Morning News

Source: Wall Street News

### Market Overview

Boosted by the news that the US and Japan reached an agreement and the US and Europe are close to reaching a 15% - tariff agreement, the market's concerns about trade frictions have significantly cooled down, and the risk - appetite has been ignited. The S&P 500 and the Nasdaq have reached new highs, with small - cap stocks leading the way. After the after - hours financial reports, Google rose by 3.5% at one point, while Tesla fell by more than 5% at one point. Under the Meme - stock craze, the “new favorites” of retail investors change quickly. GoPro and Krispy Kreme soared in intraday trading, while Kohl’s and Opendoor plunged.

The yields on US Treasury bonds rose across the board. The yield on the 10 - year Treasury bond rose nearly 4 basis points, erasing the previous day's decline.

After the news of the US - Europe trade came out, the euro rose 0.55% from its daily low against the US dollar. The US dollar fell for four consecutive days and broke through the 97 - point mark.

Gold fell nearly 1.7% from its daily high. Crude oil inventories dropped significantly, and the oil price rebounded in a deep V - shape, finally closing flat with the previous day's closing price. The night - session of coking coal rose by more than 7% at one point.

During the Asian session, the A - share market declined in the afternoon. The Shanghai Composite Index stood at 3600 points at one point. The concept stocks of Yajiang Power Station were divided. The Hang Seng Tech Index rose by more than 2%. Tencent reached a new high. Coking coal rose by 11%, and government bonds fell.

### Top News

The Ministry of Commerce of China: He Lifeng will go to Sweden to hold economic and trade talks with the US side from July 27th to 30th.

The Hainan Free - Trade Port will be closed on December 18th! The proportion of “zero - tariff” goods is 74%, and there are 8 “first - line” ports.

Tesla's Q2 performance was dismal, with the largest sales decline in a decade. It reaffirmed its new - car launch and Cybercab mass - production plans, but without a performance guide. Musk warned that the situation may be severe in the next few quarters.

Google's parent company's Q2 performance exceeded expectations, and it increased its annual capital expenditure to $85 billion. It rose by 3.4% at one point after the after - hours trading.

The media said that Europe and the US are close to reaching an agreement, and the US will impose a 15% tariff on the EU. The White House responded that it is speculation. As the August tariff deadline approaches, the EU counter - attacked again: it plans to impose a 30% tariff on $100 billion worth of US goods.

Trump said, “The US and Japan have reached an agreement. Japan has accepted a 15% tax rate and opened up its auto and rice markets.” Lutnick: Japan “bought” a lower auto - tariff rate with $550 billion. The three major US automakers are “very dissatisfied” with the US - Japan trade agreement.

Kishida Fumio came forward to deny the “resignation rumor”, saying that there has been no discussion about whether to stay in office or step down.

The Japanese bond market encountered another crisis. The demand for the 40 - year bond auction reached a 14 - year low.

The White House released an “AI Action Plan”: relaxing supervision, expanding energy, and accelerating the development of AI. Analysts said that OpenAI, Microsoft, and Amazon are the big winners.

The chip war is coming! 1 million chips VS 50 million chips, Altman and Musk are in a fierce competition.

The Speaker of the US House of Representatives: Disappointed with Fed Chairman Powell.

### Market Closing Report

European and American stock markets: The S&P 500 index closed up 0.78%, at 6358.91 points, a new all - time closing high. The Dow Jones Industrial Average rose 1.14%, to 45010.29 points. The Nasdaq rose 0.61%, to 21020.02 points, a new all - time closing high. The European STOXX 600 index closed up 1.08%, at 550.22 points.

A - share market: The Shanghai Composite Index rose 0.01%, closing at 3582.30 points; the Shenzhen Component Index fell 0.37%, closing at 11059.04 points; the ChiNext Index fell 0.01%, closing at 2310.67 points.

Bond market: The yield on the 10 - year US benchmark Treasury bond rose 3.57 basis points, to 4.3798%. The yield on the two - year US Treasury bond rose 4.66 basis points, to 3.88%.

Commodities: WTI September crude oil futures closed down 0.09%, at $65.25 per barrel. Brent September crude oil futures closed down 0.13%, at $68.51 per barrel. COMEX gold futures fell 1.28%, to $3399.50 per ounce.

