Morning News

Source: Wall Street Journal  

**Market Overview**  

Despite weak consumer confidence data from the University of Michigan and inflation expectations hitting multi-year highs, hopes for trade negotiations pushed the S&P 500 to a five-day winning streak, rising over 5% for the week—its second-largest weekly gain this year. The Dow Jones erased its year-to-date losses.  

Tesla surged 17% for the week. During Trump's visit to the Middle East, Nvidia and AMD each gained over 10%. The China-concept stock index rose more than 4% for the week.  

After the U.S. consumer confidence data, Treasury yields rebounded, and the dollar turned higher.  

During Russia-Ukraine negotiations, gold fell over 2% intraday.  

After Friday's U.S. market close, Moody's downgraded the U.S. credit rating, triggering a sell-off in both stocks and bonds. The Nasdaq 100 ETF (QQQ) fell 1% in after-hours trading. The dollar gave up more than half of its gains but still posted a fourth consecutive weekly rise. Treasury yields hit fresh daily highs, with prices falling for three straight weeks—the longest losing streak this year. Gold futures pared losses but still fell over 4% for the week, marking their biggest weekly drop in six months.  

During the Asian session, the Shanghai Composite Index closed down 0.4% on thin volume, while auto and robotics stocks bucked the trend. The Hang Seng Index fell 0.5%, with Alibaba dropping over 4%. Government bonds also declined.  

**Key News**  

- China's Securities Regulatory Commission (CSRC) amended the "Administrative Measures for Major Asset Restructuring of Listed Companies," introducing a simplified review process for the first time, adjusting regulatory requirements for share issuance in asset purchases, establishing a phased payment mechanism, and introducing a "reverse挂钩" arrangement for private equity funds to encourage their participation in listed companies' mergers and reorganizations.  

- The Central Committee of the Communist Party of China and the State Council issued the "Regulations on Strictly Enforcing Frugality and Opposing Waste in Party and Government Agencies," stipulating that work meals must not include high-end dishes, cigarettes, or alcohol. Official vehicles should be domestically produced, with priority given to new energy vehicles.  

- A media outlet under China's Ministry of Housing and Urban-Rural Development stated that, given current real estate market conditions, the timing is not yet ripe for nationwide implementation of presale housing sales.  

- The China Securities Journal reported that industry insiders dismissed recent analyses about public fund benchmark adjustments triggering market repositioning as inaccurate and unprofessional, clarifying that large-scale repositioning by public funds has not occurred recently.  

- The U.S. lost its last AAA credit rating as Moody's downgraded it to Aa1, citing concerns over government deficits. Wall Street analysts noted this could provide a reason for a stock market pullback, while Besant suggested Moody's was lagging behind the curve.  

- Mainland China's holdings of U.S. Treasuries fell by $18.9 billion in March, with the U.K. becoming the second-largest holder of U.S. debt.  

- Republican infighting led to the collapse of Trump's tax cut bill, which was voted down in the House.  

- Trump said tariffs on U.S. trade partners would be set "within the next two to three weeks," adding that it was impossible to negotiate deals with all partners. Later reports indicated the U.S. and EU had broken their deadlock and would begin tariff talks. Von der Leyen confirmed the exchange of trade-related documents between the EU and U.S.  

- Trump criticized Walmart for raising prices, saying, "They made billions last year—they should absorb the tariffs." Besant noted Walmart would "absorb" some tariffs but pass on some costs to consumers.  

- U.S. Michigan consumer sentiment hit its second-lowest level on record, with short- and long-term inflation expectations soaring to multi-decade highs.  

- OpenAI's global "Stargate" project may first land in the UAE, with OpenAI and Nvidia reportedly involved in building a 5GW data center. The "Gulf Oil Kingdom" aims to become an "AI superpower."  

- The Global Times reported Nvidia plans to establish a research center in Shanghai, "focusing on customized solutions for Chinese clients." Reference News added that Nvidia would adjust chip exports to China.  

