Morning News

Source: Wall Street Journal  

**Market Overview**  

The rally in U.S. stocks paused, with the S&P 500 ending its six-day winning streak. Google's stock fell after its major developer conference, leading the decline among tech giants. Among the "Magnificent Seven" U.S. tech stocks, only Tesla closed higher. Quantum computing stock D-Wave surged nearly 26%, while Wolfspeed plummeted over 50% after hours. The China-concept index fell for two consecutive days, though Xiaomi rose over 4%.  

Japan's bond market underperformed, heightening sensitivity to interest rate fluctuations, and U.S. Treasury yields rose.  

The dollar declined. Bitcoin surged over $3,000 at one point, surpassing $10,700 to hit a four-month high.  

Safe-haven demand drove gold up 2% during the session. After U.S. markets closed, gold broke through $3,300, and U.S. oil rose over 2% on reports that Israel is preparing to attack Iran's nuclear facilities.  

In Asian trading, the Shanghai Composite rose 0.4%, with healthcare stocks soaring. The Hang Seng Index gained over 1%, and CATL's Hong Kong listing became the year's largest IPO. Government bonds mostly fell.  

**Key News**  

- China's gold imports surged 73% in April, hitting an 11-month high.  

- Goldman Sachs predicts U.S.-EU negotiations: the baseline scenario is "no deal," with "moderate tariff hikes" for both sides. Reports suggest Japan may accept reduced U.S. tariffs rather than full exemptions. India and the U.S. are discussing a "three-phase" trade deal, with an interim agreement expected by early July.  

- Trump's tax cut bill is stalled due to Republican infighting over state and local tax (SALT) deductions.  

- Gold broke through $3,300, and U.S. oil rose over 2% on reports of Israel preparing to strike Iran's nuclear facilities.  

- Musk stated he will remain Tesla CEO for at least five more years unless he "passes away," will no longer spend heavily on elections, and announced Robotaxi's launch in Austin, Texas, by late June. xAI will continue buying chips from Nvidia and AMD.  

- Google's I/O developer conference unveiled its most powerful general-purpose AI model, Gemini 2.5 Pro, and introduced AI-powered search and video generation tools.  

- Pfizer invested $6.05 billion in 3SBio, sparking a rally in biotech stocks.  

- Ray Dalio warned the Fed faces a tough situation and should not cut rates, cautioning against the consequences of "ill-timed rate cuts."  

**Market Close**  

- **Stocks**: Dow fell 0.27%, S&P 500 dropped 0.39%, Nasdaq declined 0.38%. Europe's STOXX 600 rose 0.73%.  

- **A-shares**: Shanghai Composite rose 0.38%, Shenzhen Component gained 0.77%, ChiNext added 0.77%.  

- **Bonds**: The 10-year U.S. Treasury yield rose 3.76 bps to 4.4850%, while the 2-year yield fell 0.82 bps to 3.9683%.  

- **Commodities**: WTI crude for June delivery fell 0.21% to $62.56/barrel; Brent crude for July dropped 0.24% to $65.38/barrel. COMEX gold futures rose 1.82% to $3,292.20/oz.  

**Key Details**  

**Global Highlights**  

- China's April gold imports surged 73% YoY to 127.5 metric tons, an 11-month high. Platinum imports also hit a one-year high at 11.5 tons.  

- U.S.-China talks have influenced other nations' negotiation strategies, with China's "firm but respectful" approach potentially being emulated.  

- Goldman Sachs predicts the U.S. and EU will fail to reach a full deal, leading to "moderate tariff hikes" and possible EU retaliation.  

- Japan may accept reduced U.S. tariffs instead of full exemptions to break the trade deadlock.  

- India and the U.S. are discussing a three-phase trade deal, targeting an interim agreement by early July.  

- Trump's tax cut bill is stalled due to Republican disputes over SALT deductions.  

- Gold surpassed $3,300, and U.S. oil rose over 2% on reports of Israel preparing to strike Iran's nuclear facilities.  

- Musk stated he will remain Tesla CEO for at least five more years, reduce political spending, and launch Robotaxi in Austin by late June. xAI will continue buying chips from Nvidia and AMD.  

- Google's I/O conference introduced Gemini 2.5 Pro, AI-powered search, and video generation tools like Veo 3.  

- Pfizer's $6.05 billion investment in 3SBio ignited a biotech stock rally.  

- Dalio warned the Fed against cutting rates, citing risks of bond market turmoil and dollar weakness.  

**Domestic Macro**  

- Wang Yi met with the president of the Asia Society, emphasizing China's consistent U.S. policy and opposing U.S. chip sanctions.  

- China cut its 1-year and 5-year LPR rates by 10 bps, the first reduction this year.  

- Fiscal revenue fell 0.4% YoY in the first four months, while spending rose 4.6%. Stamp duty revenue surged 57.8%.  

- Micro-cap stocks' rally is driven by valuation expansion rather than fundamentals, according to Zhongtai Securities.  

**Domestic Companies**  

- CATL's chairman, Robin Zeng, highlighted the explosive growth of NEVs and battery-swapping ecosystems, aiming for a zero-carbon future.  

- Bilibili's Q1 revenue rose 24% YoY, with gaming revenue up 76%. Net profit reached RMB 362 million, and cash reserves doubled.  

- Pony.ai's Q1 revenue grew 12% YoY, with Robotaxi revenue surging 200%.  

**Overseas Macro**  

- After a U.S. credit rating downgrade, the choice is between smaller tax cuts or higher tariffs, Bank of America notes.  

- Japan's bond market turmoil signals deeper risks as the BOJ reduces bond purchases.  

- Japan may tax small imported parcels, with new rules expected by 2026.  

- The RBA cut rates by 25 bps as expected, citing balanced inflation risks. The AUD fell.  

- The UK suspended trade talks with Israel over its "unacceptable" actions in Gaza.  

**Overseas Companies**  

- Apple's WWDC will allow third-party developers to use its AI models, a key step in catching up in generative AI.  

- Morgan Stanley expects Nvidia's strong H2 performance despite a lack of surprises at Computex.  

- OpenAI's Sam Altman called Codex a transformative AI programming tool.  

- Cathie Wood's ARK Invest heavily bought TSMC ADRs, the largest purchase in nearly a year.  

- U.S. biotech stocks are trading at extreme discounts, resembling coal stocks during the ESG craze.  

- UnitedHealth's vertical integration model is under pressure amid rising costs and regulatory scrutiny.  

- Former SiC leader Wolfspeed may file for bankruptcy, with shares plunging over 50% after hours.  

**Sectors/Themes**  

1. **AI Glasses**: Differentiated by low-power SoCs and high-quality imaging.  

2. **Beauty/Personal Care**: A key growth sector driven by innovation and e-commerce.  

3. **Fiscal Digitalization**: New standards for electronic accounting will boost digital finance firms.  

4. **Chemicals**: Rational capacity expansion and price rebounds favor leading players.  

**Today's Preview**  

- Earnings: Baidu, Snowflake, Target, Zoom, XPeng.  

- Speech by Richmond Fed President Barkin.  

- U.S. EIA crude oil inventory data.  

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