Morning News

Source: Wall Street Journal  

**Market Overview**  
Better-than-expected U.S. non-farm payroll data boosted U.S. stocks. The S&P 500 and Nasdaq hit new record highs, marking their third consecutive week of gains, with the Nasdaq rising over 1%. Tech stocks performed strongly. Nvidia's market capitalization approached $4 trillion. Datadog surged nearly 15% after being added to the S&P 500 index.  

Following the non-farm data, expectations for a Fed rate cut plummeted, driving U.S. Treasury yields higher. The 10-year yield rose nearly 5 basis points, while the 2-year yield climbed 10 basis points. The dollar briefly spiked, gaining over 0.7% from its daily low before paring gains to 0.4% at the close.  

Spot gold fell nearly 1.4% intraday. Bitcoin continued to hover around $110,000.  

During the Asian session, A-shares rallied in the afternoon, with the ChiNext Index up 1.9%. Innovative drugmakers and PCB stocks surged collectively, while the Hang Seng Index fell 0.6%, with Xiaomi dropping over 3%. Commodities rose, and government bonds showed mixed performance.  

**Key News**  
Passed by a narrow margin of four votes, the "Big Beautiful" bill cleared the U.S. House of Representatives, bringing with it a $3.4 trillion deficit burden.  

U.S. non-farm payrolls added 147,000 jobs in June, exceeding expectations, with April and May figures revised up by 16,000 combined. The unemployment rate unexpectedly dropped to 4.1%. The "New Fed News Agency" noted that the June jobs report could prolong the Fed's wait-and-see period. The U.S. June ISM Services PMI came in at 50.8, with the employment index contracting but business activity and new orders rebounding.  

Bessent stated that the U.S. 20% tariff on Vietnam would not stack with the existing 10%, pushing Vietnam ETFs toward daily highs. Post U.S.-Vietnam agreement, India and Indonesia are stepping up efforts.  

Bessent: If the Fed doesn’t cut rates now, the September reduction could be larger, with a new chair selection process starting in the fall.  

China’s Ministry of Industry and Information Technology: Comprehensive measures to address disorderly low-price competition in the photovoltaic industry, guiding firms to improve product quality and facilitating the orderly exit of outdated capacity.  

Strong demand at Japan’s 30-year government bond auction, with the bid-to-cover ratio hitting its highest since February.  

U.K. stocks, bonds, and currency rebounded as the Prime Minister clarified the Chancellor would remain in place "for a long time" and emphasized adherence to fiscal discipline.  

Brent crude fell over 1% intraday on reports that the U.S. plans to negotiate with Iran next week.  

A roughly one-hour call between the U.S. and Russian presidents discussed the Middle East situation, Russia-Ukraine negotiations, and other topics.  

**Market Closings**  
**Global Stocks:**  
- S&P 500: +0.83% to 6,279.35, another record close, up 1.72% weekly.  
- Dow Jones: +0.77% to 44,826.53, up 2.30% weekly.  
- Nasdaq: +1.02% to 20,601.10, up 1.62% weekly.  

**A-Shares:**  
- Shanghai Composite: +0.18% to 3,461.15.  
- Shenzhen Component: +1.17% to 10,534.58.  
- ChiNext Index: +1.90% to 2,164.09.  

**Bonds:**  
- U.S. 10-year yield: +6.89 bps to 4.3457%.  
- U.S. 2-year yield: +9.51 bps to 3.8799%.  

**Commodities:**  
- WTI August crude: -0.67% to $67/barrel, up 2.26% weekly.  

- Brent September crude: -0.45% to $68.80/barrel.

### **Key News Details**  

#### **Global Highlights**  

**1. "Big Beautiful" Bill Passes U.S. House by Narrow Margin, $3.4 Trillion Deficit Looms**  

Despite strong Democratic opposition, Republicans pushed through the bill just before the July 4 deadline. The White House announced that Trump will sign it at 5 PM on July 4. Before the vote, a Democratic leader delivered a nearly 9-hour protest speech, setting a record for the longest House floor speech.  

- **Treasury Secretary Bessent**: The market sees the bill as fiscally prudent and growth-positive, providing economic certainty and stability, encouraging hiring, investment, and wage growth.  

- **Dramatic Night**: After Republican infighting and an overnight vote, the bill narrowly cleared a procedural hurdle (219-213), advancing to formal debate and final voting.  

- **Trump’s "Three No-Cuts" Pledge Backfires**: During a GOP meeting, Trump declared no cuts to Medicaid, Medicare, or Social Security—only to be corrected that his own bill slashes Medicaid by $1 trillion, affecting 11 million Americans. The White House defended the cuts as targeting "waste, fraud, and abuse."  

**2. U.S. June Nonfarm Payrolls Beat Expectations**  

- **Jobs Added**: 147K (vs. expected), with April/May revised up by 16K.  

- **Unemployment Rate**: Unexpectedly fell to **4.1%**.  

- **Wage Growth**: Just **0.2% MoM**.  

- **Market Reaction**: Traders priced out a July Fed rate cut, with September odds at ~75%.  

