Morning News

# Market Overview

Source: Wall Street CN

## Market Overview

The U.S. January nonfarm payroll report was broadly strong, dampening market expectations for interest rate cuts. Traders pushed back their forecast for the first rate cut from June to July, and U.S. Treasuries fell.

U.S. stocks opened higher but gave up gains as large-cap tech stocks weakened, with the three major U.S. stock indices closing slightly lower. Concerns over AI disruption continued to simmer: software stock ETFs fell 2.6%, and real estate services stocks were sold off on AI worries, posting their largest single-day drop since the pandemic. CBRE Group and Jones Lang LaSalle plummeted 12%.

U.S. Treasury yields rose: the 2-year yield climbed 6.4 basis points, and the 10-year yield rose about 3 basis points.

The U.S. dollar fluctuated sharply during the session, edging up 0.08% at the close. The Japanese yen rose for a third consecutive day, appreciating more than 1% at one point.

Cryptocurrencies were weak: Bitcoin fell 1.2%, and Ethereum dropped over 2%.

Spot gold rose 1.3% in volatile trading, while silver surged then retreated but still gained more than 4%. Former U.S. President Trump is privately considering withdrawing from the USMCA, and WTI crude oil rose 1%.

During the Asian session, the Shanghai Composite Index rose for seven straight days, while the ChiNext Index fell 1%. Combined trading volume on the two exchanges was less than 2 trillion yuan. Glass fiber concept stocks surged. The Hang Seng Tech Index rose nearly 1%, and Xiaomi jumped more than 4%.

## Key News

### China

- Premier Li Qiang: Comprehensively advance AI technological innovation, industrial development, and enabling applications, and foster and expand new quality productive forces.

- The State-owned Assets Supervision and Administration Commission (SASAC) is pushing central state-owned enterprises to actively expand effective investment in computing power.

- China's January CPI rose 0.2% year-on-year, with the growth rate slowing; PPI fell 1.4% year-on-year, with the decline narrowing.

- DeepSeek is conducting gray-box testing of its next-generation model.

- Zhipu AI released its new flagship model GLM-5, with enhanced capabilities in programming and agent development.

- Another milestone in China's manned lunar exploration: the Long March-10 carrier rocket and Mengzhou spacecraft successfully completed their first flight test mission.

### Overseas

- The U.S. added 130,000 nonfarm jobs in January, the largest increase since April last year. The unemployment rate fell to 4.3%, with an annual downward revision of 862,000 jobs. Wall Street expects the first rate cut to be delayed until July, while the "new Fed whisperer" forecasts an even longer pause in rate cuts.

- The U.S. budget deficit narrowed by 17% in the first four months of fiscal 2026, with a sharp increase in tariff revenue. The Congressional Budget Office (CBO) warned that Trump's fiscal path is unsustainable, raising the projected U.S. deficit by $1.4 trillion over the next decade.

- Oil prices rose more than 2% during the session amid reports that Trump is privately considering withdrawing from the USMCA. Trump faces a new test: Republican leaders failed to block a House vote on overturning tariffs on Canada.

- Trump said reaching an agreement with Iran would be his "first choice." An advisor to Iran's Supreme Leader noted that the U.S. is moving toward rationality.

- Apple's new Siri launch may be delayed again. Reportedly, testing has exposed issues, with some features possibly pushed back to September.

## Market Closing Quotes

### U.S. & European Equities

- S&P 500: Slightly lower, at 6,941.47 points.

- Dow Jones Industrial Average: Down 0.13%, at 50,121.40 points.

- Nasdaq Composite: Down 0.16%, at 23,066.467 points.

- Europe's STOXX 600: Up 0.10%, at 621.58 points.

### A-Shares

- Shanghai Composite Index: Closed at 4,131.98 points, up 0.09%.

- Shenzhen Component Index: Closed at 14,160.93 points, down 0.35%.

- ChiNext Index: Closed at 3,284.74 points, down 1.08%.

### Bond Market

- U.S. 10-year benchmark Treasury yield: Up 2.77 basis points, at 4.1704%.