### Details of Major News

#### Global Highlights

China's Ministry of Commerce: He Lifeng will travel to Sweden to hold economic and trade talks with the US side from July 27 to 30. A spokesperson for the Ministry of Commerce stated that China and the US will follow the important consensus reached by the two heads of state in their call on June 5, give full play to the role of the China-US economic and trade consultation mechanism, and continue to conduct consultations on economic and trade issues of mutual concern in line with the principles of mutual respect, peaceful coexistence, and win-win cooperation.

US Treasury Secretary says third round of US-China consultations to be held next week; Sweden voices: will host new round of US-China talks. According to the Global Times, US Treasury Secretary Janet Yellen said on July 22 local time that the third round of Sino-US trade negotiations will be held in Stockholm, Sweden, next Monday and Tuesday. On July 21, Yellen stated in an interview that the two sides may discuss the issue of China's purchase of oil from Russia and Iran. August 12 is the deadline for China and the US to suspend the imposition of additional tariffs, and the latest round of negotiations aims to postpone this deadline.

Hainan Free Trade Port to close customs on December 18! "Zero tariff" commodities account for 74%, with 8 "first-line" ports. The customs closure of Hainan Free Trade Port will be officially launched on December 18 this year. The current customs closure policies are as follows: First, implement a more preferential "zero tariff" policy for goods, and the proportion of "zero tariff" commodity items imported through the "first line" will be increased from 21% to 74%. Second, implement more relaxed trade management measures. Third, implement more convenient access measures, with 8 existing open ports on the island serving as "first-line" ports. Fourth, implement a more efficient and precise supervision model.

Tesla's Q2 performance is dismal, with the largest sales decline in a decade. It reaffirms plans to launch new cars and mass-produce Cybercab, but there is no guidance.

In the second quarter, Tesla's revenue fell 12% year-on-year, and EPS fell 23%, both exceeding expected declines. The quarterly "carbon sales" revenue has declined for four consecutive quarters; automotive business revenue fell 16% year-on-year, with double-digit declines for two consecutive quarters. The gross profit of the energy storage business hit a new quarterly high, and the supercharging network drove service and other revenues to grow by 17%.

Tesla reaffirmed that it will launch new cars as planned this year and mass-produce the Robotaxi product Cybercab next year. It said that it plans to trial-produce more affordable cars in the first half of this year and mass-produce them in the second half, and mass-produce the Semi truck next year. The second quarter is a milestone in the transformation to a leader in AI and robot services, and it is ready to launch FSD on a larger scale in China, pending regulatory approval.

The impact of tariffs, fiscal policies, and political sentiment is unclear, but investment in research and development and capital expenditures will continue. The conference call estimated that tariff costs are about $300 million, and Musk warned that the situation may be severe in the next few quarters.

Tesla's stock price rose first and then fell after hours, once dropping more than 5%.

Google's parent company's Q2 results exceeded expectations, increasing its annual capital expenditure to $85 billion, and its stock rose 3.4% after hours. The second-quarter earnings report of Google's parent company Alphabet showed that revenue and profits exceeded market expectations, with strong growth in cloud business and search advertising revenue. The company also announced that it will raise its 2025 annual capital expenditure to $85 billion, $10 billion higher than previously expected, triggering some market concerns about profitability. Google's Class A shares once fell about 2.8% after hours, but then rebounded, with an increase of 3.4% at one point.

Media reports say Europe and the US are close to reaching an agreement, and the US will impose a 15% tariff on the EU. The White House responded that it is speculation. Media reports say that the EU-US agreement will agree on a tariff level similar to the US-Japan agreement reached this week, which includes existing tariffs, meaning that the EU will face a 15% tariff on automobiles; the EU and the US will exempt tariffs on some products, including aircraft, spirits, and medical devices; if no agreement is reached by August 1, the EU is prepared to impose a 30% retaliatory tariff, which may affect 93 billion euros of goods. The euro turned up intraday and hit a two-week high. A White House trade adviser expressed doubt about the report, saying "wait and see", and the euro once turned down in the short term.

