Morning News

Source: Wall Street Journal  

**Market Overview**  
A breakthrough in U.S.-Vietnam trade negotiations boosted tech stocks, driving the S&P 500 and Nasdaq to rebound and hit record highs. Tesla surged nearly 5%, ending a six-day losing streak, while Nvidia rose 2.6%, nearing its all-time high. Healthcare stocks dragged the Dow Jones, halting its four-day rally. Centene, a health insurer that withdrew its full-year profit guidance, plummeted 40%, with peer UnitedHealth dropping 5.7%, leading the Dow's decline. Nike gained over 4% on the U.S.-Vietnam trade deal optimism. Oracle rose about 5% to a record high.  

In the UK, stocks, bonds, and the pound all fell. British equities retreated, and UK government bonds led declines in European and U.S. bond markets. The 10-year UK gilt yield surged 16 basis points in a single day, its largest increase in nearly three months. The pound dropped over 1% intraday.  

After the U.S. ADP employment report, Treasury yields briefly turned lower, with the 2-year yield hitting a session low. Gold extended gains, reaching a one-week high.  

The U.S. dollar index hit fresh three-year lows but briefly turned positive intraday, reaching a session high after the U.S.-Vietnam trade deal was announced. Bitcoin surged over $4,000, approaching the $110,000 mark.  

Oil prices rose over 3% intraday to a one-week high, though U.S. crude briefly turned lower after EIA data showed an unexpected inventory build. Copper prices broke through the $10,000 per ton mark for the first time in three months.  

In Asian trading, China's A-share indices closed lower, while solar and steel sectors rallied. The Hang Seng Index rose 0.6%, with Chongqing Iron & Steel surging 90%. Commodities and government bonds broadly gained.  

**Key News**  
- Li Qiang will attend the 17th BRICS Summit in Brazil and pay an official visit to Egypt.  
- Trump's "Big Beautiful" bill faces hurdles in the House as Republican infighting escalates, with lawmakers saying the bill is still short of over 20 votes to pass.  
- Trump announced a U.S.-Vietnam trade deal, imposing 20% tariffs on Vietnamese goods and 40% on transshipped goods, while Vietnam "fully opens its market" to the U.S. Vietnamese media reported that leaders of both countries held a phone call, with Vietnam suggesting the U.S. lift export restrictions on some high-tech products. Reports indicate U.S.-Japan trade talks are stalled, with Japan firmly rejecting a 25% auto tariff and the U.S. threatening harsher penalties.  
- ADP employment data disappointed: U.S. private payrolls fell by 33,000 in June, the first monthly decline in over three years. Analysts warn the June nonfarm payrolls report may also disappoint, with UBS and Citi predicting a cooling labor market could accelerate rate cuts.  
- Going beyond Trump's criticism, FHFA Director Mark Calabria called for a congressional investigation into Fed Chair Powell for alleged fraud, claiming grounds for removal.  
- The UK saw stocks, bonds, and the pound decline as a £5 billion welfare cut plan faltered, fueling speculation about the Chancellor's departure. The government may increase borrowing rather than raise taxes.  
- Iran's president approved suspending cooperation with the IAEA. The U.S. Defense Department reiterated plans to destroy Iran's nuclear facilities, stating the program has been delayed by 1-2 years.  
- Tesla's Q2 deliveries fell 13% YoY to 384,000 but exceeded pessimistic estimates of 350,000. June sales showed signs of recovery, with China posting its first YoY growth in nine months, while Model Y updates boosted demand in some European markets.  
- OpenAI's "Stargate" expansion in the U.S. secured 4.5GW of power and Oracle data center support, part of Oracle's $30 billion annual cloud revenue deal.  
- Baidu unveiled its largest search engine overhaul in a decade, supporting inputs of over 1,000 characters, introducing a smart search box, and upgrading its AI assistant.  

