Morning News

**Source**: Wall Street Journal

**Market Overview**

The trade war between the US and Europe has eased. US stock markets are closed, and US stock index futures have risen by more than 1%. European stocks have rebounded. The pan - European stock index has ended its three - day losing streak and closed up 1%. The automotive sector has risen nearly 2%, and Stellantis has risen 5%. The euro has hit a new high this month; the US dollar index has hit a six - week low; the pound has hit a three - year high; the New Taiwan dollar has closed at a two - year high; Bitcoin has once risen by more than $3,000 and re - entered the $110,000 mark. Gold has declined, dropping from its two - week high, and gold futures have once fallen by more than 1%.

During the Asian session, the ChiNext Index closed down 0.8%, the nuclear power sector witnessed a significant surge, both the Hang Seng Index and the Hang Seng Tech Index fell by more than 1%, BYD Co., Ltd. dropped nearly 9%, and government bonds rose.

**Top News**

The General Offices of the Central Committee of the Communist Party of China and the State Council: Promote enterprises to improve the reasonable wage growth mechanism and support listed companies to introduce institutional investors with a shareholding ratio of more than 5% as active shareholders.

People's Daily commented on the regulators' interviews with platform companies such as JD.com, Meituan, and Ele.me: It's time to take action against "involution".

Meituan's Q1 revenue exceeded expectations, with a year - on - year growth of 18.1%. Both its core and new businesses performed outstandingly, and its flash - sale business grew robustly. In the conference call, it stated that it would spare no effort to win the competition, expecting a significant drop in the operating profit margin of its local business in Q2, and was unable to provide accurate performance guidance for the time being.

After Trump postponed the 50% tariff, the EU said that the trade negotiations between the US and Europe had "new momentum" and planned to "push forward rapidly". The trade commissioner said on Monday that he had a "good call" with US officials.

Japan is said to plan to exchange its LNG project and shipbuilding technology for US tariff concessions, striving to reach an agreement by the middle of June.

California is considering suing the US federal government over the tariff on Apple phones.

A voter of the Federal Reserve next year: The pause in the easing policy may be longer, and it is "uncertain" whether the situation is clear enough.

Lagarde, the president of the European Central Bank: The euro may replace the US dollar, and the recent global turmoil has created an opportunity for the "globalization of the euro".

OPEC+ is expected to decide to continue a significant increase in production this week, and it is said that the intention is to push the oil price below $60.

The media said that the Trump Media Group plans to raise $3 billion for cryptocurrencies.

**Market Closing Reports**

European and American stock markets: The European STOXX 600 index closed up 0.99%.

A - shares: The Shanghai Composite Index fell 0.05%, the Shenzhen Component Index fell 0.41%, and the ChiNext Index fell 0.8%.

Bond market: By the end of the bond market on Friday, the yield on the 10 - year German benchmark government bond was approximately 2.56%, down 1 basis point during the day; the yield on the 2 - year German government bond was approximately 1.77%, up 2 basis points during the day.

Commodities: Brent crude oil futures for June fell 0.06%.

**Detailed Top News**  

**Global Highlights**  

The General Offices of the Communist Party of China Central Committee and the State Council: Promote the establishment of a reasonable wage growth mechanism for enterprises and support listed companies in introducing institutional investors with a shareholding ratio of over 5% as active shareholders. The *Opinions on Improving the Modern Enterprise System with Chinese Characteristics* issued by the two offices propose establishing a scientific compensation and performance evaluation system for senior corporate executives, reasonably determining their compensation levels, promoting listed companies to carry out medium-to-long-term incentives, and formulating stable and long-term cash dividend policies.  

*People’s Daily* Commentary: Act When It’s Time to Fight Against "Involution". Not long ago, five departments including the State Administration for Market Regulation interviewed platform companies such as JD.com, Meituan, and Ele.me, requiring fair and orderly competition, jointly creating a good market environment, and effectively safeguarding the legitimate rights and interests of consumers, in-platform operators, and food delivery riders. The clear signal against "involution" is aimed at promoting the standardized, healthy, and orderly development of the platform economy.  

Meituan’s Q1 revenue exceeded expectations, growing 18.1% year-on-year. Both core and new businesses performed brightly, with flash sales growing robustly. In a conference call, the company stated it would spare no cost to win competition, expecting a significant decline in the operating profit margin of its local business in Q2, and temporarily unable to provide performance guidance for Q2 and the full year.  