With the August tariff deadline approaching, the EU counterattacks again: plans to impose a 30% tariff on $100 billion of US goods. Reports say that once US President Trump fulfills his threat to impose a 30% tariff on most EU exports starting from August 1, the EU will quickly retaliate by imposing a retaliatory tariff of the same rate on about 100 billion euros (about $117 billion) of US products.

Did Japan "surrender"? Trump said that "the US and Japan have reached an agreement, Japan accepts a 15% tax rate, and opens its auto and rice markets". In addition, media reports quoted sources as saying that the US will impose a 12.5% tariff on automobiles imported from Japan, half of the previous 25% level, plus a basic tariff rate of 2.5%, totaling 15%.

Shigeru Ishiba confirmed that Japan and the US have reached an agreement. Shigeru Ishiba said that under Japan's current "minimum access system" for rice, the proportion of rice imported from the US will be increased; in terms of automobiles, the US will impose a 12.5% tariff on automobiles imported from Japan, plus the previous 2.5% tariff rate, totaling 15%; tariffs on steel and aluminum will remain at the current 50%.

Lutnick: Japan "bought" a lower auto tariff rate with $550 billion. US Commerce Secretary Lutnick said that the Japan agreement can serve as a model for the EU trade agreement, and Trump hopes that the EU will "fully" open its market. US Treasury Secretary Yellen also said that the key reason why Japan was able to obtain preferential tariff rates is that it proposed innovative financing arrangements, including the establishment of a $550 billion investment fund.

15% tariff on cars imported from Japan, 25% on imports from Mexico? The three major US automakers are "very dissatisfied" with the US-Japan trade agreement. The US tariff on Japanese imported cars has been reduced to 15%, while vehicles from Canada and Mexico remain at 25%. This move has been strongly opposed by the Detroit Big Three (General Motors, Ford, and Stellantis, the parent company of Chrysler). The chairman of the American Automotive Policy Council, which represents the interests of the three major automakers, said that this arrangement will impose higher tariffs on cars produced in North America with higher US content, while imposing lower tariffs on Japanese imported cars, which is a bad agreement for US industry and US auto workers.

Shigeru Ishiba came forward to deny the "resignation rumors", saying that he has not discussed whether to stay or step down. According to previous media reports, Shigeru Ishiba may hold talks with LDP's top advisor Taro Aso, former Prime Minister Fumio Kishida, and former Prime Minister Yoshihide Suga as early as the 23rd.

With tariff negotiations "surrendering" and rumors of Shigeru Ishiba's resignation, why did Japanese stocks soar and Japanese bonds fall? The 15% tariff rate on Japan announced by Trump is significantly lower than the market's previous expectations, driving Japanese stocks to soar, with auto stocks rising prominently and Mazda surging 18%. The rumors of Shigeru Ishiba's resignation brought additional optimism to the market, and the market generally believes that the leadership change will have a positive impact on the Japanese stock market. After the tariff agreement was reached, market expectations for the Bank of Japan to raise interest rates within the year rose sharply, becoming a factor for the rise in short-term Japanese bond yields, while the rise in long-term bond yields stemmed from concerns about the growth of government spending.

Japanese bonds hit another crisis, with demand for 40-year long-term bond auction hitting a 14-year low. The background of this auction is complex. The ruling coalition failed to win a majority in the upper house election, and the US announced a 15% tariff on Japanese goods. These factors have jointly heightened market concerns about Japan's economic prospects. After the results were announced, Japanese government bond yields rose across the board, with the 40-year yield rising nearly 10 basis points intraday, and the 10-year yield rising to the highest level since 2008.

White House releases "AI Action Plan": relax regulations, expand energy, and accelerate AI development. The Trump administration released the "AI Action Plan", aiming to accelerate the development of artificial intelligence in the US by relaxing regulations and expanding energy supply for data centers, in an effort to make US technology the foundation of global AI; it is proposed to suspend funding support for states that impose excessive regulations on emerging technologies; it plans to promote AI plans through executive orders, including directives to support the global deployment of US technology and calls for all large language models purchased by the government to remain neutral and unbiased. Analysts said that OpenAI, Microsoft, and Amazon are the big winners.

