Morning News

Source: Wall Street News

**Market Overview**  

A speech by the U.S. Commerce Secretary has boosted market hopes for talks, driving U.S. stocks higher. The S&P 500 and Nasdaq achieved three consecutive daily gains, with all three major U.S. stock indexes hitting new three-month highs. Tesla rose nearly 6%, leading tech giants for three consecutive days; the chip index gained over 2%, outperforming the broader market for two straight days. TSMC's U.S.-listed shares rose over 2% after releasing May revenue. Photovoltaic stocks advanced, with SolarEdge surging nearly 12%. Steel stocks plunged after the close, with Cleveland-Cliffs falling over 7% in after-hours trading.  

UK data strengthened expectations of interest rate cuts, causing British government bonds to jump intraday. The yield on 10-year UK gilts dropped by more than 10 basis points during trading, and UK stocks approached an all-time high.  

Bitcoin rose for five consecutive days. Crude oil initially gained over 1% intraday but turned lower, with U.S. oil falling from a two-month high. Gold and silver futures retreated, both briefly down 1%. Silver fell from its highest level since 2012.  

During Asian trading hours, A-shares and Hong Kong stocks briefly plunged in the afternoon. The ChiNext closed down over 1%, while rare earth sectors rose against the trend. The Hang Seng Tech Index fell 0.7%, and Mixue Beverage dropped over 6%.  

**Key News**  

- The U.S. Commerce Secretary said negotiations were "progressing smoothly," pushing the S&P 500 and Nasdaq to new intraday highs, and expanding gains in the China概指数 (China concept index).  

- The U.S. is reportedly close to reaching an agreement to partially exempt steel tariffs on Mexico, causing U.S. steel stocks to dive after the close, while the Mexican peso briefly turned higher.  

- Trump called the Los Angeles riots a "foreign invasion."  

- Reports: U.S. Treasury Secretary Janet Yellen is considered one of the candidates for the next Federal Reserve Chair.  

- The U.S. "stablecoin bill" will undergo a procedural vote this Wednesday, paving the way for rapid legislation; South Korea's ruling party proposed a basic digital assets bill, planning to allow domestic companies to issue stablecoins.  

- UK employment fell by the largest margin since 2020, fueling expectations of Bank of England rate cuts. Traders have fully priced in expectations of two more rate cuts this year.  

- OpenAI released the enhanced reasoning model o3-pro, and it was revealed to have partnered with Google Cloud, with o3's price cut by 80%.  

- Goldman Sachs' "Driverless" in-depth report: China's market growth will far exceed that of the U.S., with Robotaxi fleets expected to reach 500,000 by 2030, 14 times that of the U.S.; North American Robotaxi has entered the commercialization stage, with the next step being large-scale expansion. With Robotaxi set to launch in two days and test vehicles appearing on the streets ahead of schedule, Tesla's stock price has surged 14.5% in three days, basically recovering losses after last week's public feud between Musk and Trump.  

- BYD joined Dongfeng, FAW, and other automakers in承诺 (committing) to pay suppliers within 60 days.  

**Market Closings**  

- U.S. and European stocks: The Dow rose 0.25%, the S&P 500 gained 0.55%, and the Nasdaq rose 0.63%. The European STOXX 600 index fell 0.02%.  

- A-shares: The Shanghai Composite Index fell 0.44%, the Shenzhen Component Index dropped 0.86%, and the ChiNext Index fell 1.17%.  

- Bond market: By the end of trading, the yield on the U.S. 10-year benchmark Treasury note was about 4.47%, flat with Monday, and the yield on the 2-year Treasury note was about 4.02%, up about 2 basis points on the day.  

- Commodities: WTI July crude oil futures closed down 0.47%. Brent August crude oil futures fell 0.25%. COMEX August gold futures dropped 0.34%. COMEX July silver futures fell 0.42%. LME nickel closed down nearly 0.7%, and LME aluminum rose nearly 0.6%.

**Details of Key News**  

**Global Highlights**  

- The U.S. Commerce Secretary stated that negotiations are "progressing smoothly," pushing the S&P 500 and Nasdaq to new intraday highs and expanding gains in the China concept index.  

