Breakfast | Trade agreement hopes to drive the S&P and Nasdaq to new historical highs; Nvidia's momentum continues, with Q2 stock price rising over 46%

Market Overview

Trade agreement hopes to drive US stocks higher, S&P and Nasdaq hit new all-time highs, with the Nasdaq rising over 6% in June and marking three consecutive months of gains, while the S&P gained over 10% in the second quarter, the largest quarterly increase in a year and a half; Apple reportedly considering external AI, closing up 2%; major Wall Street banks passed stress tests, with Goldman Sachs rising over 2%, leading the Dow; Nvidia set new records for four consecutive days, with a nearly 46% increase in the second quarter; Tesla fell nearly 2%, marking five consecutive declines, down over 20% in the first half of the year. Oracle closed up 4%, hitting a new all-time high; solar stocks surged, with SunRun rising 10%.

The yield on the 10-year US Treasury bond hit a nearly two-month low, falling nearly 20 basis points in June. The US dollar index reached a three-year low, declining for six consecutive months, marking the longest losing streak since 2017. In the first half of the year, US Treasuries achieved their best performance in five years for the same period, the US dollar index fell over 10% in the largest first-half decline since 1973.

The euro reached a nearly four-year high; the offshore yuan rose over 100 points during the day, breaking 7.16, approaching a seven-month high, with an increase of over 1,000 points in the second quarter; Bitcoin approached $109,000 before retreating over $2,000, still rising nearly 30% in the second quarter.

Crude oil halted a three-day rally, rising at least over 6% in June and marking two consecutive months of gains. Gold turned up after hitting a one-month low during the day, with gold futures rising 25% in the first half of the year.

During the Asian session, on the last trading day of the first half of the year, A-shares and Hong Kong stocks showed divergence, with the North Star 50 Index soaring 40% in six months, the Hang Seng Tech Index rising nearly 19%, and Laopu Gold surging over 320%.

Key News

China's official manufacturing PMI rose for two consecutive months in June to 49.7, with the new orders index rebounding into the expansion zone, and the non-manufacturing sector continuing to expand.

Trump: No need to extend the July 9 deadline, will set tax rates for countries, Japan to pay a 25% auto tariff; threatened to impose tariffs on Japan due to their unwillingness to import US rice. The EU reportedly willing to accept the US "benchmark tariff," but seeks exemptions for key industries. Canada made concessions, canceling the digital services tax, and the US and Canada will resume trade negotiations, aiming to reach an agreement by July 21. South Korea's primary task is reportedly to obtain a tariff extension permit.

US Treasury Secretary Yellen: Expected to sign a series of new trade agreements, current issuance of long-term bonds is meaningless, stablecoin legislation may be introduced in mid-July.

Trump expanded his targets, criticizing the Federal Reserve Board, including Powell; the White House stated that Trump mentioned global interest rates in a letter to the Federal Reserve on Monday.

Circle's bearish report is out, JP Morgan: the profit model's "scissors gap" is eroding profits, even adding a 10% "sentiment premium" is only worth $80; Goldman Sachs: valuations are too high, with three factors putting pressure on profit margins, but cross-border payments may be a breakthrough point.

Major shift: Apple is reportedly considering external AI technology to empower Siri, using third-party AI models from Anthropic or OpenAI; Ming-Chi Kuo: Apple is preparing a "big move," with seven headsets and AI glasses in development, and 2027 will be a period of significant explosion

After Meta poached 8 people, OpenAI couldn't sit still: optimizing compensation, willing to accompany to the end; Meta added 11 AI "experts", Zuckerberg officially introduced the "superintelligence" team internally.

Oracle secured a large cloud contract, generating 30 billion in revenue in a year, with the stock price rising over 8% at one point, reaching a historical high.

