Breakfast | The S&P and Nasdaq rebounded, both reaching new historical highs, Tesla closed up nearly 5%, and Nvidia rebounded 2.6%

Market Overview

The US-Vietnam trade agreement has been reached, marking a breakthrough in the process. Tech stocks boosted the US stock market, with the S&P and Nasdaq rebounding and both hitting record highs. Tesla rose nearly 5%, ending a six-day decline, while Nvidia rebounded 2.6%, approaching record highs. Healthcare stocks dragged the Dow down, halting its four-day winning streak. Centene, a healthcare insurance company that withdrew its full-year profit guidance, plummeted 40%, while its peer UnitedHealth fell 5.7%, leading the Dow lower. The US-Vietnam trade agreement is favorable, with Nike rising over 4%. Oracle rose about 5% to set a new high.

UK stocks, bonds, and currency all fell, with the UK stock index retreating. UK government bonds led the decline in the European and American bond markets, with the yield on ten-year UK bonds rising 16 basis points in one day, marking the largest increase in nearly three months; the pound fell over 1% during the session.

After the US ADP employment report, US bond yields briefly turned lower, with the two-year US bond yield hitting a daily low; gold prices expanded their gains, reaching a new weekly high.

The US dollar index hit a three-year low, briefly turning higher during the session, and reached a daily high after the announcement of the US-Vietnam trade agreement; Bitcoin surged over $4,000, approaching the $110,000 mark.

Crude oil rose over 3% to a new weekly high, with the US EIA reporting an unexpected increase in crude oil inventories, causing US oil to briefly turn lower. Copper prices in London broke the $10,000 mark for the first time in three months.

During the Asian session, the three major A-share indices collectively closed lower, with photovoltaic and steel stocks rising. The Hang Seng Index rose 0.6%, and Chongqing Iron and Steel Co. surged 90%, while commodities and government bonds broadly increased.

Key News

Li Qiang will attend the 17th BRICS Leaders' Meeting in Brazil and make an official visit to Egypt.

The Trump "Big Beautiful" bill is stalled in the House of Representatives, with infighting escalating within the Republican Party; lawmakers say the bill is still short by over 20 votes to pass.

Trump stated that the US and Vietnam have reached a trade agreement, with the US imposing a 20% tariff on Vietnamese goods and a 40% tariff on transshipped goods, while Vietnam has "fully opened its market" to the US; Vietnamese media reported that leaders from both countries spoke on the phone, with Vietnam suggesting the removal of US export restrictions on certain high-tech products. Media reports indicate that US-Japan negotiations have encountered obstacles, with Japan firmly refusing to retain a 25% tariff on automobiles, and the US threatening to impose harsher penalties.

The "little non-farm" report surprised: US ADP employment numbers fell by 33,000 in June, marking the first monthly decrease in over three years; will June non-farm payrolls "cool down"? UBS and Citigroup warn: a cooling job market may accelerate interest rate cuts.

Going further than Trump's insults: The head of the US FHFA has called for Congress to investigate Powell for fraud, stating it constitutes grounds for removal.

UK stocks, bonds, and currency all fell, with a £5 billion welfare cut plan thwarted, and speculation about the Chancellor's resignation brewing, increasing the risk that the UK government will increase borrowing rather than raise taxes.

Iran's president has approved the suspension of cooperation with the International Atomic Energy Agency; the US Department of Defense reiterated its commitment to destroy Iran's nuclear facilities, stating that "the Iranian nuclear program has been delayed by about 1 to 2 years."

Tesla's second-quarter delivery volume decreased by 13% year-on-year to 384,000 units, but exceeded the market's pessimistic expectation of 350,000 units; Tesla's sales in June showed a turnaround, with the Chinese market experiencing its first year-on-year growth in nine months, driven by the Model Y facelift, which spurred a rebound in some European markets.

Media: Stargate is expanding in the U.S., OpenAI receives 4.5GW power support from Oracle data centers, part of Oracle's $30 billion annual revenue cloud contract.

Baidu undergoes its largest revision in a decade: supports input of over a thousand words, launches smart boxes, and upgrades its AI assistant.

Market Closing Report

U.S. and European Stock Markets: The S&P 500 index rose 0.47% to 6227.42 points. The Dow Jones fell 0.02% to 44484.42 points. The Nasdaq rose 0.94% to 20393.13 points. The European STOXX 600 index closed up 0.18% to 541.21 points.