Meituan’s Q1 results exceeded expectations, with total revenue reaching 86.6 billion RMB, up 18.1% year-on-year, and operating profit surging 102.8% year-on-year. The profit margin of core businesses significantly improved, while losses in new businesses narrowed by 17.5%.  

During the conference call, Meituan warned that due to increasingly fierce domestic competition and the company’s active expansion into new markets, its profitability might be affected. Responding to the impact of JD.com’s "10-billion-yuan subsidy" on Meituan’s food delivery business, CEO Wang Xing said Meituan would "spare no cost to win the competition." As "it is unknown how long the irrational competition from new entrants will last," the company "cannot provide accurate financial guidance for Q2 and the rest of the year, but will continue to defend its market share."  

Strategic Reorganization of Haiguang and Sugon: Joint Efforts to Lead the Domestic Chip Cycle. Haiguang is a leading Chinese chip design company, while Sugon is an established manufacturer of servers, supercomputers, and other complete machines. Their merger and reorganization will form an integrated solution capability of "domestic chips + server complete machines." Haiguang focuses on x86 architecture CPUs, compatible with mainstream operating systems and application software, with low migration costs but subject to x86 instruction set licensing restrictions. Sugon has a complete industrial chain from hardware to cloud services.  

After Trump postponed the 50% tariff, the EU said US-EU trade negotiations have "new momentum" and plan to "advance rapidly." EU Trade Commissioner Šefčovič said on Monday that he had a "good conversation" with US Commerce Secretary Raimondo and US Trade Representative Kearney. The European Commission remains fully committed to working towards an agreement in a constructive and focused manner. "We will continue to stay in close contact."  

After the first phone call between US and EU leaders, Trump extended the tariff deadline on the EU from June 1 to July 9, and the EU pledged to advance negotiations "swiftly and decisively." Analysts believe this is "a hopeful sign" that the EU is "ready to negotiate," but it may not move as quickly as Trump would like.  

Is the tariff extension just a stalling tactic? Analysts warn that the US-EU trade "showdown is far from over." "Buckle up," as July 9 will be the next flashpoint. The EU is pushing for phased tariff reductions and "mutually respectful" negotiations, but Trump’s "America First" stance could turn the talks into a fierce contest.  

Japan is reportedly planning to trade its LNG projects and shipbuilding technology for US tariff concessions, aiming to reach an agreement by mid-June. During the third round of US-Japan tariff negotiations, Japan is putting a $44-billion Alaskan LNG pipeline project and icebreaker manufacturing technology on the negotiation table as bargaining chips. Japan hopes to "ideally reach a ministerial agreement first, and then during the (June) G7 summit, Minister of Economy, Trade and Industry Takeo Mori and Trump can shake hands and make peace."  

California is considering suing the US government over Apple phone tariffs. In response to Trump’s threats, California Attorney General Rob Bonta said he is ready to file a lawsuit against the US government to protect California businesses. Industry insiders say that even transferring 10% of Apple’s supply chain would cost about $30 billion and take three years, while a full transfer would require 5-10 years.  

Enterprises have found a "lifeline" in the tariff war through legal and compliant means. Under US customs law, the "first sale rule" allows US importers to pay tariffs based on the earliest and cheapest factory prices in the supply chain, bypassing profit markups by middlemen and reducing tariff pressures. More and more companies are adopting this rule. While legal, the rule may quietly undermine the US government’s strategic goals of promoting manufacturing reshoring and increasing tariff revenue. Experts note that those who use it first save money, and failing to use it could put companies at a disadvantage in price competition.  

A Federal Reserve voter for next year: The pause in easing may be longer, and the situation is "uncertain" whether it will be clear enough. Neel Kashkari, FOMC voter for 2026 and President of the Federal Reserve Bank of Minneapolis, said the biggest risks to the US economy are the shadows of major new policies, including trade barriers and immigration policies. He is unsure whether the situation will be clear enough by September, and the Fed "must look at the data and also see how trade negotiations progress."  

ECB President Lagarde: The euro could replace the US dollar, and recent global turmoil has created an opportunity for the "globalization moment of the euro." The euro is facing a unique opportunity to expand its global influence.  