Market Report

U.S. and European Stock Markets: The S&P 500 index rose 0.52%, closing at 6204.95 points, with a cumulative increase of 4.96% in June, 10.57% in the second quarter, and 5.50% in the first half of the year. The Dow Jones Industrial Average rose 0.63%, closing at 44094.77 points, with a cumulative increase of 4.32% in June, 4.98% in the second quarter, and 3.64% in the first half of the year. The Nasdaq rose 0.48%, closing at 20369.73 points, with a cumulative increase of 6.57% in June, 17.75% in the second quarter, and 5.48% in the first half of the year. The European STOXX 600 index closed up 0.42%, at 541.37 points, with a cumulative decrease of 1.33% in June, an increase of 1.4% in the second quarter, and an increase of 6.65% in the first half of the year.

A-shares: The Shanghai Composite Index rose 0.59%, closing at 3444.43 points; the Shenzhen Component Index rose 0.83%, closing at 10465.12 points; the ChiNext Index rose 1.35%, closing at 2153.01 points.

Bond Market: By the end of the bond market, the yield on the U.S. 10-year benchmark Treasury bond was about 4.23%, down about 5 basis points during the day, with a cumulative decrease of about 17 basis points in June, an increase of about 2 basis points in the second quarter, and a cumulative decrease of about 34 basis points in the first half of the year; the yield on the 2-year U.S. Treasury bond was about 3.72%, down about 3 basis points during the day, with a cumulative decrease of about 18 basis points in June, a cumulative decrease of about 16 basis points in the second quarter, and a cumulative decrease of about 52 basis points in the first half of the year.

Commodities: WTI August crude oil futures closed down 0.63%, at $65.11 per barrel, Brent August crude oil futures closed down 0.24%, at $67.61 per barrel, with cumulative increases of about 7.1% and 6.3% in June, and cumulative decreases of about 8.9% and 10.7% in the second quarter, respectively. COMEX August gold futures closed up 0.61%, at $3307.7 per ounce, with a cumulative increase of about 0.2% in June and a cumulative increase of about 5% in the second quarter.

News Details

Global Highlights

China's official manufacturing PMI rose for two consecutive months to 49.7, with the new orders index rebounding into the expansion zone, and the non-manufacturing sector continuing to expand. The manufacturing purchasing managers' index, non-manufacturing business activity index, and composite PMI output index were 49.7%, 50.5%, and 50.7%, respectively, rising by 0.2, 0.2, and 0.3 percentage points from the previous month, indicating an overall expansion in the economic prosperity level of our country

• Minsheng Securities believes that the manufacturing PMI rose for the second consecutive month in June, benefiting from an increase in working days and a temporary easing of global trade uncertainties, with improvements in production demand and new export orders. Given that the PMI has remained below the boom-bust line for three consecutive months, coupled with a slight decline in the services PMI, the necessity for subsequent monetary easing and fiscal policies (accelerated special bond issuance, infrastructure efforts) has significantly increased.
• Guosheng Securities believes that the manufacturing PMI continued to rebound from a low level in June, with many sub-indices also showing improvement, possibly related to the continuation of "grabbing exports" and the accelerated issuance of special bonds. However, the manufacturing PMI and import-export orders are still in the contraction zone, and the services PMI is also below seasonal levels, indicating that the endogenous momentum of the economy remains weak. Looking ahead, although GDP growth was high in the first half of the year, real pressure is expected to manifest in the second half, particularly in August and September, compounded by a weakening domestic real estate market, necessitating a tightening of policies.

Trump stated, "No need to extend the deadline, will set tax rates for various countries," "Dear Japan, you must pay a 25% car tariff". With only 10 days left until the "tariff deadline" on July 9, Trump clearly stated that there is no need to extend the impending tariff deadline and will directly notify hundreds of countries of the tariff rates without continuing individual trade negotiations.

• Trump threatens to impose tariffs on Japan, citing unwillingness to import American rice.

The EU is reportedly willing to accept the US "benchmark tariff", but seeks exemptions for key industries. Media reports indicate that the EU has urged the US to provide quotas and exemptions to reduce the impact of car and steel/aluminum tariffs on the EU. Following this news, the euro's gains against the dollar expanded, reaching a nearly four-year high. The EU's trade negotiators will travel to the US for talks this Wednesday, while the European Commission denied any potential concessions to the US in technology legislation on Monday.