A-shares: The Shanghai Composite Index fell 0.09% to 3454.79 points; the Shenzhen Component Index fell 0.61% to 10412.63 points; the ChiNext Index fell 1.13% to 2123.72 points.

Bond Market: By the end of the bond market, the yield on the U.S. ten-year benchmark Treasury bond was about 4.28%, up about 4 basis points during the day; the yield on the two-year U.S. Treasury bond was about 3.78%, up about 1 basis point during the day.

Commodities: WTI August crude oil futures rose 3.05% to $67.45 per barrel, Brent September crude oil futures rose 2.98% to $69.11 per barrel. COMEX August gold futures rose 0.3% to $3359.7 per ounce. London copper rose nearly 0.8% to $10,013 per ton. London zinc rose 1.62% to $2,758 per ton.

News Details

Global Highlights

Li Qiang will attend the 17th BRICS Leaders' Meeting in Brazil and make an official visit to Egypt.

Trump's "Big Beautiful" bill faces obstacles in the House, Republican infighting escalates. Although Trump's massive tax cuts and spending "Big Beautiful" bill narrowly passed in the Senate, the Senate version is more radical in terms of spending cuts, corporate tax reductions, and the debt ceiling compared to the previous House version, which has caused significant dissatisfaction among some House Republicans, exacerbating internal divisions. Some House Republican members stated that the House Speaker is now "missing over 20 votes" for the bill to pass Trump claims the US and Vietnam have reached a trade agreement, imposing at least a 20% tariff on Vietnamese goods.

• Trump stated that the US will impose a 20% tariff on Vietnamese goods and a 40% tariff on goods transshipped from other countries to Vietnam; Vietnam will have zero tariffs on US goods and will "fully open its market" to the US. Nike's stock jumped over 4% during trading, and the S&P reached a historic high. Media reports indicate that Vietnam will purchase $8 billion worth of Boeing aircraft, with Boeing's stock rising over 2% during trading. Before the suspension of reciprocal tariffs until July 9, the US plans to impose a 46% tariff on Vietnam.

• Vietnamese state media reported that the Vietnamese leadership had a phone call with Trump, suggesting the removal of US export restrictions on certain high-tech products to Vietnam.

Trump is confident about trade negotiations, but they are stuck in Japan. Reports indicate that the Japanese side firmly refuses to accept any agreement that retains a 25% tariff on automobiles, while the US threatens to implement stricter punitive measures, including restrictions on automobile export quotas. Trump indicated that he might impose a 30-35% tariff on Japanese goods, and analysts believe this statement may signify a substantial interruption in US-Japan trade negotiations.

"Little Non-Farm" surprises! US June ADP employment fell by 33,000, marking the first monthly decrease in over three years. The US private sector did not see the expected increase of 98,000 jobs in June, instead experiencing a decrease of 33,000, marking the first negative job growth since March 2023. After revisions, May's ADP job additions were only 29,000. Employment in the service sector decreased by 66,000, the largest drop since the pandemic began.

• Is June non-farm employment going to "cool down"? UBS and Citigroup warn: Job market cooling may accelerate rate cuts. The US labor market is facing a significant slowdown, with UBS expecting only a 100,000 increase in June non-farm employment and the unemployment rate potentially reaching a new high since 2021. Citigroup predicts an increase of only 85,000 jobs in non-farm employment. If June's employment data is exceptionally weak, the Federal Reserve may take action to cut rates as early as July.

Going further than Trump's insults: US FHFA Director calls for Congress to investigate Powell for fraud, claiming it constitutes grounds for removal. FHFA Director Bill Pulte accused Federal Reserve Chairman Powell of providing deceptive testimony regarding the Fed's headquarters renovation plan in the Senate, requesting an investigation into "Powell's political bias and his false testimony in the Senate, which constitutes grounds for removal." UK stock, bond, and currency markets face triple blow! The £5 billion welfare cut plan fails, speculation about the Chancellor's resignation intensifies. The UK’s £5 billion spending cut has fallen through, and speculation about Chancellor Reeves' resignation continues to grow. Prime Minister Starmer refused to clearly state his support for her remaining in office until the end of this parliamentary session during a parliamentary inquiry. It is worth mentioning that Reeves is a key figure in maintaining fiscal discipline, and the possibility of her resignation increases the risk that the UK government will opt for increased borrowing rather than tax hikes.