- U.S. 2-year Treasury yield: Up 5.79 basis points, at 3.5099%.

### Commodities

- COMEX Gold Futures: Up 1.48%, at $5,105.43 per ounce.

- COMEX Silver Futures: Up 4.42%, at $83.935 per ounce.

- WTI March Crude Oil Futures: Up 1.05%, at $64.63 per barrel.

- Brent April Crude Oil Futures: Up 0.87%, at $69.40 per barrel.

# Detailed News Highlights

## Global Highlights

### China

- **Li Qiang**: Comprehensively advance AI technological innovation, industrial development, and enabling applications to foster and expand **new quality productive forces**. According to Xinhua News Agency, Li Qiang emphasized the need to deeply understand and grasp the development trends of artificial intelligence, promote breakthroughs across the entire AI value chain and full-scenario implementation, and unleash greater development potential. Efforts should be made to continuously consolidate the technological foundation, advance algorithm innovation, increase the supply of high-quality data, enhance the performance of large models, and proactively layout new technologies and paths. We must vigorously promote large-scale commercial applications, boost consumption of AI terminals and services, build AI application pilot bases, develop and expand the **AI agent** industry, and expand more high-value application scenarios.

- **SASAC Urges Central SOEs to Expand Effective Computing Power Investment**. The State-owned Assets Supervision and Administration Commission (SASAC) recently stated that central state-owned enterprises should strengthen investment guidance, actively expand effective investment in computing power, promote the coordinated development of "computing power + electric power", improve end-to-end data governance capabilities, and continuously consolidate the foundation of the AI industry.

- **China's January CPI Growth Slows to 0.2% YoY; PPI Decline Narrows to 1.4% YoY**. China's January CPI rose 0.2% year-on-year, down from 0.8% in the previous month. The slowdown was mainly driven by two factors: first, the **Lunar New Year calendar shift effect**—last year's January fell during the Spring Festival, when food and some service prices rose sharply, creating a high base that dragged down this year's year-on-year growth; second, falling international oil prices widened the decline in energy prices, which dropped 5.0% in January. The PPI fell 1.4% year-on-year in January, with the contraction narrowing.

- **Huatai Securities**: January's CPI slowdown to 0.2% YoY was mainly temporarily suppressed by the Lunar New Year calendar shift, but core CPI rose 0.3% month-on-month, a six-month high, indicating a mild recovery in domestic demand. The narrowing PPI decline and accelerated month-on-month growth benefited from rising non-ferrous metal prices and progress in "anti-involution" efforts. With an optimized supply-demand structure and improving external demand, the inflation center is expected to rise steadily, and core inflation is entering a recovery phase.

- **DeepSeek's New Model Coming? Gray Testing Underway**. Some users received update prompts when opening the App; the new version expands context length from 128K to 1M, with the knowledge base updated to May 2025. The official App indicates this may be the final gray release before the official launch of V4. A Nomura report noted that V4's core value lies in driving the commercialization of AI applications through underlying architecture innovation, rather than disrupting the existing AI value chain.

- **Spring Festival Launch? DeepSeek's Next-Gen Model: "Cost-Effective" Innovative Architecture to Help China Break Through "Computing Chip and Memory" Bottlenecks**. Nomura believes DeepSeek's upcoming V4 large model may further reduce training and inference costs through innovative mHC architecture and Engram technology, accelerating the innovation cycle of China's AI value chain. It is also expected to help global large language model and AI application companies accelerate commercialization, alleviating mounting capital expenditure pressures.

- **Zhipu AI Unveils Next-Gen Flagship Model GLM-5, Focusing on Enhanced Programming and AI Agent Capabilities**. On February 11, Zhipu AI launched GLM-5, with parameter scale expanded to 744B and pre-training data reaching 28.5T, integrating DeepSeek's sparse attention mechanism. Internal evaluations show its programming performance improved by over 20% compared to the previous generation, with real-world experience approaching Claude Opus 4.5; it ranked first among open-source models in three Agent benchmarks including BrowseComp, with asynchronous reinforcement learning as a core breakthrough.