Canada concedes, cancels digital services tax, US and Canada will resume trade negotiations, aiming to reach an agreement by July 21. Previously, Trump halted US-Canada trade negotiations citing the digital services tax. Trump stated that Canada’s plan to impose a digital services tax on American tech companies is a "blatant" direct attack on the US, and Canada is clearly following the EU's lead, informing Canada within the next seven days about the tariffs that will be paid for trading with the US.

With only a week left in the tariff grace period, South Korea: the top priority is to obtain an extension permitReports indicate that South Korea will seek to extend the U.S. tariff suspension period by 90 days. A senior South Korean trade official stated that efforts will be made to negotiate an extension before July 8.

Bascent: Expected to sign a series of new trade agreements, current issuance of long-term bonds is meaningless, stablecoin legislation may be introduced in mid-July. U.S. Treasury Secretary Bascent stated that he expects to sign a series of new trade agreements before the July 9 deadline set by the U.S.; given the current yield levels, it is unreasonable for the U.S. government to expand the issuance of long-term government bonds. Regarding Powell's successor, Bascent mentioned two possibilities: appointing a new member or selecting from the existing Federal Reserve Board members. He also indicated that stablecoin legislation may be introduced before mid-July.

Against the odds, U.S. Treasuries achieve the strongest first half performance in five years. The yield on the U.S. 10-year Treasury bond has fallen by more than 30 basis points this year, with about 15 basis points of that decline occurring this month alone. The core driver comes from the market's continued strengthening of expectations for Federal Reserve interest rate cuts. Traders are betting that weak employment data will force the Federal Reserve to cut rates at least twice this year. The non-farm payroll report on Thursday may become a key trigger for a policy shift, further boosting the Treasury market.

Elon Musk jumps back, hardliners oppose even without re-election, Trump's "Big Beautiful Bill" struggles in Congress. Although Republican senators barely gathered enough votes to start the debate, the bill's final passage remains uncertain, with concerns about its potential massive debt scale. Musk called it "absurd and destructive," and the divide between hardliners and moderates within the party has not been bridged, with some senators not seeking re-election voting against the bill.

Trump expands his targets, criticizes the Federal Reserve Board including Powell. On Monday, U.S. President Trump posted on social media that "Mr. Too Late" Federal Reserve Chairman Powell and the entire Federal Reserve Board should be ashamed for not cutting interest rates. Trump's post also included a suspected letter. That day, White House Press Secretary Levitt confirmed the letter was sent to the Federal Reserve on Monday. Levitt stated that Trump mentioned interest rates in a letter to Powell from multiple countries around the world.

New Taiwan Dollar faces the largest single-day drop in 24 years, has the tolerance of the "invisible hand" reached its limit?. This sudden rapid depreciation at the end of trading resembles the trend observed after the Taiwan dollar hit a three-year high last Friday, when the market believed the central bank was aggressively buying foreign currency through state-owned banks to stabilize the Taiwan dollar's appreciation. Analysts believe that the central bank's counter-cyclical intervention can only slow the trend but cannot reverse the appreciation trendCircle Bearish Report is here! JP Morgan: The "scissors gap" in the profit model devours profits, even a 10% "emotional premium" is only worth $80; Goldman Sachs: Overvaluation and three factors put pressure on profit margins, but cross-border payments may be a breakthrough.

• JP Morgan stated that the decline in interest rates and the rise in distribution costs create a "scissors gap" that devours profits. Circle's business model is highly dependent on interest rate changes, with 97% of its revenue coming from reserve income, making the company's profitability highly susceptible to fluctuations in monetary policy. Additionally, the continuous rise in distribution costs may cause gross margins to drop from 39% to 34%. However, if Circle can integrate stablecoin functions into existing banking channels, it is expected to become the "stablecoin version of Swift."
• Goldman Sachs stated that following JP Morgan, it has set a target price of $83 for Circle, citing overvaluation and three potential factors that could pressure yields: interest rate cuts, USDC being diverted to yield-bearing products, and rising distribution costs. However, Goldman Sachs expects that cross-border payments may open up growth opportunities, although Circle's Cross-Border Payment Network (CPN) is still in its early stages.