**"New Fed News Agency" (Timiraos)**: The report may extend the Fed’s wait-and-see stance. Powell has hinted at late-2024 cuts if summer inflation cools. The Fed is now weighing "policy experiments," including trade/immigration impacts.  

**3. U.S. June ISM Services PMI: 50.8 (Slight Expansion)**  

- Business activity and new orders rose, but employment contracted sharply.  

**4. U.S.-Vietnam Trade Deal Fallout**  

- **Bessent**: The 20% tariff on Vietnam won’t stack with the existing 10%, boosting Vietnam ETFs.  

- **Citi’s Warning**: The deal signals risks—higher-than-expected tariffs may spill over to other Asian economies (e.g., Thailand, Malaysia) due to strict anti-circumvention rules.  

- **India & Indonesia Step Up**:  

 - A provisional U.S.-India trade deal (excluding agriculture) is near, lifting the rupee.  

 - Indonesia plans a $34B MoU with the U.S. on July 7 to reduce tariffs.  

**5. Bessent on Fed Policy & Leadership**  

- If the Fed delays cuts, **September’s move could be larger**.  

- Powell’s successor search may start this fall, with Bessent hinting he hopes Powell departs by May 2025.  

**6. Japan’s 30-Year Bond Auction Demand Strong (But Risks Lurk)**  

- Bid-to-cover ratio hit a 5-month high (3.58), but yields rose as investors demanded higher risk premiums amid global deficit worries.  

**7. U.K. Markets Rebound After PM’s Assurance**  

- PM Starmer vowed Chancellor Reeves will stay "for a long time," reaffirming fiscal discipline targets.  

**8. Brent Dips 1% on U.S.-Iran Nuclear Talks Report**  

- U.S. envoy may meet Iran’s foreign minister in Oslo next week—first formal talks since U.S. airstrikes on nuclear sites.  

**9. Putin-Trump Call (1 Hour) on Middle East & Ukraine**  

- No discussion on halting U.S. arms to Ukraine or new peace talks, but another call could happen within 24 hours if needed.  

---  

#### **China Macro**  

- **June Caixin Services PMI**: Dropped to **50.6** (lowest since Q4 2023), with slowing demand and renewed job cuts.  

- **U.S. Eases Chip Design Software & Ethane Export Curbs**: Seen as a trade truce signal.  

- **"Anti-Internal Competition" Next Steps**: Likely a key theme in China’s next 5-year plan, targeting sectors like EVs, electronics, and machinery.  

#### **Domestic Companies/Industries**  

- **MIIT Cracks Down on PV Industry Price Wars**: Orders quality upgrades and淘汰落后产能.  

- **Tech Slump**: Alibaba, JD, Meituan fell on prolonged food-delivery battle fears. Goldman estimates:  

 - Alibaba may lose ¥41B, JD ¥26B, Meituan EBIT down ¥25B.  

 - PDD benefits as it stays out of the fray.  

- **DeepSeek Joins AI Talent War**: Posted 10 LinkedIn jobs (including AGI roles) to attract global talent.  

#### **Overseas Macro**  

- **Japan’s Car Price Cuts Shield U.S. Consumers**: May export prices plunged **~20% YoY**, letting Trump push tougher trade terms.  

- **Japan’s 34-Year High Wage Growth (5.25%)**: Boosts BOJ hike bets but squeezes corporate profits.  

- **"No 2024 Fed Cuts" Warning**: Discovery Capital’s Citrone sees S&P correction risks but touts Latin America’s boom potential.  

- **Gold’s "Goldilocks" Risk**: Struggles in mild growth/low inflation; tech stocks thrive.  

- **Copper Nears 2024 High**: U.S. buying frenzy sparks a potential short squeeze.  

- **OPEC+ May Boost Output by 411K B/D in August**.  

#### **Overseas Companies**  

- **AI War Update**:  

 - Meta all-in on "superintelligence"; Apple lags in talent race.  

 - OpenAI-Microsoft IP fight looms; Nvidia’s missteps help AMD.  

- **Tesla’s Storage Business Slumps**: Q2 installations fell to 9.6GWh (down from peak).  

- **Corporate Bitcoin Buying Spree**: Firms bought **131K BTC in Q2** (vs. ETFs’ 111K); MicroStrategy leads (597K BTC held).  

- **Figma’s IPO Bid**: 2024 revenue **$749M (+48%)**, 13M MAUs (2/3 non-designers).  

- **CoreWeave Surges 9%**: Secures Nvidia’s first GB300 AI servers.  

#### **Sector Themes**  

1. **Storage (Upgrade Cycle)**: HBM/eSSD/DDR5 demand + domestic substitution.  

2. **Low-Dk Electronic Fiber**: AI drives tight supply; high-end products stabilize oversupply fears.  

3. **Fitness Equipment**: Smart tech reshapes industry; focus on branded leaders.  

4. **Nuclear Fusion Power**: Key component (magnets, heating systems) firms gain first-mover edge.  

---  

### **Today’s Preview**  

- **U.S. Independence Day** (Markets closed).  

- **Trump’s "Deadline" for Tax/Spending Bill**.  

- **Eurozone May PPI**.  

**Disclaimer**: Views are authors’ alone, not investment advice. Accuracy, completeness, or timeliness not guaranteed. No liability for losses.