Morning News

Source: Wall Street News

**Market Overview**  

Fears over Middle East conflicts eased, with chip stocks driving a rebound in U.S. equities. The chip sector index closed up 3%, with AMD surging nearly 9%. Aviation stocks rebounded strongly, with United Airlines up over 6%. After Trump allowed the merger of U.S. Steel and Nippon Steel, U.S. Steel rose more than 5%. Chinese concept stocks outperformed the broader market, with the China概Index rebounding over 2%, and brain regeneration technology firm RGC surging more than 280%.  

Following news that Iran was willing to restart negotiations, the U.S. dollar index hit a daily low. Crude oil and gold prices plunged intraday: oil fell by up to 10% from its daily high, retreating from a more than four-month intraday high, while gold futures dropped over 2% from their daily peak.  

After the Iran-related news, U.S. Treasury yields hit daily lows as oil prices tumbled. However, a robust auction of 20-year Treasury bonds later spurred a rapid rebound in yields.  

Bitcoin surged over $4,000 intraday, breaking the 108,000 mark and erasing losses since Israel launched its attacks.  

During Asian trading hours, Chinese stocks, bonds, and commodities all rose. A-shares closed higher across the board, with stablecoin concepts surging. Hong Kong stocks rallied in the afternoon, with the Hang Seng Tech Index up over 1%, and Xiaomi rising more than 4%.  

**Key News**  

- China's May economic data showed "consumption up, production stable, investment soft": Retail sales grew 6.4% year-on-year, the highest since December 2023; industrial added value rose 5.8% year-on-year; urban fixed-asset investment from January to May increased 3.7%, while real estate development investment fell 10.7% year-on-year.  

- Reports stated that Iran hopes to dialogue with the U.S. and Israel to end hostilities, and is willing to return to nuclear talks if the U.S. does not participate in attacks. U.S. oil prices fell nearly 5% intraday.  

- Escalating Israel-Iran strikes: The Israeli prime minister claimed Israel had controlled Tehran's airspace, while the Israeli military said it would launch "more ferocious" attacks. Iran stated it would unleash "unprecedented" strikes on Israel and is prepared for long-term total war.  

- U.S. and Canadian leaders met at the G7 summit. Trump expects to reach U.S.-Canada and U.S.-U.K. trade agreements "within days or weeks."  

- Media reported the EU was ready to accept a unified 10% U.S. tariff under clear conditions, but the EU later denied this.  

- The U.S. Senate Republican tax bill proposes raising the debt ceiling by $5 trillion, $1 trillion higher than the House plan.  

- Duan Yongping revealed new positions: Sold Apple put options totaling over $1.44 million.  

- AMD's stock price surged 10% intraday, as analysts favored its new generation of AI chips, predicting a rebound in GPU business in Q4.  

**Market Closings**  

- U.S. stocks: Dow +0.75%, S&P 500 +0.94%, Nasdaq +1.52%. Europe's STOXX 600 +0.36%.  

- A-shares: Shanghai Composite +0.35%, Shenzhen Component +0.41%, ChiNext +0.66%.  

- Bond market: By the end of trading, the U.S. 10-year Treasury yield was about 4.45%, up ~5 bps; 2-year yield ~3.97%, up >2 bps.  

- Commodities: WTI July crude oil futures -1.66%; Brent August crude oil futures -1.35%; COMEX August gold futures -1.03%; COMEX July copper futures +0.45%; LME zinc +1.3%, LME nickel -0.4%.

**News Details**  

**Global Highlights**  

**China's May Economic Data: Consumption Rises, Production Stabilizes, Investment Softens**  

- Retail sales rose 6.4% year-on-year (YoY), the highest growth since December 2023. Policies promoting trade-ins of consumer goods continued to show effects, with significant increases in sales of household appliances (53.0%), communication equipment (33.0%), office supplies (30.5%), and furniture (25.6%). Auto sales grew 1.1%, while petroleum products sales fell 7%.  

- Industrial added value from large-scale enterprises grew 5.8% YoY, with strong production growth in new energy vehicles (31.7%) and industrial robots (35.5%). Among 41 major industries, 35 saw YoY growth, led by rail, ship, aerospace, and automotive manufacturing.  

- Fixed asset investment in urban areas grew 3.7% YoY from January to May, with infrastructure investment up 5.6% and manufacturing investment up 8.5%. However, real estate development investment fell 10.7%.  

- New home sales by floor area dropped 2.9% YoY, while sales value fell 3.8%. Inventory of unsold homes decreased by 7.15 million square meters in May.  

- Home prices in 70 cities: Second-hand home prices declined further, with first-tier cities down 0.7% month-on-month (MoM). New home prices in first- and second-tier cities turned negative MoM, though YoY declines narrowed.  

**Analyst Views:**  

- **Tao Chuan's Team (Minsheng Macro):** The economy shows "stable production, soft investment, rising consumption," with Q2 GDP likely above 5%. Key uncertainties include sustainability of consumption strength, export divergence, real estate downturn, manufacturing investment resilience, and infrastructure momentum.  