Major Shift: Apple is reported to be considering external AI technology to empower Siri, using third-party AI models from Anthropic or OpenAI. If Apple decides to use third-party models, it would represent a significant shift, indicating that Apple acknowledges its struggles in the generative AI field and may enable Siri to offer features comparable to AI assistants on Android phones.

• Ming-Chi Kuo: Apple is preparing a "big move," with seven headsets and AI glasses in development, 2027 will be a breakout year. Renowned Apple analyst Ming-Chi Kuo stated that Apple's current seven projects include three Vision series products and four smart glasses. The company views headsets as the next trend in consumer electronics, with smart glasses similar to Ray-Ban likely to gain popularity first, potentially driving the entire smart glasses market to exceed 10 million units shipped by 2027.

After Meta poached 8 people, OpenAI is on the move: optimizing compensation, ready to compete. In the past week, eight top researchers have left OpenAI to join Meta, including four core Chinese researchers who were responsible for key projects at OpenAI, such as o3 and the GPT-4 series. OpenAI's high-intensity work schedule of 80 hours a week has created opportunities for competitors. The company's Chief Research Officer Mark Chen stated in an internal memo, "It's like someone broke into our house and stole something."Meta adds 11 AI "experts", Zuckerberg officially introduces the "superintelligence" team. Zuckerberg announced a major restructuring of the Meta AI team, with former Scale AI CEO Alexandr Wang and former GitHub CEO Nat Friedman co-leading the new team, Meta Superintelligence Lab; he also mentioned that the 11 AI experts joining Meta include researchers from Google DeepMind, OpenAI, and Anthropic; he stated that the development of superintelligence is imminent, "this will mark the beginning of a new era for humanity."

OpenAI shifts to TPU, what does this mean for Google, NVIDIA, and Amazon? Morgan Stanley stated that for Google, this is an important endorsement of OpenAI's AI infrastructure capabilities, which will drive growth in Google Cloud's business and consolidate its leading position in the ASIC ecosystem; for NVIDIA, although facing capacity constraint challenges, it will still maintain its dominance in the GPU market; for Amazon, the absence of AWS from OpenAI's partner list may expose its capacity limitations and insufficient competitiveness of Trainium chips.

Oracle wins a major cloud contract, generating 30 billion in revenue in a year, stock price once surged over 8%, hitting a record high. Oracle's CEO stated that the fiscal year 2026, which began in June this year, started strong, with multi-cloud database revenue continuing to grow at over 100%; the company has signed several large cloud service agreements, one of which is expected to contribute over $30 billion in annual revenue starting from fiscal year 2028. Stifel analysts upgraded Oracle's rating to buy, raising the target price by nearly 40%, optimistic about Oracle's cloud business growth.

Domestic Macro

China's central bank media: The main tone of "moderately loose" monetary policy has not changed. Previously, the central bank's second-quarter meeting removed the wording "to reduce the reserve requirement and interest rates at an appropriate time," attracting market attention. The Financial Times published an article over the weekend stating that the monetary policy orientation in the second quarter meeting is the same as in the first quarter. Industry experts believe that although the economy has been operating steadily and positively in the first half of the year, the external environment remains challenging, domestic effective demand is insufficient, and the real estate market is still in an adjustment phase, the main tone of "moderately loose" monetary policy has not changed.

China Securities Journal headline: Fiscal incremental reserve policy expected to be introduced in a timely manner. For the second half of the year, several experts believe that fiscal policy will accelerate the implementation of existing policies, focusing on the early issuance and use of ultra-long special national bonds and local government special bondsIn response to the economic operation situation, incremental reserve policies in the fiscal sector are expected to be timely introduced and expanded to boost domestic demand. Possible measures include issuing ultra-long-term special government bonds and establishing new policy financial instruments.

China plans to invite Trump to the military parade in Beijing in September? Foreign Ministry responds. A reporter asked, according to Japan's Kyodo News, that China plans to invite U.S. President Trump to the military parade in Beijing in September. According to Global Times, Chinese Foreign Ministry spokesperson Mao Ning stated that at the press conference held last week by the State Council Information Office, relevant departments introduced the situation and arrangements for inviting foreign leaders to the 80th anniversary of the victory in the War of Resistance Against Japan. Regarding the specific question you mentioned, I currently have no information to provide.