- The U.S. is reportedly close to reaching an agreement to partially exempt steel tariffs on Mexico, causing U.S. steel stocks to dive in after-hours trading, while the Mexican peso briefly turned higher. Media reports suggest the new agreement will lift the 50% tariff on Mexican steel imposed by former President Trump for imports below a certain threshold, with the new tariff-exempt import ceiling higher than that allowed under a similar agreement during Trump's first term. Cleveland-Cliffs fell over 7% in after-hours trading.  

- Former U.S. President Trump called the Los Angeles riots a "foreign invasion." According to CCTV News, Trump said those who burn the American flag should be sentenced to one year in prison. He claimed that if he hadn't deployed guards, Los Angeles would have "burned down," and the guards were protecting U.S. Immigration and Customs Enforcement agents while preventing an "invasion." Trump accused the California governor and Los Angeles mayor of "incompetence," vowing that his administration would "liberate Los Angeles."  

- Reports: U.S. Treasury Secretary Janet Yellen is considered a candidate for the next Federal Reserve Chair. Media reports indicate that internal and external advisors to the Trump administration are pushing for Yellen to take the role, making her a strong contender. Yellen responded, "I have the best job in Washington. The president will decide who is best for the U.S. economy and people." The White House later refuted reports suggesting Yellen is a potential candidate.  

- The U.S. "stablecoin bill" will undergo a procedural vote this Wednesday, paving the way for rapid legislation. If the bill passes the 60-vote threshold, it will lay the foundation for a regulatory framework for dollar-pegged tokens. However, progressive Democrats warn that the bill lacks key safeguards against systemic risks.  

- South Korea's ruling party proposed a basic digital assets bill, planning to allow domestic companies to issue stablecoins. The bill stipulates that South Korean companies with a capital stock of 500 million won (approximately $368,000) or more can issue stablecoins, provided they guarantee a redemption mechanism through reserve funds. Following the news, KakaoPay Corp.'s stock price soared 18%, marking its highest gain since January 2024.  

- The impact of Trump's "Great America" bill: How significant are its fiscal stimulus, the "capital tax" in Clause 899, and effects on U.S. Treasuries and the dollar? Morgan Stanley notes that the bill's short-term stimulus effect on the economy is minimal and will turn into a negative drag by 2028. Additionally, the "capital tax" in Clause 899 will bring huge uncertainties to foreign investors holding U.S. assets. Finally, against the backdrop of the end of U.S. growth "exceptionalism" and risks to capital inflows, the U.S. dollar index is expected to fall by 4-5% by the end of 2025.  

- UK employment saw its largest decline since 2020, with wage growth slowing. Expectations for Bank of England rate cuts have intensified, with traders fully pricing in two more rate cuts this year.  

- After a 35% monthly rebound driven by Chinese demand, how long can platinum's rally last? Strong demand from Chinese buyers has supported platinum's surge of 35% from its April low, breaking through the key resistance level of $1,100 and heading toward $1,220, hitting a four-year high. As gold has become too expensive and volatile, platinum balances the risk and price fluctuations of gold. Analysts predict global platinum demand will continue to exceed supply over the next decade.  

- Platinum and silver are stealing gold's spotlight. UBS notes that the strong performance of platinum and silver stems from five common factors: expected market supply gaps fundamentally supporting prices; relative value attractiveness compared to gold emerging after previous underperformance; relatively light investor positions; technical breakthroughs of key resistance levels; and thinner liquidity than gold, making price fluctuations more easily amplified.  

- In the gold arbitrage boom, Wall Street's big banks are raking in profits! Tariff panic has triggered arbitrage opportunities, with large amounts of gold and silver flowing into U.S. futures exchange warehouses. Precious metals traders at Wall Street's top investment banks achieved their best performance in five years in the first quarter of 2025; 12 major banks generated $500 million in precious metals revenue in the first quarter, the second-highest in a decade. Morgan Stanley delivered 67 metric tons of gold in the first quarter to settle proprietary NYSE positions, valued at about $7 billion.  

- OpenAI released the enhanced reasoning model o3-pro.  

