach $1 trillion in deals during his Gulf trip.

   - The panic over tariffs has subsided, and Morgan Stanley's Wilson warns the US stock market: It is too early to be optimistic. Morgan Stanley believes that the two factors supporting the continuous rebound of the US stock market have not been achieved. Powell reiterated the "wait - and - see" attitude last week, and the yield on the 10 - year Treasury bond has currently exceeded 4.4%. Pay attention to the next resistance level of the S&P 500 at 5750 - 5800.

   - BofA's Hartnett: The US stock market "sells the fact", "shorts the US dollar" before the Fed cuts interest rates, and "goes long on the 5 - year US Treasury bond" before the Republican budget. BofA strategist Hartnett, known as the "most accurate analyst on Wall Street", believes that the US stock market has already reflected the expected trade agreement / lower tariffs in the second quarter in advance. It is expected that the market will "buy the expectation and sell the fact". The macro - factors that promote the market to continue rising are most likely to come from the "three Cs": the China - US agreement, global interest rate cuts, and strong consumer demand. Under the macro - change situation, the most diversified investment portfolio, such as a 25/25/25/25 allocation of cash / gold / stocks / bonds, may be better than the traditional 60/40 stock - bond allocation.

   - Apple was reported to possibly raise the price of the new iPhone and avoid talking about tariffs. It is reported that Apple is considering raising the price of the iPhone series to be launched this autumn, but the company will never publicly attribute the price increase to tariffs under US trade policies. It is still unclear what new functions Apple will provide to justify the price increase.

   - Trump said that he talked with Apple's CEO Cook on Monday, and Cook said that Apple would increase its planned investment in the US by $500 billion.

   - CK Hutchison responded to the port transaction, saying that it is absolutely impossible to conduct any illegal or non - compliant transactions. CK Hutchison announced that it originally planned to talk about the port transaction at the annual general meeting of shareholders on May 22. However, in view of the continuous inquiries from shareholders and the media recently, CK Hutchison Holdings Limited hereby states that this transaction is absolutely impossible to be carried out under any illegal or non - compliant circumstances.

- **Domestic Macroeconomy**

   - Foreign capital is back. Morgan Stanley: 80% of investors intend to increase their allocation to China in the short term. Morgan Stanley said that at the just - concluded Morgan Stanley China BEST Conference, more than 80% of investors said that they are likely to increase their exposure to Chinese stocks in the near future. The report said that the Chinese market is the most under - allocated among all the emerging markets rated "overweight / neutral" by Morgan Stanley Research, and the negative impact of short - term tariffs on China may actually be less than that on many other major economies and markets.

   - Based on a comparison of 38 countries: Why is China's consumption rate on the low side? Dongwu Securities believes that China's disposable income is slightly higher than the average of the 38 countries, and the primary distribution is lower than the average of the 38 countries. The latter is mainly due to the low level of net property income. Assuming that the tax burden on individual income tax and property tax of residents is increased to the same level as the average of the 38 countries, and the transfer payment level is increased while increasing the tax burden, and this part of the increased tax is given to the middle - and low - income earners in the form of transfer payments, it is expected that the resident consumption rate can be increased by 1.3 percentage points.

- **Domestic Companies**

   - How much pressure is there on the withdrawal of funds from Hong Kong stocks under the new regulations on the management of public funds? GF Securities believes that the most direct impact of the new regulations is that fund managers have to more carefully consider the deviation of their positions from the performance benchmark. The active - type funds allocated in both A - share and H - share markets have increased their allocation of Hong Kong stock targets in the first quarter. The subsequent position - adjustment situation of these products may have a certain impact on the overall liquidity of Hong Kong stocks. According to the calculation, in the first - quarter report, 477 active - type fund products with a net asset value of more than 1 billion yuan over - allocated Hong Kong stocks by about 69.8 billion yuan, with a deviation of 5.5%.

   - What are the catch - up opportunities in the export chain after the tariff reduction? Societe Generale Securities believes that the industries with the most improved net profit damage situation after the tariff reduction are mainly concentrated in home appliances, electronics (optical optoelectronics, consumer electronics), textile, clothing and light industry (home furnishings, cultural and entertainment products, textile manufacturing), medical and pharmaceutical (medical devices, chemical pharmaceuticals), mechanical equipment, etc.

- **Overseas Macroeconomy**

   - Trump's "major concern": The stock market is back, but the bond market is not. The S&P 500 index has returned to the level before the tariff shock in April, but the yield on the 10 - year US Treasury bond is still higher than the average level of 4.156% before the tariff announcement in April. Uncertainties such as tariff policies, fiscal prospects, and the White House's criticism of the Fed's interest rate policies have all increased the pressure on the bond market.