The chip war is coming! 1 million cards VS 50 million cards, Altman and Musk's "celestial battle". OpenAI announced that it will deploy more than 1 million GPUs by the end of 2025, directly pointing to the ultimate computing power goal of AGI, while Musk boasted that xAI will build computing power equivalent to 50 million H100 GPUs within five years, setting off an AI "arms race". Giants are fiercely competing for dominance in computing power, and the industry predicts that AI capital expenditure will exceed 2.5 trillion yuan in 2025. With the explosion in computing power demand, will NVIDIA win big again?

US House Speaker: Disappointed with Federal Reserve Chairman Powell. US "third-in-line" and House Speaker Johnson said he was disappointed with Federal Reserve Chairman Powell and believed that all reviews of the Federal Reserve are appropriate. Johnson also said that he is willing to consider revising the Federal Reserve Act enacted in 1913, which established the central banking system.

#### Domestic Macro

Hong Kong Monetary Authority Chief Executive Eddie Yue: The cooling efforts on stablecoins still need to be strengthened. Eddie Yue said that it is necessary to prevent excessive speculation on stablecoins in the market and public opinion. The first is over-conceptualization, and the second, which is more worthy of attention, is the trend of bubble formation. After the "Stablecoin Ordinance" is passed, the Hong Kong Monetary Authority will immediately implement the regulatory and anti-money laundering guidelines of the ordinance to seek public opinions, and it is expected to be announced by the end of July.

Hong Kong's virtual asset regulatory framework and related licenses. Guojin Securities said that from the "Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance" to the "Stablecoin Ordinance", Hong Kong's virtual asset regulatory framework has been continuously improved. Before the implementation of the regulatory system for stablecoin issuers, the Hong Kong Monetary Authority launched a stablecoin sandbox in March 2024 to convey regulatory expectations and provide guidance to institutions planning to issue fiat-backed stablecoins in Hong Kong, to ensure that the system design meets regulatory objectives. Currently, there are 3 groups of institutions in the sandbox.

How to view the recent breakthrough of Hong Kong stocks? Due to the rebound of the Internet and the anti-involution policy boosting the cycle, Hong Kong stocks are evolving towards 26,000 points. The seemingly strong index this time is essentially still a structural market, and stepping on the wrong main line can easily lead to missed gains. At present, liquidity is abundant and there is support at the bottom, but the market always overdraws. Instead of chasing when it is excited, it is better to buy when it is sluggish and lay out in advance. It is recommended that the dividend side can moderately switch from banks to insurance, and the growth side can switch from overdrawn new consumption to AI applications, robots and components.

#### Domestic Companies/Industries

Ministry of Science and Technology sets tone for autonomous driving: must respect life, control risks, and not false propaganda! The Ministry of Science and Technology issued the "Guidelines" stating that when facing unavoidable traffic accidents or extreme driving environments, the driving automation system should be ensured to highly respect life and actively seek effective response methods to minimize harm to people. The "Guidelines" clearly state that the research and development of driving automation technology should design a sound risk monitoring and emergency mechanism to ensure that relevant responsible subjects can promptly detect, intervene, and control risks, and reduce potential threats to a reasonable and controllable range. The "Guidelines" also emphasize that when releasing major research results, relevant subjects should adhere to objectivity and accuracy, seek truth from facts, and must not fabricate or spread false information that is inconsistent with the actual functions and effects of the driving automation system.

#### Overseas Macro

Wall Street majors warn: the new round of retail狂欢 may be coming to an end. Kohl's Department Store soared 105% at one point on Tuesday, and real estate agent Opendoor has surged 440% in the past year. The enthusiasm of retail investors is reminiscent of the GameStop era. Regarding the enthusiasm of retail investors, analysts seem to have reached a consensus: it is not about whether there will be a correction, but "when" it will happen. Barclays warned that some corners of the market have shown obvious bubble characteristics, which will eventually burst in some form, and it is time for retail investors to hit the brakes.

The more the market believes in TACO, the more Trump dares to raise taxes, and the more the Fed dare not cut interest rates. Bank of America warned that the escalation of US tariffs exceeded expectations, and the effective tax rate soared to around 16%. The market's indifferent response is encouraging the Trump administration to further escalate the trade war. The Federal Reserve is facing the dual pressure of inflation rising by 30 basis points and downward pressure on economic growth, and the possibility of interest rate cuts within the year is further reduced.

