Morning News

Source: Wall Street News

### **Market Overview**

Hopes for a thaw in trade tensions reignited last Friday, leading to a rebound in U.S. stocks. The three major indices opened lower but closed higher, posting weekly gains of at least over 1%. Earnings reports alleviated bad loan concerns, sparking a regional bank stock rally; the regional bank index rose nearly 2%. Zion's and Western Alliance, which fell sharply on Thursday due to bad loan issues, rose nearly 6% and over 3%, respectively. Jefferies, the investment bank involved in the credit crisis, rose nearly 6%. The chip index halted a two-day rally but still gained nearly 6% for the week. Oracle fell nearly 7% after its previous day's gains.

U.S. bond prices fell. The two-year Treasury yield turned higher after again hitting a new three-year low but still fell for the third consecutive week. Gold and silver plunged after hitting new intraday highs; spot gold once fell over 3%, and silver fell nearly 7% at one point. Gold still marked its ninth consecutive weekly gain, with gold futures rising over 5% for the week, the largest weekly gain in nearly five months.

The U.S. dollar index turned higher after hitting a new one-week low for three consecutive days. Offshore yuan broke through 7.12 to a more than three-week high before falling over 100 points at one point. Bitcoin fell over 5% intraday, breaking below $104,000 to a nearly four-month low, before paring more than half of its losses.

Oil ended a three-day losing streak, moving away from five-month lows, but still fell over 2% for the week, marking its third consecutive weekly decline.

In the Asian session, A-shares and Hong Kong stocks saw significant adjustments. The Shanghai Composite Index fell nearly 2%, with over 4800 stocks falling across the market, although Agricultural Bank of China hit a new high against the trend. The Hang Seng Tech Index fell over 4%. Shanghai gold broke through the 1,000 yuan per gram mark.

### **Key News**

*   The Fourth Plenary Session of the 20th Central Committee of the Communist Party of China will be held in Beijing from October 20th to 23rd, studying recommendations for formulating the "15th Five-Year Plan."

*   He Lifeng held a video call with U.S. Treasury Secretary Janet Beshent and Trade Representative Greer. Both sides had candid, in-depth, and constructive exchanges on important issues in bilateral economic and trade relations and agreed to hold a new round of Sino-U.S. economic and trade consultations as soon as possible.

*   The General Secretary of the CPC Central Committee sent a congratulatory message to Zheng Liwen on her election as chairman of the Kuomintang (KMT). Zheng Liwen sent a reply expressing her thanks.

*   State Council Executive Meeting: Continue to promote cost reduction, quality improvement, and efficiency increase in logistics, and increase investment in areas such as logistics and warehousing facilities; Accelerate the improvement of the green trade policy system, enhance the green and low-carbon development capabilities of foreign trade enterprises, and expand the import and export of related products and technologies; Support market entities in increasing grain purchases.

*   PBOC Governor Pan Gongsheng, NFRA Director Li Yunze, and CSRC Chairman Wu Qing will attend the 2025 Financial Street Forum Annual Conference from October 27th to 30th and deliver keynote speeches.

*   Three ministries including the Ministry of Finance: Adjust the duty-free shopping policy for offshore travelers in Hainan effective November 1st.

*   Shanghai gold broke through the 1,000 yuan mark on Friday, setting new records; SHFE: Adjusted the trading margin ratios and price limit ranges for gold and silver futures.

*   The U.S. will impose a 25% tariff on medium and heavy-duty trucks and a 10% tariff on passenger vehicles starting November 1st. Ahead of the U.S. Supreme Court's hearing on reciprocal tariffs in November, the Trump administration is "adjusting" its strategy, offering various "exemptions" to hedge legal risks.

*   U.S. regional bank stocks rebounded; earnings from multiple banks showed loan loss provisions were lower than analysts expected, alleviating bad debt panic. Executives reassured that "credit quality is robust." Truist, which reported earnings, rose nearly 4%. "Bond King" Bill Gross: Gold has become a momentum/meme asset; regional bank "cockroaches" will continue to affect stocks and bonds.

*   After three meetings at the White House within eight months, Trump ruled out a trilateral U.S.-Russia-Ukraine meeting, stating he hopes to end the war without considering supplying "Tomahawk" missiles to Ukraine. Zelensky suggested trading Ukrainian drones for "Tomahawks" and expressed willingness to attend a meeting between U.S. and Russian leaders in Hungary. Russia confirmed that Putin and Trump might meet within two weeks.

*   Japan's Liberal Democratic Party and Japan Innovation Party have basically reached a consensus on a coalition government. Sanae Takaichi is close to becoming "Japan's first female prime minister," but the prospects of the "Takaichi deal" remain uncertain.