- **Another Milestone in China's Manned Lunar Program: Long March-10 and Mengzhou Spacecraft Complete First Flight Test Successfully**. The Long March-10 carrier rocket and Mengzhou manned spacecraft just successfully completed the maximum dynamic pressure abort flight test, marking a phased breakthrough in China's manned lunar exploration project. The test verified the spacecraft's abort capability under extreme conditions and the sea splashdown recovery capability of the rocket's first stage and the spacecraft's return capsule. According to the plan, an unmanned flight test of "Mengzhou-1" and its docking with the space station will be conducted in 2026, with the goal of achieving China's first manned lunar landing by 2030.

### Overseas

- **U.S. January Nonfarm Payrolls Add 130,000 Jobs, Largest Gain Since April 2025; Unemployment Rate Drops to 4.3%; Annual Revision Cuts 862,000 Jobs**. The U.S. added 130,000 nonfarm jobs in January, the largest increase since April 2025. The unemployment rate unexpectedly fell to 4.3%, and average hourly earnings rose 0.4% month-on-month—all stronger than expected. The Bureau of Labor Statistics revised down total nonfarm employment by 898,000 for the year ending March 2025. Job gains were led by healthcare, manufacturing returned to growth, while temporary employment continued to contract. Traders pushed back rate-cut bets from June to July. The Fed faces a conflicting picture of strong monthly data and weak historical revisions.

- **Wall Street Expects First Rate Cut Delayed to July; "New Fed Whisperer" Sees Longer Pause**. The January nonfarm report may reinforce the Fed's wait-and-see stance, making it harder for officials to cite labor market weakness to justify further cuts, providing more ammunition for inflation-focused hawks. The data reduces the need for the Fed to cut rates before mid-year but does not rule out cuts entirely in 2026. Multiple institutions still expect two rate cuts this year, but delayed to the second half.

- **U.S. Budget Deficit Narrows 17% in First Four Months of Fiscal 2026; Tariff Revenue Surges**. Tariff revenue helped the U.S. government cut its budget deficit by 17% in the first four months of the fiscal year, highlighting the high stakes for the administration as the Supreme Court weighs whether President Trump has the authority to impose most of his tariff actions.

- **CBO: Trump's Fiscal Path Unsustainable; U.S. Deficit Projections Raised by $1.4 Trillion Over Next Decade**. The Congressional Budget Office (CBO) warned again on Wednesday that the U.S. is on an unsustainable fiscal path, raising its 10-year deficit forecast by $1.4 trillion, partly due to President Trump's 2025 tax and immigration policies. From 2026 to 2036, annual deficits are projected to reach or exceed 5.6% of GDP, a record—deficits have never remained at such high levels for more than five consecutive years.

- **Oil Prices Rise Over 2% Intraday; Report: Trump Privately Considering Withdrawing from USMCA**. Media reported that Trump is privately evaluating the possibility of exiting the U.S.-Mexico-Canada Agreement (USMCA), injecting uncertainty into the critical July 1 review. Market concerns over North American energy trade prospects intensified, pushing oil prices up over 2% intraday. Negotiations are currently split: Mexico is pragmatic, while Canada is difficult. The move may aim to force concessions from Canada and Mexico on immigration and drug control. A collapse would reimpose tariff barriers, fuel inflation, and impact midterm elections. Analysts believe the withdrawal threat is more likely a negotiating chip than an end goal.

- **Trump's New Test: GOP Leaders Fail to Block House Vote on Reversing Canada Tariffs**. Three Republican lawmakers defected, leading the House to vote down a bill proposed by the Speaker late Tuesday to delay the tariff vote until late July. Even if the House passes a resolution to revoke Canada tariffs, Trump is highly likely to veto it, making the vote largely symbolic. However, the unfavorable outcome, especially in an election year, will exert political pressure on Trump.