**Market Close**  
- **Stocks**:  
  - S&P 500: +0.47% to 6,227.42  
  - Dow Jones: -0.02% to 44,484.42  
  - Nasdaq: +0.94% to 20,393.13  
  - Europe STOXX 600: +0.18% to 541.21  
  - China A-shares:  
    - Shanghai Composite: -0.09% to 3,454.79  
    - Shenzhen Component: -0.61% to 10,412.63  
    - ChiNext: -1.13% to 2,123.72  
- **Bonds**:  
  - 10-year U.S. Treasury yield: ~4.28%, up ~4 bps  
  - 2-year U.S. Treasury yield: ~3.78%, up ~1 bp  
- **Commodities**:  
  - WTI August crude: +3.05% to $67.45/barrel  
  - Brent September crude: +2.98% to $69.11/barrel  
  - COMEX August gold: +0.3% to $3,359.7/oz  
  - LME copper: +0.8% to $10,013/ton  

  - LME zinc: +1.62% to $2,758/ton

### Key News Details  

**Global Highlights**  

1. **Li Qiang to Attend BRICS Summit and Visit Egypt**  

  - Chinese Premier Li Qiang will attend the 17th BRICS Leaders' Meeting in Brazil and pay an official visit to Egypt.  

2. **Trump’s "Big Beautiful" Bill Stalls in the House Amid GOP Infighting**  

  - Although Trump’s massive tax cut and spending bill narrowly passed the Senate, the Senate version is more aggressive in spending cuts, corporate tax reductions, and debt ceiling adjustments, angering some House Republicans. A GOP representative stated that the House Speaker is currently "short by over 20 votes" to pass the bill.  

3. **U.S.-Vietnam Trade Deal Announced**  

  - Trump announced a trade agreement with Vietnam, imposing a 20% tariff on Vietnamese goods and 40% on transshipped goods, while Vietnam will fully open its market to U.S. goods with zero tariffs. Nike surged over 4% intraday, and the S&P 500 hit a record high. Reports suggest Vietnam will purchase $8 billion worth of Boeing aircraft (Boeing rose over 2% intraday). Before a tariff truce until July 9, the U.S. had planned to impose 46% tariffs on Vietnam.  

  - Vietnamese state media reported that their leader spoke with Trump, suggesting the U.S. lift export restrictions on some high-tech products.  

4. **U.S.-Japan Trade Talks Hit a Snag**  

  - Japan firmly rejected any deal retaining a 25% auto tariff, prompting U.S. threats of harsher penalties, including export quotas. Trump hinted at possible 30-35% tariffs on Japanese goods, signaling a potential breakdown in negotiations.  

5. **ADP Employment Data Disappoints**  

  - U.S. private payrolls fell by 33,000 in June, the first monthly decline since March 2023, missing expectations of a 98,000 gain. Service sector employment dropped by 66,000, the largest decline since the pandemic.  

6. **June Nonfarm Payrolls at Risk? UBS and Citi Warn of Cooling Labor Market**  

  - UBS predicts only 100,000 jobs added in June, with unemployment potentially hitting a 2021 high. Citi forecasts just 85,000 jobs. Weak data could prompt the Fed to cut rates as early as July.  

7. **FHFA Director Calls for Congressional Investigation into Powell**  

  - FHFA Director Bill Pulte accused Fed Chair Powell of deceptive testimony regarding the Fed’s headquarters renovation, alleging "political bias" and grounds for removal.  

8. **UK Stocks, Bonds, and Pound Plunge**  

  - A £5 billion welfare cut plan failed, fueling speculation about Chancellor Rachel Reeves’ resignation. Prime Minister Keir Starmer avoided confirming her tenure, raising concerns about increased borrowing instead of taxes.  

9. **Iran Suspends Cooperation with IAEA**  

  - Iran’s president approved halting collaboration with the International Atomic Energy Agency. The U.S. Defense Department reiterated plans to destroy Iran’s nuclear facilities, claiming the program has been delayed by 1-2 years.  

10. **Tesla Q2 Deliveries Fall 13% but Beat Pessimistic Estimates**  

   - Tesla delivered 384,122 vehicles in Q2, down 13% YoY but above the gloomy forecast of 350,000-360,000. Elon Musk has taken direct control of U.S. and European sales to address intensifying competition.  

   - June sales showed signs of recovery in China (first YoY growth in nine months) and parts of Europe (boosted by Model Y updates), but U.S. sales fell 16%.  

11. **Oracle Secures $30 Billion Cloud Deal with OpenAI for "Stargate" Expansion**  

   - OpenAI will lease significant computing power from Oracle’s data centers. Oracle is expanding a Texas project to 2GW and considering additional data centers in multiple states. Its stock rose over 5% to a record high.  

12. **Goldman Sachs: Asian Currencies to Appreciate Further in H2**  

   - Goldman expects the dollar’s decline to continue, benefiting Asian currencies, particularly the Korean won and Taiwanese dollar, due to policy support and export-driven demand.  