### **Market Closing Reports**

*   **U.S. & European Stocks**:

   *   S&P 500: +0.53% to 6,664.01 points; +1.70% weekly.

   *   Dow Jones: +0.52% to 46,190.61 points; +1.56% weekly.

   *   Nasdaq: +0.52% to 22,679.98 points; +2.14% weekly.

   *   Europe STOXX 600: -0.95% to 566.24 points; +0.37% weekly.

*   **A-Shares**:

   *   Shanghai Composite: -1.95% to 3,839.76 points.

   *   Shenzhen Component: -3.04% to 12,688.94 points.

   *   ChiNext Index: -3.36% to 2,935.37 points.

*   **Bond Markets**:

   *   The U.S. 10-year Treasury yield was ~4.01%, up ~4 bps on the day, down ~2 bps weekly.

   *   The 2-year Treasury yield was ~3.46%, up ~4 bps on the day, down ~4 bps weekly.

*   **Commodities**:

   *   WTI November Crude: +0.14% to $57.54/barrel; ~-2.3% weekly.

   *   Brent December Crude: +0.38% to $61.29/barrel; ~-2.3% weekly.

   *   COMEX December Gold: -2.12% to $4,213.3/oz; +5.32% weekly.

   *   COMEX December Silver: ~-6.00% to $50.104/oz; +6.05% weekly.

**Key News Details**

**Global Highlights**

*   **Fourth Plenary Session of the 20th CPC Central Committee**: The session is scheduled for October 20-23 in Beijing. According to CCTV News, the main agenda includes a work report from the Political Bureau to the Central Committee and studying proposals for formulating the "15th Five-Year Plan" for national economic and social development. The meeting will analyze the current economic situation and deploy economic work for the second half of the year.

   *   **Analyst View (Minsheng Securities)**: Expects the plenum to signal: 1) Leveraging institutional advantages to concentrate resources on major initiatives to win strategic initiative in intense international competition; 2) Systematic advancement of national strength, with building a financial powerhouse expected to accelerate as a strategy协同 with tech and manufacturing powerhouses; 3) Placing greater emphasis on developing productive forces based on local conditions; 4) Expanding domestic demand with more focus on improving livelihoods; 5) Deepening the development of a unified national market.

*   **State Council Executive Meeting**: Focused on continuously reducing logistics costs and improving quality/efficiency, increasing investment in logistics and warehousing facilities. It also deployed measures to expand green trade, including improving the green trade policy system, enhancing the green development capabilities of foreign trade firms, and expanding imports/exports of related products and technologies. Regarding agriculture, it emphasized using policy-based purchases to support the market and supporting market entities in increasing grain purchases to protect farmers' interests.

*   **He Lifeng Holds Video Call with U.S. Counterparts**: On the morning of Oct. 18 (Beijing Time), Chinese Vice Premier He Lifeng held a video call with U.S. Treasury Secretary Janet Beshent and Trade Representative Greer. They had candid, in-depth, and constructive exchanges on important issues in bilateral economic and trade ties, and agreed to hold a new round of economic and trade consultations as soon as possible.

*   **People's Daily Commentary (Zhong Sheng)**: Stated that global industrial and supply chain security requires joint maintenance. It emphasized that China and the U.S. can manage differences if there is mutual respect and consultation, but the U.S. must match its words with deeds and not introduce new restrictive measures while proposing talks.

*   **Chinese Financial Chiefs to Speak at Forum**: PBOC Governor Pan Gongsheng, NFRA Director Li Yunze, and CSRC Chairman Wu Qing will deliver keynote speeches at the 2025 Financial Street Forum Annual Conference (Oct 27-30). The forum is expected to feature important financial policy announcements.

*   **Hainan Duty-Free Policy Adjusted**: Effective Nov. 1, the policy will expand the range of duty-free goods; allow some domestic goods to be sold in duty-free shops (exempt/refunded from VAT and consumption tax); raise the minimum age for shoppers from 16 to 18; allow departing travelers to enjoy the policy; and remove the annual purchase limit for island residents.

*   **Congratulatory Message to KMT Chairperson**: The General Secretary of the CPC Central Committee sent a congratulatory message to Zheng Liwen on her election as chairperson of the Kuomintang (KMT). Zheng Liwen sent a reply expressing thanks.

*   **SHFE Adjusts Gold, Silver Margins and Limits**: From the settlement after closing on Tuesday, Oct. 21, the price limit for gold and silver futures contracts will be adjusted to 14%. Margin requirements will be 15% for hedging positions and 16% for general positions.

   *   **Related**: The Shanghai gold front-month contract broke through the 1,000 yuan/gram mark intraday on Friday, rising nearly 4% to a new record high.