Domestic Companies

Huawei's first open-source large model is here! Pro MoE with 72 billion parameters and 4,000 Ascend training chips. Huawei has open-sourced the Pangu large model for the first time. According to data from the SuperCLUE Chinese large model benchmark evaluation in May, Pangu 72B ranked fifth in the open-source leaderboard, only behind DeepSeek-R1 full version, DeepSeek-V3 full version, and Qwen3-32B and 235B. Some media commented that Huawei has formed a complete vertical integration system from chips (Ascend NPU) to frameworks (MindSpore) to models (Pangu). It proves that there is a viable high-performance alternative outside the single industry pattern dominated by Nvidia.

Overseas Macro

Historic post! Trump warns "Republicans advocating for spending cuts": You still want to be re-elected, don't go too crazy. Trump posted a fierce warning to "Republicans advocating for spending cuts" saying "don't go too crazy." This post is seen as a "historic post" by netizens due to its rare public pressure on the party and its naked pointing out the conflict between re-election politics and fiscal policy, directly stating "this is the reason why U.S. debt never decreases." This warning coincides with Republican Senator Tillis announcing he will not seek re-election, highlighting the divisions within the Republican Party.

U.S. stocks face the first earnings "test" under tariff shocks, Goldman Sachs warns: S&P 500 earnings growth may slow significantly. The U.S. stock second-quarter earnings season will officially begin on July 15. Goldman Sachs expects S&P 500 earnings growth in the second quarter to slow significantly to only 4%, a two-year low, mainly due to margin contraction. If companies are forced to "absorb" a larger share of tariff costs, corporate profit margins will face pressure. Goldman Sachs maintains its forecast of 7% earnings growth per share for the S&P 500 in 2025, expecting the index to rise 5% to 6,500 points in the next 12 monthsTariff War Combined with Low Water Levels, European Ports Face the Most Severe Congestion Since the Pandemic! European ports are experiencing the most severe supply chain congestion since the pandemic, with waiting times for container ships and barges at major ports like Rotterdam, Antwerp, and Hamburg significantly extending to 66-77 hours. Additionally, Asian goods are shifting to Europe due to high tariffs in the U.S., leading to a nearly 7% surge in import volumes at European ports. Industry insiders expect the congestion issues to persist for several months.

Germany's June Inflation Unexpectedly Drops to 2%, First Time Reaching ECB Target. Germany's June CPI rose 2% year-on-year, down from 2.1% in May and below the expected 2.2%, marking the first time in nearly a year that it has reached the European Central Bank's target level. However, compared to price increase pressures, many decision-makers are more concerned that economic weakness may drag inflation down. The market expects the ECB to pause interest rate cuts at the July meeting.

Overseas Companies

"Father of iPhone" and "Father of GPT" Join Forces, Is the First AI Device Actually a Pen? Altman revealed that the first AI device jointly launched by OpenAI and io will not be equipped with a screen and will not be wearable, capable of fitting in a pocket or being placed on a desk. Given Ive's deep involvement in the design of the Apple Pencil and his personal hobby of collecting high-end writing instruments, analysts speculate that this AI hardware product is likely to be a smart pen, potentially set for official release in 2026.

Apple, Meta, Google, Who Will Build the "Android" System for the Era of Humanoid Robots? Morgan Stanley stated that tech giants hope to expand AI tools into the physical world through open-source initiatives while binding developers more deeply to their respective ecosystems. However, the future winner of the "Android system" remains uncertain. China, with its manufacturing base and policy support advantages, may take the lead in this "robot race." It is expected that by 2050, the global humanoid robot market could reach annual revenues of $5 trillion, with cumulative adoption reaching 1 billion units, a scale approximately double the total revenue of the world's top 20 automakers in 2024.

Today's News Preview

China's June Caixin Manufacturing PMI.

U.S. and Eurozone June Manufacturing PMI Index.

U.S. May JOLTS Job Openings.

Eurozone June Harmonized CPI.

Major Central Bank Governors Hold Group Discussions.