Morning News

Source: Wall Street News

Market Overview

The market will be closed on July 4th during the US Independence Day holiday, and the US stock and US bond spot markets will be closed on that day.

The latest Trump administration's tariff threat triggered a sell-off in risk assets, with S&P 500 futures falling 0.6% on Friday, while European blue-chip stock index STOXX 50 fell more than 1%. European chip stocks generally fell, with Asmay Holdings falling about 2.6%.

The yield on the 10-year German bond fell by 0.8 basis points, while the British bonds were still in decline, and the cumulative yield of the whole week rose by 5 basis points.

Risk aversion sentiment rebounded, and spot gold rose nearly 0.6% during the session. The OPEC+ meeting is expected to increase production significantly again, with U.S. oil falling 1.5% at one point.

At the Asian market on Monday, spot gold opened slightly higher, US stock futures fell slightly, and WTI crude oil fell 1.8% at one point, and the decline narrowed since then.

Important news

Ministry of Commerce: The European side insists on taking restrictive measures on its own initiative, and China has to take reciprocal restrictions.

Trump: 12 trade letters have been signed, planned to be sent on Monday. Becent said trade negotiations with the EU are moving forward, and major news may be announced in the next two days, and Bitcoin's gains will expand.

Musk announced the establishment of the "American Party" and wanted to "avoid the US bankruptcy" and planned to run for election next year. Trump responded: Absurd.

Senior central bank reporter warned: Trump forced the Federal Reserve to pay for the fiscal deficit, and the consequences may be very serious.

On the evening of July 5, Alibaba and Meituan staged a takeaway war. As of 22:54 on July 5, Meituan Instant Retail's orders on the day had exceeded 120 million orders, of which the catering orders had exceeded 100 million orders.

OPEC+ accelerated production growth and agreed to increase production by 548,000 barrels per day in August, higher than expected, considering an additional 548,000 barrels per day in September.

Market closing

European and American stock markets: US stocks are closed. The European STOXX 600 index closed down 0.48%, down 0.46% throughout the week.

A-shares: The Shanghai Composite Index rose 0.32% to 3472.32 points, the Shenzhen Component Index fell 0.25% to 10,508.76 points, and the ChiNext Index fell 0.36% to 2156.23 points.

Bond market: Germany's 10-year government bond yield fell 0.8 basis points to 2.607%, and the cumulative increase of 1.5 basis points throughout the week. The yield on the two-year German bond fell 1.8 basis points to 1.816%, and the cumulative decline of 4.4 basis points throughout the week.

Commodity: WTI crude oil futures fell 0.76% to US$66.49 per barrel. Brent's September crude oil futures closed down 0.72% at $68.30 per barrel, up 2.24% throughout the week. Spot gold rose 0.33% to $3337.15 per ounce, up 1.92% throughout the week.

News Details  

Global Highlights  

**Ministry of Commerce**: The EU persists in imposing restrictive measures, and China has no choice but to adopt reciprocal measures. The notice stipulates that for medical equipment procurement projects with budgets exceeding 45 million RMB (see attached list for specific categories), if imported products are deemed necessary, EU companies (excluding European-funded enterprises in China) must be excluded after completing legal procedures. For non-EU companies participating, the proportion of medical equipment imported from the EU must not exceed 50% of the total contract value. These measures do not apply to projects where only EU-imported medical equipment can meet procurement requirements.  

**Trump**: Has signed 12 trade letters, plans to send them out on Monday. The shift from complex negotiations to unilateral demands marks an aggressive U.S. trade strategy, creating significant uncertainty for the global economy. Markets are holding their breath, awaiting the final destinations of these mysterious letters and the chain reactions they may trigger.  

**Bessent**: Trade discussions with the EU are progressing, and major announcements may be made in the next two days. Bitcoin gains widen. U.S. Treasury Secretary Bessent stated that the U.S. holds leverage in negotiations with the EU, and trade talks are in their final stages. "We are close to reaching several trade agreements."  

What happens after the tariff exemption deadline? Song Xuetao of Guojin Securities believes that countries like India, Pakistan, and Switzerland may reach trade agreements or frameworks with the U.S., while the EU, Japan, South Korea, and some ASEAN nations are still in negotiations and may secure trade deals or tariff extensions. Although the uncertainty around "reciprocal tariffs" has diminished, the Trump administration still wields other tariff tools like Section 232 and Section 301, keeping future trade policies highly unpredictable.  

With the tariff deadline looming, why are investors choosing to ignore it? Markets believe the deadline has enough "flexibility" and that the worst-case scenario is no longer on the table. If April 2 was an earthquake, the tariff letters are merely aftershocks—even if rates exceed the initial 10%, the market impact won’t be the same.  

**Musk announces the founding of the "American Party"**, aiming to "prevent U.S. bankruptcy" and plans to run for office next year. Musk hinted that the American Party will participate in the 2026 midterm elections, with a political platform potentially including reduced debt spending, AI development, and deregulation (especially in energy). Initially, the party will focus on 2-3 Senate seats and 8-10 House districts, aiming to become a decisive force in Congress. Musk’s approach is less about forming a traditional party and more about creating a precise "political lever" to influence national policy by targeting key seats.  

According to CCTV News, on the afternoon of July 6, local time, U.S. President Trump, when asked about billionaire Musk’s announcement of a new political party, said Musk "can have some fun with it," but he considers it "absurd."  