- The first direct Russia-Ukraine talks in three years ended with Ukraine calling them "fruitless," while Russia expressed overall satisfaction. Trump said he would call Putin and Zelensky separately on the 19th.  

**Market Closing Prices**  

- **Global Stocks**: The Dow rose 0.78%, the S&P 500 gained 0.7%, and the Nasdaq climbed 0.52%, with weekly gains of 3.41%, 5.27%, and 7.15%, respectively. Europe's STOXX 600 rose 0.42%, up 2.1% for the week.  

- **A Shares**: The Shanghai Composite fell 0.4%, the Shenzhen Component lost 0.07%, and the ChiNext Index dipped 0.19%.  

- **Bonds**: By Friday's close, the 10-year U.S. Treasury yield was around 4.48%, up about 5 basis points (bps) for the day and 10 bps for the week. The 2-year yield was around 4.0%, up 4 bps daily and 11 bps weekly.  

- **Commodities**: WTI June crude rose 1.41%, up ~2.4% for the week. Brent June crude gained 1.36%, up 2.35% weekly. COMEX June gold fell 1.22%, down ~4.7% for the week. COMEX July copper dropped 1.92%, losing ~1.3% weekly.

**Key News Details**  
**Global Highlights**  

- **New Rules for Major Asset Restructuring of Listed Companies Introduced, Featuring Multiple "Firsts"**  
  The China Securities Regulatory Commission (CSRC) issued the "Decision on Amending the Administrative Measures for Major Asset Restructuring of Listed Companies," marking several firsts:  
  - First establishment of a simplified review process.  
  - First adjustment to regulatory requirements for share issuance in asset purchases.  
  - First introduction of a phased payment mechanism.  
  - First inclusion of a "reverse挂钩" arrangement for private equity funds to encourage their participation in mergers and acquisitions.  

- **Central Committee and State Council Issue Regulations on Frugality and Anti-Waste for Party and Government Agencies**  
  The regulations stipulate that:  
  - Official receptions must adhere to domestic standards, with total expenditure controls.  
  - Work meals must not include high-end dishes, cigarettes, or alcohol.  
  - Official vehicles must be domestically produced, with priority given to new energy vehicles.  

- **Ministry of Housing Media: Timing Not Ripe for Nationwide Presale Housing Ban**  
  An article in *China Real Estate News* argued that presale housing is a complex issue involving finance, land, and industry ecosystems. A nationwide ban should not be rushed, and local pilot programs should be refined with supportive policies.  

- **China Securities Journal: Public Fund Repositioning Claims Inaccurate**  
  Industry insiders dismissed recent analyses about public fund benchmark adjustments triggering market repositioning as unprofessional, clarifying that large-scale repositioning has not occurred.  

- **Moody’s Downgrades U.S. Credit Rating to Aa1, Citing Fiscal Deficits**  
  Moody’s downgraded the U.S. from Aaa to Aa1, with a "stable" outlook, marking the loss of America’s last AAA rating. The move reflects concerns over rising government debt. Historically, such downgrades (e.g., S&P in 2011) triggered market sell-offs, but analysts suggest the impact may now be muted due to adjusted institutional frameworks.  

- **China Reduces U.S. Treasury Holdings by $18.9 Billion in March; U.K. Becomes Second-Largest Foreign Holder**  
  U.S. Treasury data showed overseas holdings of U.S. debt rose to $9.05 trillion in March, with Japan’s holdings up $4.9 billion for the third straight month.  

- **Trump: Tariffs on Trade Partners to Be Set in "2-3 Weeks"**  
  Trump stated his administration cannot negotiate deals with all partners. Later, reports indicated the U.S. and EU broke their deadlock and exchanged documents to begin tariff talks.  

- **Trump Criticizes Walmart for Price Hikes Amid Tariffs**  
  Trump accused Walmart of profiting billions while passing tariff costs to consumers. Treasury Secretary Yellen noted Walmart would absorb some costs but warned of consumer impact.  

