Breakfast | Meta rose nearly 4%, leading the tech giants! U.S. steel tariffs are coming, and steel stocks surged

Market Overview

Trade winds affect U.S. stock nerves, S&P V-shaped reversal, June opens with a thrilling gain. After the U.S. manufacturing index, the three major U.S. stock indices hit daily lows, U.S. Treasury yields fell back, and the U.S. dollar index hit a nearly six-week low, approaching a three-year low. After news of possible leader talks, U.S. stock indices and Chinese concept indices turned upward, and U.S. Treasury yields rebounded. Meta rose 3.6%, leading tech giants, while Tesla fell over 1%.

With U.S. steel tariffs approaching, U.S. steel stock Cleveland-Cliffs rose 23%, while Ford and General Motors fell nearly 4%, and Stellantis' European stocks dropped nearly 5%, with New Copper once rising nearly 6%.

During the session, gold rose nearly 3%, and U.S. oil rose over 5%. Media reports indicated that after a 180-degree shift in U.S. government policy on Iran nuclear negotiations, crude oil narrowed its gains.

In the Asian session, Hong Kong stocks rebounded sharply, with the Hang Seng Index closing down only 0.57%, and Pop Mart rose over 4%.

Key News

The U.S. claims that China violated the consensus of the China-U.S. Geneva trade talks, while the Chinese Ministry of Commerce spokesperson stated that China firmly rejects unreasonable accusations.

Ahead of negotiations between Europe and the U.S., the European Union warned the U.S.: if talks fail, countermeasures will take effect no later than July 14.

Progress on tariff policies is hindered, with the Trump administration seeking help from the appeals court; U.S. Secretary of Commerce stated that even if tariff policies are canceled, the U.S. President still has the authority to take other actions.

The U.S. May ISM Manufacturing Index has contracted for three consecutive months, with import indicators hitting a sixteen-year low; the Eurozone May Manufacturing PMI was 49.4, showing a slowdown in contraction, with output growing for the third consecutive month, indicating signs of recovery.

After the second round of direct negotiations between Russia and Ukraine, it is reported that the Russian side is satisfied with the negotiation results, there are significant differences between Russia and Ukraine on ceasefire conditions, and the possibility of a meeting between the leaders of Russia and Ukraine in Turkey cannot be ruled out; on the eve of the Russia-Ukraine talks, several "black swans" emerged, with Ukrainian officials claiming that the "spider web" operation completely destroyed at least 13 Russian military aircraft, which Russian media claimed was purely a rumor.

U.S. Treasury Secretary responds to Dimon's "U.S. debt collapse theory": The U.S. will never default, we are in a warning zone, but will never hit a wall.

Federal Reserve "hotshot" Waller: sees no evidence of long-term inflation rising, still expects interest rate cuts later this year.

Media reports indicate a 180-degree shift in U.S. policy on Iran nuclear negotiations, with a secret proposal allowing low-enriched uranium activities; Trump: the U.S. will not allow any uranium enrichment.

Market Closing Report

U.S. and European stock markets: The Dow rose 0.08%, the S&P 500 index rose 0.41%, and the Nasdaq rose 0.67%. The European STOXX 600 index closed down 0.14%.

A-shares: Market closed.

Bond Market: By the end of the bond market, the yield on the benchmark U.S. ten-year Treasury bond was approximately 4.44%, and the two-year U.S. Treasury yield was approximately 3.94%, both up about 4 basis points during the day Commodity: WTI July crude oil futures rose by 2.84%. Brent August crude oil futures rose by 2.94%. COMEX August gold futures rose by 2.47%. COMEX July copper futures rose by 3.87%. London zinc rose nearly 3%, London nickel rose nearly 2%, and London copper rose by 1.2%.

News Details

Global Highlights

The U.S. claims that China violated the consensus reached in the China-U.S. Geneva trade talks, Chinese Ministry of Commerce spokesperson: China firmly rejects unreasonable accusations.

• The spokesperson of the Ministry of Commerce stated that after the Geneva trade talks, the U.S. has successively introduced multiple discriminatory restrictions against China, including issuing guidelines for AI chip export controls, halting sales of chip design software (EDA) to China, and announcing the revocation of Chinese student visas. These actions seriously violate the consensus reached during the phone call between the two heads of state on January 17, severely undermine the existing consensus of the Geneva trade talks, and seriously harm China's legitimate rights and interests.