- While "backstabbing" Microsoft and intensifying internal competition: OpenAI was exposed to have reached a partnership with Google Cloud, with o3's price cut by 80%. Media reports say OpenAI and Google discussed the collaboration for months and finalised the agreement last month, with Google Cloud providing computing power for OpenAI's model training and operation—previously impossible due to OpenAI's exclusive cloud service agreement with Microsoft. Before January this year, Microsoft was OpenAI's sole cloud service provider.  

- Coreweave and Circle have ignited U.S. IPOs, and two more popular stocks are set to go public. Two highly anticipated companies, fintech firm Chime Financial and aerospace defense enterprise Voyager Technologies, are about to face the ultimate market test. Analysts note that "investors who missed CoreWeave may experience FOMO (fear of missing out)."  

- Chime goes public on Thursday, known as the "Alipay" and "Huabei" for low-income Americans. Chime provides financial services similar to "Alipay + Huabei" for low-income groups in the U.S. through no monthly fee accounts, cash advances, and smart savings tools. Chime is valued at over $11 billion, a significant drop from its $25 billion peak in 2021. However, early investor Crosslink Capital turned a $6.4 million investment into $430 million, yielding a return of over 67 times.  

- Last week, it doubled in a single week and has surged 300% since listing: "NVIDIA's close partner" CoreWeave is booming in the U.S. stock market. The core logic driving CoreWeave's stock price surge is that it is seen as one of the few public market vehicles allowing investors to indirectly bet on OpenAI's success, while also being NVIDIA's preferred partner. Analysts say CoreWeave's IPO lock-up period will expire in September, likely a critical juncture determining its stock price trajectory.  

- Goldman Sachs' "driverless" in-depth report: China's market growth will far exceed that of the U.S., with Robotaxi fleets expected to reach 500,000 by 2030—14 times that of the U.S.; auto insurance will undergo significant变革, with changes in accident frequency, claim distribution, and legal liability; North American Robotaxi has entered the commercialization stage, with the next step being large-scale expansion.  

- Goldman Sachs expects China's Robotaxi market to grow from $54 million in 2025 to $12 billion in 2030, while the U.S. will only grow from $300 million to $7 billion over the same period. China's Robotaxi fleet will reach 500,000 by 2030, 14 times that of the U.S. (35,000). In terms of costs, the cost of dedicated autonomous driving vehicles in China has dropped below $40,000 (Baidu Apollo Go is only $29,000), more than 50% lower than in the U.S.  

- Goldman Sachs believes the auto insurance industry will maintain moderate growth over the next 10-15 years, but as driverless technology penetrates, long-term accident frequency will significantly decline, claim complexity will increase, and the allocation of legal liability may shift from individuals to manufacturers or technology providers, prompting insurance products to transform into product liability and cybersecurity insurance.  

- The Goldman Sachs report shows that North American driverless taxis have officially entered the commercialization stage, with Waymo operating over 1,500 vehicles. Tesla plans to launch commercial operations in Austin this month, and it is expected that there will be 1,800 commercial autonomous vehicles in the U.S. by the end of 2025. By 2030, the U.S. shared mobility market is expected to grow from $58 billion to $336 billion, with driverless taxis accounting for $7 billion.  

- With Robotaxi set to launch in two days and test vehicles appearing on the streets ahead of schedule, Tesla's stock price has basically recovered the decline after last week's public feud between Musk and Trump. Previous reports said Tesla's Robotaxi plans to launch in Austin, Texas, on June 12, and a recent video released by Tesla executives shows test vehicles appearing on Austin's streets ahead of schedule, indicating that the launch of the robot taxi service has entered its final stage. Tesla's stock price has surged 14.5% in three days.  

- BYD has joined Dongfeng, FAW, and other automakers in committing to a payment period of no more than 60 days for suppliers.  

**Domestic Macro**  

- The General Office of the Communist Party of China Central Committee and the General Office of the State Council: Opinions on Deepening the Shenzhen Comprehensive Reform Pilot to Further Promote Reform, Innovation, and Opening-Up. The Opinions mention promoting the empowerment of the real economy for high-quality development through finance, technology, data, etc. Allow Guangdong-Hong Kong-Macao Greater Bay Area enterprises listed on the Hong Kong Stock Exchange to list on the Shenzhen Stock Exchange in accordance with policy regulations. Support Shenzhen in deepening reform and innovation of the unmanned aerial vehicle flight management system and improving low-altitude flight supervision rules.  