- **Guosheng Macro:** Consumption growth is policy-driven, but weak domestic demand remains a constraint, as seen in subdued credit, CPI/PPI declines, and PMI contraction.  

- **CITIC Securities:** Strong retail sales in May were driven by mid-year promotions, the Dragon Boat Festival timing, and subsidies. However, auto and property-related consumption remain weak, and the sustainability of growth is questionable without further stimulus.  

**Iran Seeks Dialogue with U.S. and Israel to End Hostilities, Oil Prices Drop Nearly 5%**  

Reports suggest Iran is open to nuclear talks if the U.S. refrains from attacks. The news triggered a drop in oil and gold prices, while U.S. stocks rose over 1%.  

**Israel-Iran Conflict Escalates**  

- Israel claims control over Tehran’s airspace and warns residents to evacuate, vowing "more intense strikes."  

- Iran’s Revolutionary Guard threatens "unprecedented attacks" on Israel, with missile strikes continuing for a fourth night.  

- The U.S. cancels a planned visit by the USS Nimitz to Vietnam, redirecting it to the Middle East.  

- Reports reveal Israel smuggled drone parts into Iran for months before F-35 strikes. Pakistan closes border crossings with Iran.  

**IAEA Reports Normal Radiation Levels at Iranian Nuclear Sites**  

**U.S.-Canada Trade Deal Progress**  

Trump expects a U.S.-Canada deal within "weeks" and a U.K. trade pact soon. He notes Iran’s openness to de-escalation talks. Canadian officials express optimism.  

**EU Open to U.S. Proposal for 10% Tariffs**  

The EU denies any agreement, stating negotiations are ongoing.  

**U.S. Senate GOP Proposes $5 Trillion Debt Ceiling Hike**  

The plan expands tax breaks and raises the ceiling higher than the House version. A vote is expected next week.  

**Duan Yongping Sells Apple Put Options, Betting on Stock Stability**  

The investor sold $1.44 million in puts, signaling confidence in Apple’s stock above $195 by 2026.  

**AMD Surges 10% on AI Chip Optimism**  

New MI400 chips and Helios servers drive bullish analyst forecasts, with GPU recovery expected in Q4.  

**Domestic Macro**  

**Goldman Sachs’ "China’s Top 10 Private Giants"**  

The list includes Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui Pharma, Trip.com, and Anta, citing policy support and valuation appeal.  

**GF Securities: A-H Premium May Narrow Further**  

Hong Kong stocks could see more premium pricing over A-shares due to improved liquidity and quality listings.  

**IPO Boom in Hong Kong**  

Over 200 companies are queuing for listings, with $52.2 billion raised in a week—the best window since 2021. Sovereign funds like Temasek and GIC are returning.  

**South Korean Won Increasingly Tied to Yuan**  

Trade tensions are strengthening the won’s correlation with the yuan, per the Bank of Korea.  

**Domestic Companies**  

**CIFI’s $1.4 Billion Bond Restructuring Plan**  

Options include debt-for-equity swaps, asset offsets, or a 9.5-year extension.  

**Overseas Macro**  

**CTA Funds Cover Oil Shorts, Bet Against Dollar**  

Trend-following funds are now heavily short the dollar and long gold, per BofA.  

**Oil Traders Brace for More Volatility**  

Israel-Iran tensions add risk premium, but sustained price spikes require broader supply disruptions.  

**Historical Context: Middle East Conflicts and Oil Prices**  

Geopolitical shocks are often short-lived unless production is significantly affected.  

**Strong Demand for 20-Year U.S. Treasury Auction**  

The bid-to-cover ratio hit a March high, reflecting robust appetite for long-term debt.  

**Japanese Bonds Drive Global Market Sentiment**  

With volatility at 20-year highs, Japan’s bond market is influencing U.S. Treasuries.  

**OPEC+ Underproduces, Kazakhstan Defies Quotas**  

May output fell short of targets due to compensation cuts, but Kazakhstan overproduced.  

**Overseas Companies**  

**Trump Launches "Trump Mobile"**  

The $499 phone and $47.45/month plan stir controversy over domestic production claims.  

**Meta’s AI Bet Pays Off, Nears Record High**  

Heavy AI investments and talent poaching drive a 40% rebound.  

**WhatsApp to Introduce Ads**  

Meta seeks new revenue streams, ending its ad-free promise.  

**Renault CEO to Lead Kering**  

Luca de Meo faces the challenge of reviving Gucci and reducing debt. Kering shares surged 11.8%.  

**Sector/Themes**  

1. **Offshore Wind:** Q2 demand boosts earnings for pipe pile manufacturers.  

2. **Diabetes:** ADA conference updates may catalyze weight-loss drug stocks.  

3. **Food Additives:** Healthier tea drinks drive demand for dietary fiber.  

4. **Defense:** Geopolitical tensions highlight advanced military tech.  

**Upcoming Events**  

- **June 17:** China-Central Asia Summit in Astana.  

- **U.S. May Retail Sales, Industrial Output.**  

- **Japan Central Bank Rate Decision.**  

- **IEA Oil Market Report.**  

*Disclaimer: Views expressed are solely the author’s and do not constitute investment advice. Accuracy and completeness are not guaranteed.*