Before the U.S.-Europe negotiations, the EU warns the U.S.: If no agreement is reached, countermeasures will take effect by July 14 at the latest. An EU spokesperson stated that if a mutually acceptable solution cannot be reached, the existing and potentially additional EU countermeasures will automatically take effect on July 14, with the possibility of earlier implementation. The spokesperson also indicated that the EU does not want to pursue a tariff route and prefers to resolve disputes through negotiations. Media reports indicate that the U.S. urged its negotiating partners in a letter to propose the best tariff solutions by this Wednesday.

Tariff policy advancement hindered, Trump administration seeks help from appellate court. According to CCTV news, on June 2 local time, the Trump administration requested the federal appellate court to block the previous ruling by the U.S. District Court for the District of Columbia that deemed its tariff policy "illegal."

• According to CCTV, U.S. Secretary of Commerce: Even if the tariff policy is canceled, the U.S. President still has the right to take other actions.

In May, the ISM manufacturing index in the U.S. shrank for three consecutive months, and the import index hit a sixteen-year low. The ISM manufacturing PMI index for May was 48.5, below expectations and the previous value. Order volumes shrank for the fourth consecutive month, the import index hit a new low since 2009, the export index hit a five-year low, and the price payment index remained high Eurozone May Manufacturing PMI at 49.4, contraction slows, output grows for the third consecutive month, showing signs of recovery. The Eurozone manufacturing PMI remains in the contraction zone, but the improvement trend is evident; Germany's manufacturing output has grown for three consecutive months, boosted by export orders; France's manufacturing is further recovering, with a warming job market; Italy's manufacturing is still in recession, but signs of improvement are emerging.

Second round of direct negotiations between Russia and Ukraine ends, reportedly not ruling out the possibility of a meeting between the leaders of Russia and Ukraine in Istanbul. Reports indicate that the Russian delegation is satisfied with the results of the second round of negotiations and has submitted a peace memorandum to the Ukrainian side; the Ukrainian side has requested an unconditional ceasefire for at least 30 days in airspace, maritime, and land areas. It is still too early to discuss the timing of a meeting between the leaders of Russia and Ukraine. Media reports that there are significant differences between the two sides regarding ceasefire conditions.

• On the eve of the second round of talks, several "black swans" flew out. Ukraine revealed that on June 1, it launched a special operation against Russia, using drones to destroy 41 Russian strategic bombers, with about 34% of the strategic bombers at major Russian airports being attacked. Russian media stated that the Ukrainian claim is purely a rumor.
• Did Ukraine's "big surprise attack" severely damage Russia? For Russia, strategic bombers like the Tu-95 and Tu-22 are difficult to replace as strategic assets; if irreparable losses occur, it means that the Russian military's strategic nuclear strike capability is weakened. Moreover, theoretically, if strategic nuclear vehicles are attacked, it has crossed a line that is untouchable for a nuclear-armed country, and the Russian military should respond with the strongest counterattack.

U.S. Treasury Secretary responds to Dimon's "U.S. debt collapse theory": The U.S. will never default, we are in a warning zone, but will never hit a wall. In response to JPMorgan CEO Dimon's warning that the U.S. debt market will "collapse," U.S. Treasury Secretary Yellen firmly stated that "the U.S. will never default" and refuted CEO Dimon's prediction, saying that similar predictions in his career have never come true.

Federal Reserve "star governor" Waller: sees no evidence of long-term inflation rising, still expects rate cuts later this year. Waller stated that tariffs will push inflation higher in the "coming months," supporting the notion that as long as inflation expectations remain stable, short-term price increases can be ignored when formulating policy. Assuming effective tariff rates are close to lower tariff scenarios, potential inflation continues to make progress toward the 2% target, and the labor market remains robust, it will support a 'good news-style' rate cut later this year Media reports the U.S. has made a 180-degree turn in its Iran nuclear negotiation policy, secretly proposing to allow low-enriched uranium activities, Trump: impossible. The proposal aims to allow Iran to conduct limited low-level uranium enrichment activities on its territory, with the duration yet to be determined, which contradicts previous public statements by senior U.S. officials. Sources revealed to the media that the newly proposed U.S. plan shows greater flexibility on these two key issues. Trump later insisted that the U.S. would not allow Iran to engage in any uranium enrichment.