**Veteran central bank reporter warns**: Trump’s pressure on the Fed to cut rates and fund fiscal deficits could have severe consequences. Greg Ip of *The Wall Street Journal* noted that Trump’s rate-cut demands introduce a new dimension—he hopes lower rates will support his fiscal priorities. This "fiscal dominance" model often leads to a mix of inflation, crises, and economic stagnation. However, in the short term, it could serve as a powerful economic stimulus, explaining why stocks continue to hit new highs under this expectation.  

On the evening of July 5, Alibaba and Meituan engaged in a food delivery battle. Both platforms released a large number of high-value coupons, including "25 off 21," "25 off 20," and "16 off 16" no-threshold discounts. The influx of users caused Meituan’s system to crash temporarily. Internal data showed that by 22:54 on July 5, Meituan’s instant retail orders had exceeded 120 million for the day, with food orders surpassing 100 million.  

**OPEC+ accelerates production increases**, agreeing to boost output by 548,000 barrels per day in August—higher than expected—and considering another 548,000 bpd hike in September. This follows increases of 411,000 bpd in May, June, and July. OPEC+ representatives indicated that further hikes will be discussed at the next meeting.  

**Domestic Macro**  

**CICC**: The market has a hint of late-2014 vibes, lacking only a catalyst. CICC notes similarities to late 2014: investors have seen gains in Hong Kong stocks, small-cap stocks, and industrial sectors, with new products warming up; non-financial sector earnings expectations are nearing bottom, and patience is improving, though confidence remains shaky; anti-internal competition and domestic demand stimulation are clear policy goals, with specific measures pending. The market only lacks a spark, which could come from unexpected Sino-U.S. policy moves or new tech developments.  

**Understanding Sci-Tech Bond ETFs**: The first batch of 10 Sci-Tech Bond ETFs primarily tracks three indices: CSI AAA Sci-Tech Bonds, Shanghai AAA Sci-Tech Bonds, and Shenzhen AAA Sci-Tech Bonds. Guojin Securities estimates that, given regulatory requirements and growing ETF sizes, the upper limit for these ETFs may be 300–500 billion RMB.  

**Domestic Companies**  

**Foxconn’s Q2 report meets expectations**, with strong AI server demand. Driven by robust AI server and iPhone demand, Q2 revenue rose 15.8% YoY to NT$1.8 trillion. Analysts attribute this to continued AI investments by cloud providers and accelerated iPhone production amid tariff uncertainties.  

**Overseas Macro**  

**The "Big Beautiful Act" passes, and a U.S. debt issuance wave is coming**. To cover trillion-dollar deficits, the U.S. government is betting on short-term financing, testing the $7 trillion market’s capacity.  

**U.S. debt "flood"—watch for safety!** Western Securities notes that the July 4-passed *Beautiful Big Act* raises the debt ceiling by $5 trillion. Heavy debt issuance in H2 could push 10-year Treasury yields above 5%, shifting markets from growth back to "safe assets." Drawing parallels to 2023: after the debt ceiling was breached in late May, yields rose, and the ChatGPT rally abruptly ended in late June. Since late last year, rising yields and "reciprocal tariffs" have caused adjustments in A-share markets and growth styles.  

**BofA’s Hartnett**: Sell when the S&P hits 6,300! Just 0.3% away from Thursday’s close, Hartnett sees growing "bubble risks," with the *Beautiful Big Act* fueling market froth. However, he adds, "overbought markets may stay overbought, as greed is harder to overcome than fear."  

**Japan’s Upper House election begins**, a major test for Prime Minister Ishiba’s government. *The Japan Times* reports that if the ruling coalition fails to maintain a majority, Ishiba’s position could be at risk, sparking speculation about a regime change or coalition expansion.  

**"Rush exports" boost Vietnam’s Q2 GDP growth to 7.96%**, beating expectations. Exports rose 18% to $116.93 billion, yielding a $4.41 billion surplus, as buyers accelerated purchases ahead of potential U.S. tariffs. A new U.S.-Vietnam trade deal could help Vietnam shift exports toward higher-value products like semiconductors.  

**Overseas Companies**  

**Who will be the first $4 trillion company: Nvidia or Microsoft?** Currently valued at $3.89T and $3.71T, respectively. Nvidia, an upstream AI chip supplier, benefits from AI demand, while Microsoft, downstream, relies on premium AI service payments.  

**OAI/Google/DeepSeek form an "AI Dream Team"!** Sakana AI’s Multi-LLM AB-MCTS method integrates o4-mini, Gemini-2.5-Pro, and DeepSeek-R1-0528, dynamically optimizing outputs through collaborative reasoning, effectively harnessing collective AI intelligence.  

**Industries/Concepts**  

1. **Cross-border payments**: On July 4, 2025, the PBOC sought public feedback on revised *CIPS Business Rules*, emphasizing flexibility to support RMB internationalization.  

2. **PCBs**: Guosheng Securities highlights growing AI infrastructure investments, benefiting PCB companies.  

3. **Semiconductors**: Moore Threads and MetaX’s IPOs advance domestic tech, with AI chips potentially shifting to local foundries.  

4. **Pharma**: Shenwan Hongyuan notes strong H1 earnings in chemical pharmaceuticals, with optimism for medical equipment and upstream suppliers.  

**Today’s Preview**  

- China’s July forex reserves.  

- Eurozone May retail sales.  

- BRICS Summit in Rio de Janeiro, July 6–7.  

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**Disclaimer**: Views are solely the author’s and do not constitute investment advice. The platform disclaims liability for accuracy, completeness, originality, or timeliness, and any losses from reliance on this information.