- People's Daily front-page interview with Ren Zhengfei: The more open the country is, the more it will drive us to progress. Ren Zhengfei said that for silicon-based chips, we use mathematics to compensate for physics and non-Moore's law to complement Moore's law. Using the principle of cluster computing, we can meet our current needs. Software cannot be "stuck" because it is built from mathematical symbols, codes, and some cutting-edge operators and algorithms, with no barriers. The challenge lies in our education, training, and talent pipeline construction. Artificial intelligence may be the last technological revolution in human society, though nuclear fusion for energy may also be one. The development of artificial intelligence will take decades or even centuries. There is no need to worry, as China has many advantages.  

**Domestic Companies**  

- Tencent Music plans to acquire Himalaya for $1.26 billion in cash. In addition to cash payment, Tencent Music will grant Himalaya's relevant shareholders no more than 5.1986% of Tencent Music's issued and outstanding common shares and issue no more than 0.37% of the total shares as incentives to its founding shareholders. Tencent Music's U.S.-listed shares rose 8% in pre-market trading but closed slightly lower.  

- Driven by strong AI demand, TSMC's May revenue was NT$320.52 billion, up 39.6% year on year. TSMC's May sales were NT$320.52 billion, up 39.6% year on year, slowing from the 48.1% year-on-year growth in the previous month, and down 8.3% month on month. Cumulative sales for the first five months were NT$1.51 trillion, up 42.6% year on year.  

- Report: Volcano Engine's revenue will double to 25 billion yuan this year, with call volume nearly equal to the sum of Alibaba and Baidu. ByteDance's Volcano Engine will hold the 2025 Yuan动力 Conference in Beijing from June 11-12, and the Doubao family will be fully upgraded. Volcano Engine's revenue exceeded 12 billion yuan in 2024, with a 2025 revenue target of doubling to 25 billion yuan. Its market share in large model calls reaches 46.4%, exceeding the combined total of Alibaba Cloud and Baidu Smart Cloud.  

- Deutsche Bank: Pop Mart is "thriving globally and across all categories," with its stock price expected to break through HK$300. Deutsche Bank believes that Pop Mart's cross-cultural appeal means its market potential far exceeds previous expectations, and its penetration in European and American markets may have just begun. As overseas markets expand rapidly and product categories grow, profitability is expected to be further consolidated.  

- FAW, Dongfeng, GAC, SERES, and BYD commit to payment terms of no more than 60 days! Four automakers—China FAW, Dongfeng Motor, GAC Group, and SERES Group—issued statements committing to controlling payment terms within 60 days. China FAW will improve mechanisms, optimize processes, and empower with technology to ensure on-time payments; Dongfeng Motor officially announced unifying payment terms within 60 days; GAC Group adheres to payment terms within 60 days to ensure supply chain capital turnover; SERES will make payments within 60 days as stipulated in contracts to achieve a win-win for OEMs and suppliers.此后 (Subsequently), BYD Auto also announced unifying supplier payment terms within 60 days.  

**Overseas Macro**  

- The U.S. stock market is experiencing "the biggest short squeeze in years," with the next target being "small-cap stocks"? Historically, when Goldman Sachs' most shorted index rises by more than 15% in two weeks, the market tends to maintain a steady upward trend. The index has soared 42% from its April low and surged over 10% in the past five days. Goldman Sachs notes that while CTA demand has begun to weaken in most markets, the short squeeze potential of low-quality stocks in the Russell 2000 index remains underexplored.  

- After a successful bottom-fishing in April, South Korean and Japanese retail investors are starting to "withdraw" from U.S. stocks. South Korean retail investors turned net sellers of U.S. stocks for the first time in May, while Japanese retail investors recorded their largest sell-off since April 2023 in May. The number of Singaporean traders buying U.S. stocks in May dropped 25% from the previous month.  

- World Bank warns: This decade faces the weakest global growth performance since the 1960s. Affected by trade conflicts and policy uncertainties, the World Bank on Tuesday lowered its 2025 global GDP growth forecast from 2.7% to 2.3% and warned that the 2020s could be the weakest decade since the 1960s. In this forecast adjustment, 70% of countries saw their economic growth rates lowered. Among them, U.S. GDP in 2025 is expected to grow by only 1.4%, 0.9 percentage points lower than previously forecast.  