- **U.S. Consumer Sentiment Hits Second-Lowest Ever; Inflation Expectations Soar**  
  The University of Michigan’s 1-year inflation expectation hit 7.3% (highest since 1981), while the 5-year expectation reached 4.6% (highest since 1991). Financial outlooks sank to post-2009 lows.  

- **Biden Diagnosed with Prostate Cancer**  
  A statement confirmed the cancer has metastasized to his bones.  

- **OpenAI’s Global "Stargate" May Launch in UAE, with Nvidia Involved in 5GW Data Center**  
  Reports suggest OpenAI will be a key tenant in a U.S.-UAE joint AI campus, sharing 5GW power with other firms. Nvidia and Cisco are supporting the project.  

- **Middle East’s $2.2 Trillion AI Ambition**  
  With energy resources and capital, the Gulf aims to host the world’s most powerful AI data centers within five years, potentially rivaling the U.S.  

- **Nvidia Plans Shanghai Research Center for Customized Chinese Chips**  
  The center will focus on China-specific needs under U.S. export controls, though core design remains overseas.  

- **Russia-Ukraine Talks End Without Breakthrough**  
  The first direct negotiations in three years saw Turkey mediate, but core disagreements persist. Trump plans separate calls with Putin and Zelensky on Monday.  

**Domestic Macro**  
- **2024 Wage Data**: Urban non-private sector average wages rose 2.8% YoY to 124,110 yuan; private sector wages grew 1.7% to 69,476 yuan.  

**Corporate News**  
- **Tencent’s "Hunyuan Image 2.0"**: Enables real-time AI image generation as users type prompts.  
- **Morgan Stanley Defends Alibaba Cloud**: Despite post-earnings stock drop, growth logic remains intact, with 22% revenue growth expected next quarter.  
- **CATL’s IPO Countdown**: Priced at HK$263/share, oversubscribed 120x, set to be 2024’s largest global IPO.  

**Overseas Macro**  
- **JPMorgan: U.S. Stock Rally Not Over Yet**  
  Resilient macro data, strong earnings, and trade optimism could push the S&P 500 to a record 6,144 this quarter.  
- **U.S. Proposes 5% Tax on Non-Citizen Remittances**  
  Targets H-1B, F-1 visa holders and green card recipients, potentially affecting wages and investments.  
- **Fed Plans 10% Staff Cuts Over Years**  
  Seen as a preemptive move to maintain independence amid political pressures.  
- **Japan’s Economy Shrinks 0.2%**  
  First contraction in a year, raising recession risks and complicating BOJ rate hikes.  

**Sector/Themes**  
1. **M&A Restructuring**: Reforms expected to boost market activity, with 1,400+ deals since 2023.  
2. **Brain-Computer Interface**: Invasive tech advances may accelerate commercialization by 2025.  
3. **AEBS (Automatic Emergency Braking)**: Mandatory standards could lift penetration to 60% by 2025, boosting radar and camera demand.  
4. **Nuclear Fusion**: ITER’s "artificial sun" milestone marks progress toward controllable fusion energy.  
5. **Industrial Machinery**: Policy support (e.g., equipment upgrades) and emerging industries (robotics, aerospace) to drive growth.  

**Today’s Preview**  
- China’s April home prices, industrial output, retail sales, unemployment, and fixed-asset investment data.  
- Huawei’s nova 14 series and HarmonyOS PC launch.  
- Nvidia CEO Jensen Huang’s keynote at Computex Taipei on AI advancements.  
- Fed Vice Chair Jefferson’s speech.  
- Microsoft Build developer conference (May 21-22).  

*End of Report*  

**Disclaimer**: Views expressed are solely the author’s and do not constitute investment advice. The platform disclaims liability for accuracy, completeness, or timeliness of information and any resulting losses.