Iranian President approves suspension of cooperation with the International Atomic Energy Agency.

• US Department of Defense reiterates the destruction of Iranian nuclear facilities, claims “Iran's nuclear program has been delayed by about 1 to 2 years”.

Tesla's second-quarter delivery volume fell 13% year-on-year to 384,000 units, but exceeded the market's pessimistic expectation of 350,000 units. Tesla delivered 384,122 vehicles globally in the second quarter, slightly below analysts' average delivery expectation of 389,407 units, but stronger than the pessimistic forecast circulating in the market over the past week of 350,000 to 360,000 units. Facing the challenge of declining sales, Musk has personally taken over the company's sales operations in the US and Europe to tackle the increasingly fierce market competition.

• Tesla's June sales show a turnaround, with the Chinese market experiencing its first year-on-year growth in nine months, Model Y facelift drives a rebound in some European markets. In June, Tesla's Shanghai factory delivered 71,599 vehicles, a year-on-year increase of 0.8%. The Model Y drove significant sales increases in Norway and Spain, but other European markets continued to face pressure, with US sales down 16% year-on-year. Analysts expect Tesla's overall performance in the second quarter to remain disappointing, and the boost from the facelift may be a short-term effect.

Oracle's $30 billion deal leveraging the "Stargate"? OpenAI reportedly receives 4.5GW power support from Oracle's data centers. Media reports indicate that OpenAI has reached an agreement with Oracle to expand cooperation on the Stargate project, with OpenAI renting a large amount of computing power from Oracle's data centers; in addition to nearly doubling the capacity of the Texas project to 2GW, Oracle is considering building more data centers in multiple states across the US. On Monday, Oracle disclosed that it had reached a cloud service agreement that will contribute over $30 billion in annual revenue starting from the 2028 fiscal year. Media reports suggest that the Stargate agreement between Oracle and OpenAI is at least part of this cloud agreement Oracle's stock price rose over 5% to a new high.

Goldman Sachs: There is still room for appreciation of Asian currencies in the second half of the year, particularly optimistic about the Korean won and New Taiwan dollar. Goldman Sachs believes that the marginal funds flowing into U.S. assets will decrease and the gradual rotation towards non-U.S. assets will continue to pressure the dollar in the second half of 2025. Against the backdrop of continued dollar depreciation, Asian currencies may continue their current appreciation trend in the second half of 2025. The new South Korean government's supplementary budget and policies favorable to the stock market will continue to boost the won. Considering the large amount of U.S. dollar deposits in Taiwan, exporters are increasing foreign exchange conversions, which will further raise the New Taiwan dollar exchange rate.

Baidu's largest revision in ten years: Supports input of over a thousand words, launches smart box, upgrades AI assistant. The new search box has been upgraded to support input of over a thousand words and multimodal input, including photo, voice, and video. The new version also integrates over 18,000 MCPs and can generate a 3-minute video from a single sentence.

Domestic Macro

CSRC: Steady and orderly prevention and control of risks in bond defaults, private equity funds, and other areas. The meeting emphasized the need to deepen the comprehensive reform of the capital market with the "Two Innovation Boards" reform as a starting point, always prioritizing market stability as the primary task of regulation, promoting the establishment of a normalized market stabilization mechanism, and steadily and orderly preventing and controlling risks in bond defaults, private equity funds, and other areas to create a better environment for the high-quality development of the capital market.

Minister of Finance Lan Fang'an attends the United Nations Fourth International Conference on Financing for Development. Lan Fang'an stated that China calls on developed countries to promote the liberalization and facilitation of trade and investment, reduce the negative spillover effects of macro policies from major economies, and create an open and stable financing environment for development.

What is the actual inventory of the real estate market nationwide? According to data from the National Bureau of Statistics, the area of unsold commercial housing nationwide reached 78.142 million square meters in May this year, an increase of 21 million square meters compared to the end of last year, with an average monthly increase in inventory continuing to exceed 4.2 million square meters, and the inventory of second-hand houses also reached a new high. Among the 137 cities surveyed for inventory scale, Chongqing, Chengdu, and Shenyang have the most inventory. In 42 cities, the de-stocking cycle is 3-5 years, and in 26 cities, it exceeds 5 years.

Domestic Companies

Chinese AI is breaking through globally. In Europe, the Middle East, Africa, and Asia, users from multinational banks to public universities are viewing Chinese companies like DeepSeek and Alibaba's large language models as alternatives to American products like ChatGPT Data shows that currently up to one-fifth of users worldwide choose Chinese AI models.