US House Speaker Johnson launches follow-up legislative work on the "Big Beautiful" tax law, seeking to pass it in autumn. US House Speaker Johnson said that House Republicans are planning to launch a sequel to the "Big Beautiful Act" in autumn this year, aiming to re-include the content deleted by the Senate rules in the first version, such as prohibiting illegal immigrants from obtaining state-funded Medicaid. The new bill will be promoted through the budget reconciliation process, but on a smaller scale, and is expected to involve fewer committees. However, media reports say that this attempt faces challenges, not only needing to redesign the provisions to meet the budget impact requirements, but also overcoming the Republican Party's internal fatigue with negotiations, and Senate Republicans seem indifferent.

White House says Trump wants to retain his decision-making power on sanctions against Russia. The White House said that US President Trump wants to retain his decision-making power on sanctions against Russia.

US existing home sales fell to the lowest level in nearly 15 years in June, and housing prices hit a new all-time high. US existing home sales fell 2.7% month-on-month to 3.9 million units at an annualized rate in June, the lowest level since September last year, and lower than the market expectation of 4 million units. Trump publicly stated that due to Federal Reserve Chairman, "Mr. Too Late" Powell's refusal to cut interest rates, the US housing market is lagging behind.

#### Overseas Companies

Sam Altman dialogues with Federal Reserve's Bowman. Altman said that we seem to be about to achieve "intelligence cheap enough to be immeasurable". In the past five years, we have been able to reduce the cost per unit of intelligence by more than ten times. It seems that we will do the same in the next five years, and maybe even more.

Consumers' resistance is heating up, and luxury giants finally hit the price increase brake. In the first five months of 2025, the average global luxury price increased by only 3%, the slowest increase since 2019. Top brands such as Louis Vuitton and Chanel have driven performance by substantial price increases in previous years, but under the current pressure of high inflation, high interest rates, and geopolitical conflicts, consumer confidence has weakened, and high-net-worth individuals have also begun to be精打细算, and the industry's willingness to raise prices has significantly weakened.

#### Industries/Concepts

1. Small nucleic acids: Huafu Securities pointed out that 2025 is an important year for small nucleic acid drug investment for three reasons: ① The delivery platform GalNac is very mature, and extrahepatic targeting platforms will usher in data catalysis; ② Indications expand from rare diseases to common diseases, expanding market imagination space; ③ Small nucleic acid drugs "commercialization + clinical data" catalysis is intensive.

2. Solid-state batteries: SAIC took the lead in applying semi-solid-state batteries in 100,000-class models. Dry process is the key to performance and cost. While Qingtao has made important progress in dry process, domestic and foreign manufacturers are also accelerating the landing application of solid-state batteries, and the industrialization of solid-state batteries is accelerating.

3. Construction machinery: According to the experience of the Three Gorges and other hydropower projects, the total investment in construction machinery and equipment usually accounts for 10-15% of the total project investment. Therefore, the equipment demand for the Yajiang Hydropower Station is expected to be between 120-180 billion yuan. From the perspective of the construction stage, the earthwork stage may account for 1/3 of the project time, mainly involving excavation operations, cranes will be used in the middle stage, and concrete pouring will be carried out in the later stage.

4. Refining and chemical industry: At present, the elimination of old and outdated production capacity in the chemical industry has entered the evaluation stage, coupled with the anti-involution trend in the industry, the benefits of main refineries are expected to improve. Pay attention to the transformation and elimination of old and outdated production capacity in sub-industries such as oil refining, chemical fertilizers, pigments and dyes, and related leading companies are expected to continue to benefit.

Preview of Today's Major News

President of the European Council Costa and President of the European Commission von der Leyen will visit China on July 24.

China's proportion of RMB in global payments via Swift in June.

Preliminary values of July manufacturing, services, and composite PMIs for the United States, the euro zone, the United Kingdom, and Japan.

Number of initial jobless claims in the United States last week.

U.S. new home sales in June.

European Central Bank interest rate decision, President Lagarde holds a monetary policy press conference.

Launch of Huawei's flagship tablet new product.

Honeywell releases financial results.

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