13. **Baidu Overhauls Search Engine After a Decade**  

   - The new version supports inputs exceeding 1,000 characters, introduces a smart search box, and upgrades its AI assistant with multimodal capabilities (text, voice, images).  

**Domestic Macro**  

1. **CSRC Vows to Steadily Mitigate Risks in Bonds and Private Funds**  

  - The China Securities Regulatory Commission emphasized deepening capital market reforms, maintaining stability, and addressing risks in bonds and private funds to foster high-quality development.  

2. **Finance Minister Lan Fo’an Attends UN Development Financing Conference**  

  - Lan urged developed nations to promote trade liberalization, minimize policy spillovers, and create a stable financing environment.  

3. **China’s Housing Inventory Hits Record High**  

  - As of May, unsold commercial housing reached 781.42 million sqm, up 21 million sqm from end-2024. Chongqing, Chengdu, and Shenyang have the highest inventory, with 42 cities facing 3-5 years of destocking.  

**Domestic Companies**  

1. **Chinese AI Gains Global Traction**  

  - From banks to universities in Europe, the Middle East, and Asia, Chinese AI models like DeepSeek and Alibaba’s are increasingly seen as alternatives to U.S. products like ChatGPT.  

2. **Xiaomi’s Lei Jun: Exports Likely Only After 2027**  

  - The YU7 received 240,000 orders in 18 hours, with 30% from female buyers. Lei dismissed claims of order cancellations, stating new orders dominate. Domestic demand will delay exports until 2027.  

**Overseas Macro**  

1. **U.S. Tariff Revenue Hits $327 Billion Annualized**  

  - Morgan Stanley warns such high tariffs (1.1% of GDP) could slash corporate profits if fully absorbed, advising long Treasuries and short USD.  

2. **Song Xuedong: Divergent Pricing in U.S. Markets**  

  - Guojin Securities’ macro team notes:  

    - **Stocks**: Driven by short-term sentiment (retail speculation), ignoring structural issues like AI hype and inequality.  

    - **Bonds**: Short end prices recession; long end worries over fiscal sustainability.  

    - **USD**: Pressured by tariffs and fiscal credibility concerns, may drop to 95.  

3. **Crowded Treasury Trades Await Nonfarm Payrolls Test**  

  - Citi warns strong jobs data could trigger a bond selloff if it undermines July rate-cut expectations.  

4. **EU Proposes 2040 Climate Target: 90% Emissions Cut**  

  - The European Commission aims for net emissions to be 90% below 1990 levels by 2040, suggesting carbon credits to ease transition pressures.  

**Overseas Companies**  

1. **Amazon’s Robot Takeover Accelerates**  

  - Robots now assist in 75% of Amazon’s package handling. Warehouse staffing is at a 16-year low, with further cuts expected by the 2030s.  

2. **24/7 Tokenized Stock Trading Launches**  

  - Bybit, Robinhood, and Kraken now offer blockchain-based trading for stocks like Apple and Nvidia, including private firms like OpenAI. McKinsey predicts a $2 trillion tokenized asset market by 2030, but regulatory hurdles persist.  

3. **Musk’s xAI Leaks Grok 4 Code, Valuation Hits $113 Billion**  

  - The leaked code reveals upcoming releases of Grok 4 (flagship model) and Grok 4 Code (programming-focused). xAI’s $10 billion funding round cements its position alongside OpenAI and Anthropic in the AI race.  

**Sector/Themes**  

1. **Commercial & Industrial Energy Storage**: Overseas demand surges, with 30%+ margins attracting strong sales incentives.  

2. **Beauty & Personal Care**: H1 2025 sales growth (+4.1% YoY) and premiumization trends support valuation recovery.  

3. **Polyester Industrial Yarn**: Supply constraints and export resilience signal a cyclical upturn.  

4. **Power Sector**: Grid upgrades, ultra-high-voltage projects, and wind energy structural growth are key investment themes.  

**Today’s Preview**  

- China’s June Caixin Services & Composite PMI.  

- U.S. markets close early for Independence Day.  

- U.S. June Nonfarm Payrolls, Services PMI, Jobless Claims, Trade Balance, Factory Orders.  

- Speeches by Atlanta Fed President Bostic.  

*Disclaimer: Views expressed are solely the author’s and do not constitute investment advice. The platform disclaims liability for accuracy, completeness, or timeliness of information and any resulting losses.*  

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