- **Trump Says Iran Deal Would Be "First Choice"; Iran's Supreme Leader Advisor: U.S. Moving Toward Rationality**. Israeli and U.S. leaders discussed a "joint action plan" in case U.S.-Iran negotiations fail. Trump stated he told Netanyahu that a deal would be their first choice if achievable; if not, they would have to wait and see. The Israeli Prime Minister reportedly demanded that any Iran deal have no expiration date. Iran's Foreign Minister reiterated that a peaceful nuclear deal is possible. An advisor to Iran's Supreme Leader said the U.S. is moving toward rationality, while Israel seeks to provoke incidents; negotiations are underway for the next round of talks.

- **Apple's New Siri Launch Likely Delayed Again; Testing Exposes Issues; Some Features May Be Pushed to September**. Reports say Apple insisted on launching new Siri features with iOS 26.4 in March until last month, but testing revealed problems including incorrect query handling, slow response times, and poor accuracy. Apple now considers releasing some features in May or even September iOS updates, with personal data functions particularly likely to be delayed. Apple's stock, which rose over 2% intraday, gave up more than half its gains by the close.

## Selected Research Reports

- **Morgan Stanley "Aggressively" Raises Micron Target to $450: AI Demand Strength Renders China Capacity Impact and Capex Overheating Irrelevant!** Morgan Stanley sharply raised Micron's target price from $350 to $450, implying ~28.6% upside from current levels. Analysts argue that memory chip supply shortages have spread to every end market, with pricing power firmly in sellers' hands. Driven by the AI supercycle, traditional cyclical valuation frameworks no longer apply; Micron is in a sweet spot of dual expansion in profitability and valuation multiples.

- **Optical Fiber: The Next Memory? AI Computing Power Demand Reshapes Fiber Industry, Mirroring 2025 Memory Chip Supercycle**. Guotai Junan and Haitong Securities note that as high-end capacity shifts to AI data centers, supply of traditional G.652D bare fiber is squeezed, with prices doubling from last year's procurement levels. Supply-demand tensions are exacerbated by long preform expansion cycles and overseas "volume locking". Shenwan Hongyuan believes that despite high sector valuations, the industry is transitioning from a cyclical bottom to structural prosperity via price realization and high-end product exports.

- **Carry Trade "Time Bomb" Ticking; Yen Volatility May Signal Global Asset Turning Point**. Recent yen strength could trigger massive carry trade unwinding. BCA Research notes that the past three yen carry trade unwindings were driven by stress in carry assets, not narrowing rate differentials, and all coincided with surging global volatility. Current yen appreciation is already transmitting to the Nasdaq, bond volatility indicators, and the VIX—an cross-asset volatility window is approaching.

# Domestic Macro

## State Council: To Basically Establish a Unified National Electricity Market System by 2030

The State Council has issued guidelines stating that by 2030, a unified national electricity market system will be basically completed. All types of power generators and electricity consumers (except for guaranteed users) will directly participate in the market, with market-based trading electricity accounting for approximately 70% of total social electricity consumption. Cross-provincial, cross-regional and provincial markets will achieve joint trading; spot markets will fully transition to formal operation; basic market rules and technical standards will be fully unified; a market-oriented electricity pricing mechanism will be basically sound; and a fair and unified market supervision system will be essentially formed.

## MSCI Global Index Adds Chinese Companies on a Large Scale; Passive Funds to Launch a New Round of Buying

In the largest such move in nearly three years, MSCI has significantly increased the inclusion of Chinese stocks, with a net addition of 21 companies, led by strong representation from tech stocks. This not only opens a window for passive funds to "buy in" but also forces global funds to revalue Chinese assets. With the rising weight of AI and innovative enterprises, China's stock market is at a critical juncture for a new round of capital inflows and structural transformation.

# Domestic Companies/Industries

## Behind the Broad Limit-Up of Glass Fiber Stocks: Tight Electronic Cloth Creates New Constraints on AI Computing Power

The A-share glass fiber sector has surged recently, directly driven by another round of price increases for electronic cloth. This price hike stems from a boom in high-end demand driven by AI computing infrastructure construction, while supply is constrained by high technical barriers and costs, leading to slow capacity expansion. As a key substrate for PCBs, the shortage of electronic cloth is directly transmitting to the supply chain of high-end hardware such as AI servers, becoming a new bottleneck restricting the development of computing infrastructure.