   - The latest research of the Federal Reserve: Learning from history, the transmission of tariffs to consumer goods prices is completed within 2 months. The latest research of the Federal Reserve found that the tariff changes from 2018 to 2019 were completely transmitted to consumer goods prices within two months, and the tariffs in early 2025 have led to a 0.33 - percentage - point increase in the core goods PCE price, pushing the overall core PCE up by 0.08 percentage points.

   - Gold prices encountered a "weekend storm" - "substantial progress" in the China - US negotiations, the India - Pakistan cease - fire, the Russia - Ukraine negotiations, and the US - Iran negotiations. Global risk - averse sentiment ebbed, and gold prices plunged. The high - level China - US economic and trade talks reached an important consensus and made substantial progress. The India - Pakistan cease - fire agreement was maintained on Sunday. Putin proposed to resume direct Russia - Ukraine negotiations in Turkey on the 15th, and the fourth round of US - Iran negotiations, which was once postponed, also began.

   - The market is overly optimistic. BofA is bearish on European stocks: It will fall 15% by the third quarter. The BofA Merrill Lynch report points out that although European stocks have rebounded strongly by more than 15% since early April, the market has priced in the disappearance of policy uncertainty too quickly, and there is a risk of disappointment. BofA expects the global PMI to decline to 48 in the third quarter, and policy uncertainty will not decline sharply as expected. The Stoxx 600 index has about 15% downside space in the third quarter, with a target of 460 points. European cyclical stocks will underperform defensive stocks by more than 10% again.

   - Seriously undervalued and lacking long - term investment, is the catch - up of Asian currencies just beginning? Data shows that the South Korean won, the Indonesian rupiah, and the Indian rupee are among the most undervalued currencies in emerging markets compared with their historical average levels. In addition to having attractive valuations, the new economic stimulus policies introduced by China and the progress made in the US - Asia trade negotiations have further enhanced the attractiveness of the region.

Overseas Companies

SoftBank and OpenAI's "Stargate" are facing three crises, and their ambition of a hundred-billion-dollar AI plan is hindered. More than three months have passed since the announcement of the "Stargate" plan. SoftBank has neither formulated a project financing template nor started detailed discussions with banks, private equity investors, and asset management companies. Under the shadow of tariffs, concerns about a global economic recession have intensified. Coupled with the emergence of high-efficiency models, the demand for data centers has been impacted. In addition, the price war has eroded profits, and investment institutions are re-evaluating their investments in AI infrastructure.

Perplexity is negotiating to raise $500 million at a valuation of $14 billion, which is lower than the earlier expectations. Perplexity AI, a star AI company, is conducting late-stage financing negotiations. Media reported in March that during the early negotiation stage, Perplexity planned to raise $500 million to $1 billion at a post-financing valuation of $18 billion. Media reports said that Perplexity's annual recurring revenue is slightly less than $100 million.

Industries/Concepts

1. Banking: Changjiang Securities pointed out that active funds have been seriously underallocated in bank stocks for a long time, and a comprehensive reconstruction of the allocation ratio will unfold in the next few years. The marginal pricing logic of individual stocks will change, and more attention will be paid to index weights, governance, and performance changes compared with the past two years. China Merchants Bank with the highest weight, as well as a group of high-quality leading city commercial banks such as Hangzhou Bank with continuously leading fundamentals, will benefit the most.

2. Chemical Industry: Currently, using cellulose acetate as the main raw material, through deep processing, a high-performance and high-value-added cellulose acetate industrial chain with wide market applications can be formed, including cigarette filter materials, textiles and clothing, light industrial products, filtration membranes, and membranes for liquid crystal displays. Pay attention to the opportunities related to the localization of cellulose propionate and cellulose butyrate.

3. Humanoid Robots: The market's concerns about the tariff issue have been alleviated, and T-chain targets are expected to experience an oversold rebound. At the same time, the technology and commercialization progress of domestic humanoid robots have been continuously breaking through. From an annual perspective, it is optimistic about the industrialization process of the T-chain and the layout of automobile OEMs with strong intelligent capabilities in the robot field.

4. Excavators: Overall, the core of the strong stock prices in the construction machinery sector is performance-driven. The catalysts at the β level are macro policy regulation and the continuous upgrading of domestic demand recovery. The growth at the beginning of 2025 is still significant, supporting the further acceleration of the recovery rhythm throughout the year. Pay attention to listed companies such as OEMs, components, and forklift truck manufacturers.

Preview of Today's Top News

The State Council Information Office will hold a press conference for Chinese and foreign journalists on "Taking the Path of Specialization, Sophistication, Uniqueness and Innovation to Expand and Strengthen the Advanced Manufacturing Industry".

The US CPI in April.

US President Trump will visit Saudi Arabia, Qatar, and the United Arab Emirates from May 13th to 16th.

JD.com will release its financial report.

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