*   **U.S. Tariffs on Vehicles**: President Trump signed an executive order on Oct. 17 to impose a 25% tariff on imported medium/heavy-duty trucks and parts, and a 10% tariff on passenger vehicles, effective Nov. 1.

   *   **Strategy Shift**: Ahead of the November Supreme Court hearing on reciprocal tariffs, the Trump administration is "adjusting" its strategy by offering various "exemptions." It is also expanding the use of Sec. 232 tariffs to cover heavy trucks, pharmaceuticals, and furniture to hedge legal risks.

*   **U.S. Regional Bank Rebound**: Earnings from several banks showed loan loss provisions were lower than expected, easing bad loan panic and causing a rebound on Friday. Truist Financial (+~4%), Ally Financial (+>3%), and Fifth Third (+>1%) all rose. Executives from these banks emphasized "robust credit quality" and characterized issues as isolated incidents.

   *   **Analyst Focus (Goldman Sachs)**: Investors are focused on how these loans passed approval, why three unrelated suspected fraud cases emerged in six weeks, and whether small banks relaxed underwriting standards. The market is watching earnings to see if this is isolated or systemic.

   *   **Preferred Shares Hit**: Preferred shares issued by small banks were hit hard, indicating high investor vigilance.

   *   **Bill Gross' View**: The "Bond King" stated gold has become a momentum/meme asset and that regional bank "cockroaches" will continue to affect stocks and bonds. He suggested waiting to buy gold and expects the 10-year Treasury yield to be near 4.5%.

*   **Ukraine War Diplomacy**: After his third meeting with Zelensky in eight months, Trump said he hopes to end the war without supplying "Tomahawk" missiles, which he acknowledged would be an "escalation." He ruled out a trilateral meeting, planning instead a "bilateral" with Putin in Hungary, while keeping communication with Zelensky.

   *   **Zelensky's Stance**: Suggested trading Ukrainian drones for "Tomahawks" and expressed willingness to participate in the Hungary meeting. He stated willingness to negotiate but not to make concessions to Russia, and that a ceasefire should be based on current contact lines.

   *   **Russian Confirmation**: Russia confirmed that Putin and Trump might meet within two weeks.

*   **Japan Politics**: The ruling LDP and the Japan Innovation Party have basically reached a consensus on a coalition government. The LDP has agreed to conditions including a 10% cut in Diet seats. The Innovation Party will cooperate as an "external coalition partner" without joining the cabinet. This makes Sanae Takaichi almost certain to be elected Prime Minister on Oct. 21.

   *   **Challenges**: The coalition would still lack a majority in both chambers of the Diet, leading to a "minority government" situation and potential policy gridlock. The prospects for the "Takaichi deal" remain uncertain.

**Domestic Macroeconomics**

*   **Fiscal Data (Jan-Sept)**: National fiscal revenue increased 0.5% YoY, expenditure rose 3.1%. Stamp duty revenue surged 103.4% YoY. Securities transaction stamp duty was 144.8 billion yuan, up 103.4%.

*   **Regulation on NEV Fires**: The State Administration for Market Regulation will establish and implement a reporting system for NEV fire accidents for manufacturers.

*   **Hong Kong IPO Pipeline**: Financial Secretary Paul Chan stated that over 200 companies are queuing to list in Hong Kong. He highlighted Hong Kong's role as a platform for mainland firms expanding globally.

*   **Energy Sector Breakthroughs**: China marked several "firsts" on Oct. 16: the "Linglong One" small modular reactor succeeded in its first cold testing; the first national deep-water oil and gas emergency rescue base was launched; and the first million-kW peak-shaving thermal power project in northwest China was fully operational.

*   **Generative AI Users in China**: According to a CNNIC report, as of June 2025, China's GenAI user base reached 515 million, doubling in six months, with a penetration rate of 36.5%.

**Domestic Companies**

*   **Doubao (ByteDance)**: The "Doubao" AI model now handles 30 trillion tokens daily, a 253x growth, with 157 million MAUs, ranking first in China. Its success is attributed to deep integration with Douyin, multimodal features, and low user barrier.

*   **Cambricon**: Q3 revenue surged 1332% YoY to 1.727 billion yuan; net profit was 567 million yuan, marking the third consecutive profitable quarter.

*   **Zijin Mining**: Q3 net profit attributable to shareholders soared 57.14% YoY, driven by production increases and higher gold prices.

*   **Xiaomi's AI Research**: Xiaomi's AI team, with Peking University, published a paper on MoE and reinforcement learning. Former DeepSeek researcher Luo Fulai appeared as a corresponding author.