## InnoLight Issues Urgent Clarification: CSP Customers Place Orders Directly; No Bypassing of Middlemen

On February 11, rumors circulated that "the order path for optical modules has changed," claiming that CSP vendors were bypassing module manufacturers like InnoLight to place orders directly with upstream laser equipment suppliers, which would then be produced by designated assembly plants. This triggered a sharp drop in the sector, with InnoLight closing down 4.28%. The company issued an urgent clarification on the interactive platform the same day, stating that its business model remains unchanged: CSP customers place orders directly, and the company manufactures and delivers directly to CSP customers, with no scenario of orders being routed through upstream suppliers.

## SMIC Conference Call: HBM Shortage to Persist; Overly Rapid AI Capacity Expansion May Lead to Data Center Idling

SMIC Co-CEO Zhao Haijun revealed that in Q4 2025, the company's business showed the characteristic of "a slow season not being slow," with 12-inch wafer capacity near full utilization. Strong AI-driven demand for memory continues to push up high-end and mid-to-high-end orders, while "squeezing out" the mid-to-low-end market such as mobile phones. He also warned that companies are attempting to build data center capacity for the next decade within one to two years, but without sufficient planning for the specific uses of these facilities, some capacity may face the risk of idling.

## CAAM: January Auto Sales Down 3.2% YoY; NEV Market Stable with 2.5% Production and 0.1% Sales Growth

According to the China Association of Automobile Manufacturers (CAAM), the auto industry operated steadily in January. The passenger vehicle market declined, while the commercial vehicle market maintained a positive trend; the new energy vehicle (NEV) market remained stable, and auto exports continued to grow. The main factors behind the market decline are: first, the adjustment of NEV purchase tax policies; second, the annual transition of purchase subsidy policies in many regions; and third, the early release of some consumer demand in 2025.

## NetEase Q4 Revenue Misses Estimates; Games Still Growing with New Titles Contributing

NetEase's Q4 results fell short of market expectations: adjusted EPS was 10.95 yuan, below the estimated 14.07 yuan; revenue was 27.55 billion yuan, also missing forecasts. Game business revenue reached 21.97 billion yuan, showing moderate growth. Management emphasized that AI has been deeply integrated into the entire game development process, becoming a "basic capability." The company maintained shareholder returns, approving dividends and completing a $2 billion share repurchase, with robust cash flow.

# Overseas Macro

## Balance Sheet Reduction – "Fed-Treasury Accord" – Rate Cuts: Is This Warsh's "Grand Strategy"?

Kevin Warsh may reshape the Fed's balance sheet through "swapping short for long," drastically shortening duration without outright balance sheet reduction. Barclays analysis points out that to minimize market impact, this move requires the Treasury to keep long-term bond issuance to the private sector unchanged while increasing short-term debt issuance to meet the Fed's new demand (the new accord). However, even this will push up term premiums across the yield curve, forcing the Fed to hedge with "lower interest rates," potentially triggering an investment shift with larger-than-expected rate cuts.

## Congress Reopens Epstein Probe; U.S. Commerce Secretary Admits Visiting Island in 2012

U.S. Commerce Secretary Lutnick stumbled in a congressional hearing, admitting he visited Epstein's private island with his family for dinner in 2012, contradicting his earlier claim of "cutting ties after 2005". Despite White House support, Department of Justice documents revealed subsequent business dealings, sparking a credibility crisis and bipartisan calls for his resignation, adding another personnel variable to the Trump team.

## Congo's Copper Exports Up 10% in 2025; Cobalt Exports Plunge Nearly 80%

Congo's copper exports rose nearly 10% to 3.4 million tonnes in 2025, solidifying its position as the world's second-largest copper producer. Chinese-led capacity expansion provided a critical buffer for the tight global market, with copper prices surging 40% and hitting record highs over the same period. In contrast, cobalt exports plummeted 80% to 44,500 tonnes due to government bans and quotas. Under co-mining of copper and cobalt, supply trajectories have diverged sharply.