Lei Jun: Xiaomi cars will consider exporting around 2027. The Xiaomi YU7 launch was very successful, with 240,000 units locked in just 18 hours. Lei Jun introduced that the average age of YU7 locked-in users is 33 years, with women accounting for 30%. In response to external doubts about a large number of "transfer orders," he stated that the proportion of SU7 transfer orders to the total YU7 orders is less than 15%, and the vast majority are new orders. Lei Jun also mentioned that due to the high number of domestic queue users, domestic deliveries will be prioritized in the next two years, and exports will not be considered until 2027.

Overseas Macro

US tariff revenue has reached an annualized $327 billion, Morgan Stanley: Such a huge tax burden is not good for the economy, regardless of who pays it. Morgan Stanley stated that US tariff revenue has reached an annualized $327 billion, accounting for 1.1% of GDP, equivalent to 65% of corporate income tax in 2024. If companies fully absorb the tariff costs, profit margins will drop from 13.8% to 11.7%, below the average level of the past 15 years. For investors, Morgan Stanley recommends remaining bullish on US Treasuries and bearish on the US dollar.

Song Xuetao: What are US stocks, US Treasuries, and the US dollar pricing? The macro team of Guojin Securities led by Song Xuetao believes that US stocks price the shortest time dimension, mainly driven by short-term sentiment and capital, dominated by retail investor speculation, but fundamental issues such as the shaking of AI narratives and widening wealth gaps remain unresolved. US Treasuries price a medium time dimension, with the short end reflecting recession expectations and the long end concerned about fiscal sustainability. The US dollar prices the longest time dimension, influenced by mid-term tariff factors and long-term fiscal credit deterioration, and is expected to decline to around 95 in the short term.

US Treasury bulls are crowded, and the market holds its breath for the "non-farm payroll test". Citigroup believes that if this week's non-farm payroll data is strong, the current one-sided long positions in US Treasuries may face a significant correction—traders may seek to close positions if labor market conditions cannot support the Federal Reserve's earliest rate cut expectations next month.

The European Commission proposes a revision of the "European Climate Law," setting a 2040 emission reduction target. The European Commission stated on the 2nd that it has proposed a revision of the "European Climate Law," setting a target to reduce net greenhouse gas emissions by 90% compared to 1990 levels by 2040. The European Commission also suggested introducing mechanisms such as carbon credit quotas to alleviate the pressure Europe faces in achieving its emission reduction targets

Overseas Companies

The army of robots is approaching, soon Amazon's warehouses will no longer need workers. Currently, about 75% of Amazon's packages are assisted by robotic systems during processing. The average number of employees in each Amazon warehouse has dropped to the lowest level in 16 years, and further layoffs may occur at Amazon by the 2030s.

24-hour uninterrupted trading, Bybit, Robinhood, and Kraken launch simultaneously, the tokenization of US stocks is surging. The three major platforms have simultaneously launched US stock tokenization services, utilizing blockchain to enable 24/7 trading of stocks like Apple and Nvidia, with Robinhood also planning to include private companies like OpenAI. McKinsey predicts that the market for physical assets on the blockchain will reach $2 trillion by 2030. However, challenges remain severe, as vague US regulations have led to many services being launched overseas, and the current total market value of tokenized stocks is only $388 million, less than 0.003% of the traditional stock market.

Grok 4 source code has just leaked, countdown to launch, Musk's xAI valuation exceeds $113 billion, major models are about to change. The leak of xAI's source code shows that Grok 4 and Grok 4 Code are about to launch. The official claim is that Grok 4 is the latest and most powerful flagship model, while Grok 4 Code is specifically designed for programming. xAI has also secured $10 billion in new financing, with its valuation soaring to $113 billion, forming a competitive landscape with OpenAI ($300 billion valuation) and Anthropic ($61.5 billion valuation).

Today's News Preview

China's June Caixin Services and Composite PMI.

Due to the upcoming Independence Day in the United States, the US stock market will close half a day early.

US June Non-Farm Payroll Report.

US and Eurozone June Services and Composite PMI.

The number of initial jobless claims in the US last week.

US May Trade Balance.

US May Factory Orders and Durable Goods Orders.

Speech by Atlanta Federal Reserve President Raphael Bostic.