Lagarde believes the current international order is being fundamentally shaken, with multilateral cooperation being replaced by zero-sum thinking and power games. Openness is giving way to protectionism. Any changes in the international order that lead to a decline in world trade or the fragmentation of economic blocs will negatively impact the European economy. However, with the right policy responses, these changes could also offer possibilities for the euro to play a larger role on the international stage in the future.  

OPEC+ is expected to significantly increase production this week, aiming to push oil prices below $60. OPEC+ may plan a third consecutive month of massive production increases of 411,000 barrels per day, targeting the "lifeline" of US shale oil at $60 per barrel. Currently, US shale oil faces multiple "strangulations" such as soaring costs, depletion of high-quality oil fields, and tariff policies. OPEC+ may be seizing a historic window of opportunity to regain eroded market share.  

"Squeezed by tariffs and low oil prices," oil giants warn: The US shale oil boom is ending. US oil companies are cutting spending and idling drilling rigs, with industry giants warning that the boom era is coming to an end. US oil production may decline for the first time in a decade next year. If crude oil falls to $50 per barrel, US production could decrease by as much as 300,000 barrels per day. With oil prices continuing to fall, the break-even point for shale oil producers has also been breached.  

The media reports that Trump Media Group plans to raise $3 billion for cryptocurrencies. Trump Media’s DJT plans to raise funds through a $2-billion stock offering and a $1-billion convertible bond issuance, possibly announcing the plan before this week’s cryptocurrency conference. In response, DJT issued a statement calling reporters "ridiculously stupid" and the sources "even stupider," but did not deny the report.  

**Domestic Macro**  

Goldman Sachs sees the yuan at 7 and emphasizes "a 1% rise could lift Chinese stocks by 3%." Goldman Sachs believes that compared to currency depreciation, relying on alternative policy tools to alleviate the drag of trade on growth is more feasible at the current competitive valuation level of the yuan. A stronger yuan could benefit Chinese equities through accounting, fundamental, risk premium, and portfolio flow channels; each 1% appreciation could drive a 3% rise in the stock market, with non-essential consumer goods, real estate, and brokerage stocks performing well.  

With a 10% valuation discount, ROE reversal, and accelerated AI development, Morgan Stanley is bullish on China’s "structural recovery" in equities. Morgan Stanley believes that structural improvements in China’s stock market are gradually emerging, with positive factors including the bottoming out of corporate ROE, improved earnings expectation cycles, low global valuations, strengthened policy support, and advancements in industrial upgrading and technological innovation.  

**Domestic Companies**  

The automotive price war intensifies, causing a sharp decline in Hong Kong-listed auto stocks. BYD launched a major price reduction campaign, with some models priced as low as 60,000 yuan including national subsidies, triggering market concerns about a new round of price wars. Morgan Stanley analysis notes that with the expectation that stock prices must ultimately return to fundamentals, the intensified price war may make investors more pessimistic. Hong Kong-listed BYD shares fell more than 8% at one point, their largest decline in over a month; Geely Auto fell more than 7%; Li Auto fell more than 5%.  

Humanoid robots stage a fistfight in Hangzhou, a "new moment in human history," says Unitree CEO Wang Xingxing. The world’s first humanoid robot fighting competition was held in Hangzhou, with four teams using Unitree G1 robots to engage in intense battles. The robots demonstrated close combat, side evasion, quick起身 (rising quickly), and even taunting opponents. The competition used a three-round system, scoring points by hitting the head and torso, with "AI Calculator" ultimately winning the championship.  

Westerners can’t stop "modifying" Labubu: dental implants, butt lifts, skin color changes, and even knockoff Lafufu is jumping on the bandwagon! When Pop Mart’s Labubu encounters Western players’ "modifications," it’s no longer just cultural export but a global carnival subverting traditional business logic.  

The founder of a photovoltaic giant with a market value of 100 billion yuan resigns as "general manager." On May 26, LONGi Green Energy officially announced a senior management restructuring. Li Zhenguo will fully focus on the company’s R&D and technology management, resigning as a director and general manager. Chairman Zhong Baoshen officially took on the roles of general manager and legal representative.  

**Overseas Macro**  

Trump: US manufacturing needs chips, computers, and "big things," not socks. Trump said the US does not plan to produce T-shirts, sneakers, or socks but will focus on "big things." Some netizens noted that this US government "only shouts slogans but cannot produce practical plans."  