# Overseas Companies

## Tesla Unveils Plan for 100GW of New Solar Manufacturing Capacity; Far Exceeds U.S. Ground Demand, Aimed at Space Data Centers

Morgan Stanley believes Tesla aims to build an independent energy closed-loop system. This capacity will primarily serve "space data centers" and ensure supply chain security, rather than simply selling components. Despite hundreds of billions in capital expenditures, IRA subsidies and vertical integration advantages are expected to generate hundreds of billions in revenue and significantly boost the valuation of its energy business.

## Global Debut: Intel Unveils ZAM Memory Prototype; 512GB Per Chip, Half the Power Consumption, Directly Competes with HBM

ZAM made its first public appearance globally, promising lower power consumption, higher capacity, and wider bandwidth compared to traditional DRAM. Through vertical stacking, heat generated by each chip is uniformly dissipated upward, solving the long-standing thermal challenge of planar stacking. The prototype is scheduled for launch in 2027, with full commercialization expected by 2030.

# Industries/Concepts

## 1. Low-Code

According to Sina Finance, China's first national standard for low-code development, **General Technical Requirements for Low-Code Development Platforms (GB/T 46900-2025)**, has been officially approved and will take effect on July 1, 2026. The standard establishes a comprehensive and systematic technical specification system focusing on the two core dimensions of functionality and performance for low-code development platforms, marking a new stage of standardized development for China's low-code industry.

**Commentary**: Analysts note that low-code development platforms (LCDP) enable rapid application generation with minimal or no coding. According to authoritative forecasts, 70% of global enterprise applications will be developed using low-code within five years. Artificial intelligence (AI) and machine learning will be deeply integrated into low-code platforms, enhancing intelligent recommendations, automatic code generation, and process automation, elevating platform intelligence. This technological convergence may drive low-code platforms to become the mainstream development model, accelerating the construction of an ecosystem with hundreds of millions of new applications.

## 2. Nickel (Non-Ferrous Metals)

According to Hexun, Indonesia's Weda Bay nickel mine has been allocated only 12 million tonnes of ore production quota for this year, a drop of over 70% from the adjusted 42 million tonnes in 2025. Eramet, a joint venture partner of Weda Bay, has confirmed the news in an announcement. Weda Bay, the world's largest nickel mine, is jointly owned by Tsingshan Holding Group, France's Eramet, and Indonesia's state-owned PT Aneka Tambang.

**Commentary**: Analysts point out that prior to the latest capacity cuts, Indonesia supplied 65% of the global nickel market. Indonesia's massive capacity expansion in recent years has led to persistent nickel price declines. As the world's largest nickel producer, Indonesia is actively regulating supply to stabilize prices. The country plans to cut this year's nickel mining quota to approximately 260 million tonnes, down from 379 million tonnes last year. Following the news, LME nickel futures have risen for four consecutive days, approaching $18,000 per tonne.

## 3. Innovative Drugs

According to Xinhua News Agency, an international research team has recently developed a synthetic antibody that targets pseudaminic acid, a sugar molecule on the surface of bacterial cells, providing a new approach to combat drug-resistant "superbugs". Pseudaminic acid is found exclusively on the surface of various bacteria, playing a key role in bacterial survival and pathogenicity, making it a highly specific intervention target.

**Commentary**: Analysts state that compared to traditional antibiotics, synthetic antibodies offer three core advantages: high specificity, low immunogenicity, and strong designability. The global antibody drug market is growing at an annual rate of 15% and is expected to reach $445 billion within five years.

# Today's News Preview

- U.S. January PPI

- U.S. Initial Jobless Claims (Last Week)

- U.S. January Existing Home Sales

- Earnings Reports from Arista Networks and Airbnb

- Launch of Amazon's Leo Satellites

- IEA Monthly Oil Market Report

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# Risk Warning and Disclaimer

The market involves risks, and investments require caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this article is at your own risk.