*   **NIO's BaaS Model**: JPMorgan views Battery-as-a-Service as a business/financial innovation, not a tool for manipulating financials, and sees limited legal risk from the lawsuit.

**Overseas Macroeconomics**

*   **Dollar Outlook (Citi)**: The next 5%+ sell-off in the S&P 500 will test the dollar's safe-haven status. The dollar is unlikely to reverse (weaken further) before "Fed dovishness peaks and US cyclical weakness peaks," a turning point expected within 3 months, leading to a potential rebound in 2026.

*   **Bitcoin Warning Signs**: Bearish pressure is indicated by rising demand for put options and Bitcoin miners sending ~51,000 BTC to exchanges (a multi-month high), potentially preparing to sell.

**Overseas Companies**

*   **Microsoft & OpenAI**: Microsoft's willingness to let OpenAI partner with Oracle reflects a calculated move to let rivals bear financial risks. Microsoft remains the sole provider of supercomputers for OpenAI's model training and still gets a 20% revenue share.

*   **ChatGPT User Growth (Deutsche Bank)**: ChatGPT's consumer spending in Europe has stalled since May, suggesting paid user growth may have peaked. With only 20 million paid users out of 800 million WAUs, the $500 billion valuation appears stretched, posing a potential valuation correction risk for the AI sector.

*   **Meta's Data Center Financing**: Meta is planning a nearly $30 billion financing via an SPV for a massive data center project. Meta will retain only 20% equity. This keeps debt off its balance sheet, providing a new financing template for the AI era.

*   **Joshua Kushner's Thrive Capital**: Profile of the influential investor and OpenAI's largest external shareholder. Thrive's funds have grown from $5M in 2010 to $3.3B in 2023, with prescient bets on Stripe and OpenAI.

*   **Oracle Defends AI Profitability**: CEO Clay Magouyrk explained the "ramp" phenomenon, where initial costs lead to negative margins, but argued that mature contracts can yield 30-40% gross margins.

*   **xAI's Financing Structure**: Musk's backers are raising $20B via an SPV to buy Nvidia chips and lease them to xAI. This structure relies on xAI generating enough cash flow to cover lease payments and debt.

*   **Japanese Banks' Stablecoin Plan**: MUFG, SMFG, and Mizuho plan to jointly issue a yen-pegged stablecoin for corporate clients, with infrastructure for transfers.

*   **Trump Comments Hit Weight-Loss Drug Makers**: Trump stated that prices for drugs like Ozempic would fall sharply, causing Novo Nordisk and Eli Lilly shares to drop 4-5% after hours. GLP-1 drugs are under price negotiation pressure.

*   **Nvidia's U.S.-Made Blackwell Chip**: CEO Jensen Huang visited TSMC's Phoenix fab to celebrate the first U.S.-made Blackwell chip, marking the start of volume production.

*   **Kering Sells Beauty Unit**: Kering is reportedly close to selling its beauty business to L'Oréal for a valuation of around $40 billion, with a deal possible this week.

**Sectors/Concepts**

1.  **Computing Power**: The STAR Market listing review committee will review the IPO of Moore Threads (a domestic GPU company) on Oct 24.

2.  **Shipping**: The "Hong Wei" ship successfully completed a round trip to Europe via the Arctic Northeast Passage, reducing travel time by 10 days to 26 days compared to the Suez Canal route.

3.  **Satellite Internet**: A technical roadmap for smart connected vehicles was released. Satellite internet is seen as crucial for bridging the digital divide and supporting emerging sectors like autonomous driving, forming an integrated air-ground network with 5G/6G.

4.  **Robotics**: UBTECH won a 126 million yuan project to supply its Walker S2 humanoid robots. Year-to-date orders for the Walker series have exceeded 630 million yuan.

5.  **Tourism**: Nine ministries issued guidelines to promote high-quality development of the accommodation industry, covering brand building, upgrades, internationalization, and financial support.

6.  **Power Battery Recycling**: Five new national standards for battery recycling were released, bringing the total to 22. Some companies have achieved recovery rates of 99.6% for nickel/cobalt/manganese and 96.5% for lithium using these standards.

**Today's News Preview**

*   China's October 1-Year and 5-Year Loan Prime Rates (LPR).

*   China's September Industrial Output, Retail Sales, Jan-Sept Real Estate Development Investment.

*   China Q3 GDP.

*   State Council Press Conference on Economic Performance.

*   The Fourth Plenary Session of the 20th CPC Central Committee (Oct 20-23).

*   Earnings from CATL and iFlytek.

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**Risk Warning and Disclaimer**

The market carries risks, and investment should be cautious. This article does not constitute personal investment advice, nor does it consider the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Investments made based on this information are at your own risk.