Domestic Macro

China Securities Journal: Multiple regions take various measures to strictly prevent the illegal outflow of strategic minerals. The National Export Control Work Coordination Mechanism Office issued and implemented the "Overall Deployment for Strengthening the Whole Chain Control of Strategic Mineral Exports" after procedural approval. Guizhou will strictly follow the division of work outlined in the "Overall Deployment" to carry out relevant tasks. Hunan Province will earnestly implement local regulatory responsibilities, systematically investigate Hunan's strategic mineral export enterprises, establish a ledger, guide enterprises to strengthen compliance system construction, enhance corporate compliance awareness and capabilities, and ensure that control measures are effectively implemented. Guangxi will continue to supervise and manage the exploration and mining of national strategic minerals.

Domestic Companies

After a new round of major price cuts, BYD's sales increased, but stock price fell. BYD's sales surged in May, selling 382,000 vehicles, setting a new high for the year, with overseas sales also breaking records. The "internal competition price cuts" boosted sales but severely hurt stock prices, with the company's stock price dropping over 17% from its record high. Citigroup estimates that after the price cuts, foot traffic for BYD dealers may increase by 30% to 40% month-on-month. However, whether this strategy of exchanging price for volume can be sustained has become a focal point for the market.

Overseas Macro

Powell attends Federal Reserve International Finance Division event: commemorates Fischer, reiterates the importance of global economic research, does not discuss policy outlook. Federal Reserve Chairman Jerome Powell spoke on Monday at the 75th anniversary event of the Federal Reserve International Finance Division (IF), reviewing the department's historical contributions to global economic research and praising its role in responding to financial crises and pandemics. However, at a time when the market is highly focused on the direction of the Fed's interest rate policy, Powell did not express any views on the current U.S. economic situation or future interest rate outlook during this speech.

30-year U.S. Treasuries have become a pariah, star institutions fear to avoid them, "short them if you can". Media reports indicate that due to concerns over the U.S.'s continuously expanding federal budget deficit and debt burden, several institutions, including DoubleLine Capital, PIMCO, and TCW Group, are avoiding 30-year U.S. Treasuries and opting for short-term bonds instead Since the beginning of this year, the performance of the 30-year U.S. Treasury bond has been particularly weak, with yields continuously rising, while the yields on the 2-year, 5-year, and 10-year bonds have been declining. Analysts believe that this divergence is very rare, with the last occurrence for an entire year being in 2001. Meanwhile, on Monday morning, for a brief moment, the yield on the 20-year U.S. Treasury bond experienced the largest inversion in nearly four years, briefly falling below the 30-year U.S. Treasury bond by less than 1 basis point.

Saudi Arabia pushes for increased production, stubbornly breaking tradition, even OPEC insiders are guessing the reasons. Saudi Arabia is reshaping the OPEC+ landscape with unprecedented dominance, pushing for significant production increases for three consecutive months, with a planned increase of 411,000 barrels per day in July. This strategic shift breaks the traditional negotiation mechanism, and even opposition from major oil-producing countries like Russia cannot stop it. Analysts believe this is a "strategic calibration with geopolitical intentions."

• Morgan Stanley expects OPEC+ to increase production three more times, while Goldman Sachs expects one more increase. There is significant divergence on Wall Street regarding the future production path of OPEC+. Goldman Sachs believes OPEC+ will only conduct one more round of production increase in August, expecting oil supply to become loose in September. Morgan Stanley predicts continued production increases over the next three months, emphasizing a "disconnection" between quotas and actual production. However, both parties maintain a bearish outlook on oil prices, believing that the impact of U.S. tariffs, accelerated non-OPEC supply, and potential oversupply will suppress oil prices by the end of the year.

Overseas Companies

Next week's annual developer conference (WWDC), Apple AI still won't have any "surprises". The highly anticipated annual developer conference may fail to showcase Apple's determination to catch up in the AI field, and may instead highlight its shortcomings. Analysts point out that Apple's core AI features (such as the new version of Siri) continue to be delayed, with most of the released content being brand packaging, and only a small model with 3 billion parameters being opened to developers, far inferior to competitors.

Elon Musk's xAI launches $300 million stock sale at a group valuation of $113 billion. This transaction will allow employees to sell shares to new investors. In this transaction, the company's valuation reaches $113 billion, consistent with the price Musk's xAI paid when acquiring its social media platform X in March of this year.

Today's News Preview

China's May Caixin Manufacturing PMI.

Xiaomi Group 2025 Investor Day.

Speech by Bank of Japan Governor Kazuo Ueda.

Japan's Ministry of Finance conducts 10-year government bond auction.

South Korea holds elections.

Eurozone May CPI.

U.S. April JOLTS Job Openings. U.S. factory orders and durable goods orders for April.

Speech by Chicago Federal Reserve President Goolsbee and Dallas Federal Reserve President Logan