- The U.S. government下调 (lowered) next year's oil production forecast for the first time since 2021. The EIA now expects U.S. crude oil production to fall from a record 13.5 million barrels per day in the second quarter of this year to 13.3 million barrels per day in the fourth quarter of 2026. The EIA notes that the number of active rigs reported by油田服务公司 (oilfield services company) Baker Hughes fell more than expected last month. The EIA expects oil prices to continue to decline as global inventories increase. Analysts say Trump's energy strategy has hit a snag, as he had said U.S. crude producers would vigorously expand production.  

**Overseas Companies**  

- Morgan Stanley on the WWDC conference: Lacking major AI updates, Apple's AI story may have a longer path to realization. Morgan Stanley believes that while Apple introduced "Apple Intelligence" features, the AI upgrades are limited, a more personalized Siri still awaits, and currently only 20% of iPhones support the new AI functions. Apple still has key elements to win in the AI era, thanks to its strong ecosystem, user base, and privacy standards, but investor sentiment is unlikely to see a major shift in the short term.  

- Disappointed with Llama 4, Mark Zuckerberg personally oversees recruitment to form a new "super intelligence" AI team. The release of Llama 4 in April left Zuckerberg deeply disappointed. He repeatedly emphasized within the company the hope of having the best AI product by the end of the year, but the model's performance has faced internal and external质疑 (criticism). Zuckerberg has had to become a top recruiter, personally hiring about 50 experts to form a secret "super intelligence" AI team. He even rearranged the office desks at company headquarters so new employees could sit near him.  

- Meta agreed to acquire a 49% stake in Scale AI for $14.8 billion, its largest external AI investment to date.  

- GLP-1 drugs are reshaping consumer habits, and Wall Street rarely downgrades McDonald's. Redburn Atlantic analyst Edward Lewis became the first analyst in recent times to downgrade McDonald's from "buy" to "sell," citing GLP-1 weight-loss drugs suppressing consumer appetite. He warns these drugs will trigger widespread behavioral changes, affecting group dining and reducing habitual demand, especially among low-income consumers.  

**Industries/Concepts**  

1. **Raw Milk**: A research report by Guosen Securities points out that domestic dairy cow capacity began to decline in mid-2023. Driven by subsequent production contraction, joint momentum from meat and milk markets, and reduced imports, domestic raw milk prices are expected to reverse and start an upward trend in the second half of 2025.  

2. **New Energy**: Changjiang Securities notes that while the EU's carbon emission policies have been delayed, the assessment pressure remains high. Coupled with the cancellation of tax incentives for corporate fuel-powered vehicles, Europe's new energy penetration rate is expected to rise rapidly from 2025 to 2028. Amid opportunities in the European new energy market, domestic vehicle manufacturers such as BYD and Leapmotor can expect growing sales in Europe due to their strong model competitiveness and favorable tariff adjustments. With increased volume, parts enterprises like Minth Group and Wencan Co., Ltd. will also see significant revenue growth from European new energy sectors.  

3. **Trend Toy Materials**: Most trend toy products are plastic items, and in the production process, color masterbatches and pigments play a key role in coloring. As the trend toy industry continues to expand in the future, the color masterbatch and pigment sectors are expected to benefit in the long term.  

4. **Rare Earths**: China Merchants Securities states that the current rare earth mining has formed a duopoly pattern. With the relaxation of export controls, magnetic materials exports are expected to increase significantly in the third and fourth quarters. Meanwhile, rare earth prices are widely expected to rise, and related rare earth magnetic materials enterprises will see a rebound in profits.  

**Preview of Today's Key News**  

- U.S. May CPI data.  

- U.S. Treasury Secretary Janet Yellen testifies before a House committee.  

- Huawei holds a launch event for the Pura 80 series and full-scenario new products.  

- NVIDIA hosts the GTC Conference, lasting until June 12. Jensen Huang will deliver a keynote speech at 17:00 Beijing Time on June 11.  

- Changes in U.S. EIA crude oil inventories for the previous week.  

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