At a sensitive moment, Powell tells Princeton graduates: Universities are vital national assets. As the Trump administration intensifies its attacks on Ivy League schools, Federal Reserve Chairman Powell stood up for US universities, calling them "vital national assets."  

US ETFs see record inflows as investors "bottom-fish" US stocks and bonds via ETFs; VOO attracts $65 billion. US ETFs have absorbed $437.9 billion in funds so far, with inflows on track to set a second consecutive annual record. Among them, Vanguard’s S&P 500 ETF (VOO) attracted the most capital, becoming the world’s largest ETF by assets under management.  

Japan’s ultra-long-term government bonds stop falling, but the real test comes on Wednesday. On Monday, yields on Japan’s 30-year and 40-year bonds both fell by 7 basis points. Wednesday’s 40-year bond auction will be a critical moment to test real market demand. A poor auction result could trigger a new sell-off and further destabilize Japan’s bond market.  

The West lifts restrictions on the range of weapons supplied to Ukraine; Germany greenlights deep strikes against Russia. According to CCTV News, German Chancellor Scholz said Germany and EU countries will continue to support Ukraine, and Germany and its allies have lifted restrictions on the range of weapons supplied to Ukraine. Scholz said the UK, France, and the US are all supplying cruise missiles to Ukraine, and Germany will join them. However, Scholz did not clarify whether this means Germany will provide "Taurus" cruise missiles to Ukraine. After the news, oil prices rose slightly.  

**Overseas Companies**  

More brands are announcing price hikes, including Walmart, Ralph Lauren, and Mattel. Against the backdrop of Trump’s tariff policies, more and more brands—from luxury goods to children’s toys, from retail giants to automakers—are quietly announcing price hike plans: Walmart, Ralph Lauren, and Mattel all announced price increases in May, and sports brand Nike was revealed to adjust prices starting June 1.  

Core members of Anthropic reveal details about Claude 4: By 2027, AI models will be able to automate almost all white-collar jobs. Douglas, a core technical member of Anthropic, predicts that AI tools can already increase the efficiency of senior engineers by 1.5 times, and in new fields, this could be as high as 5 times. By 2027-2028, AI models will be capable of automating almost all white-collar work. In the future, we may not collaborate with a single AI but manage an "army of AI models."  

**Industries/Concepts**  

1. Driverless logistics vehicles: A Yangtze Securities report states that China’s low-speed driverless logistics vehicle market has entered an explosive growth phase. On one hand, leading logistics tech companies like Neolix, Nine Identity Intelligence, and White Rhino are accelerating financing; on the other hand, China’s leading express delivery companies have started a procurement wave, with order volumes for leading logistics tech firms growing exponentially. Focus on express delivery companies benefiting from logistics cost reduction and core components of driverless logistics vehicles.  

2. CAS-related companies: Debon Securities believes that synergistic development and scaling up of tech-oriented state-owned assets are inevitable trends. Listed companies under the Chinese Academy of Sciences (CAS) represent the core assets of CAS in various fields, embodying its R&D achievements and key talent. They are positioned in critical sectors with significant strategic advantages and scarcity.  

3. Memory storage: Guolian Minsheng Securities notes that as the three major original equipment manufacturers (OEMs) gradually reduce production, DDR4 capacity has shrunk rapidly, with some spot DDR4 particles rising by over 50% in price in the past half month. As OEMs gradually shift low-process DDR4 capacity to DDR5, DDR5 penetration is expected to rise rapidly, benefiting the memory module industry chain.  

4. Beer: Dongfang Securities points out that since March, when the beer industry entered a low-base period, volume growth accelerated month-on-month in April as the industry entered a peak stocking season. In the short term, channel inventories are low, coinciding with the beer consumption旺季 (peak season). In the medium term, if consumption stimulus policies are implemented quickly, catering and circulation scenarios are expected to recover positively.  

**Upcoming Top News for Today**  

- China’s April industrial profits above designated size.  

- US April durable goods orders.  

- US March S&P/CS 20-city home price index.  

- US May Conference Board consumer confidence.  

- Speech by the President of the Federal Reserve Bank of Minneapolis.  

- Earnings reports from Pinduoduo, Xiaomi Group, and Kuaishou.  

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