Breakfast

Market Overview

The market is awaiting the Federal Reserve's interest rate decision and the concentrated earnings reports from major U.S. technology companies. Investor concerns over the high valuations of U.S. stocks overshadowed positive trade news, leading to declines in the three major U.S. stock indices. The S&P ended its six-day winning streak, while U.S. Treasury bonds and the dollar both rose. UPS fell over 10%, and the company has yet to release its annual forecast. UnitedHealth announced disappointing earnings forecasts, causing its stock to drop 7.5%, dragging down the Dow Jones. Novo Nordisk's stock plummeted over 20% after its earnings report.

Due to a strong auction of 7-year U.S. Treasury bonds, U.S. Treasury yields fell across the board on Tuesday, with the 10-year yield dropping nearly 9 basis points. The dollar fluctuated and closed up 0.3%. Bitcoin experienced a V-shaped reversal, briefly returning to $119,000 before declining again.

During the Asian session, the ChiNext index broke through 2400 points, with pharmaceutical stocks surging, government bonds plummeting, and coking coal dropping over 6%. Hong Kong stocks rebounded in the afternoon, with Pop Mart rising nearly 6%.

Key News

China and the U.S. will continue to push for the 24% portion of U.S. tariffs that have been suspended and the corresponding countermeasures from China to be extended for 90 days as scheduled.

A U.S. court began oral arguments on Thursday, with the "reciprocal tariffs" facing "cancellation risks."

U.S. chip stocks rose before the market opened, as the European Union may purchase €40 billion in AI chips as part of a U.S.-EU trade agreement. U.S. Secretary of Commerce: There is still much "bargaining" with the EU, with digital services tax and steel and aluminum being key negotiation points.

Trump set a new deadline for Russia to reach an agreement on the Russia-Ukraine conflict, reducing it from 50 days to 10 days, warning of tariffs on Russia, causing crude oil to rise over 4% during the session.

India has postponed new trade concessions, preparing to respond to high U.S. tariffs, with the goal of finalizing an agreement by September or October.

Trump and Bessent indicated: After interest rates decline, the U.S. will issue more long-term bonds.

The U.S. June JOLTS job openings stood at 7.437 million, below expectations, indicating a slowdown in hiring. Imports fell sharply, and the U.S. goods trade deficit narrowed more than expected, leading Wall Street to raise its Q2 GDP forecast. An important U.S. housing price index has fallen for three consecutive months, marking the largest decline since 2022.

Novo Nordisk's stock plummeted 28% before the U.S. market opened, appointing a new CEO and lowering its full-year guidance, with sales of the weight-loss drug Wegovy falling short of expectations.

Not only has it sold inventory, but reports indicate that NVIDIA has newly ordered 300,000 H20 chips from TSMC. NVIDIA has launched a brand new open-source model: three times the throughput, capable of running on a single card, and has achieved state-of-the-art inference.

Reports indicate that Microsoft is engaged in in-depth negotiations for long-term access to OpenAI technology, with an agreement possibly reached within weeks. GPT-5 benchmark test leaks suggest it may be released in two days

Market Report

U.S. and European Stock Markets: The S&P 500 index fell by 0.30%, closing at 6370.86 points. The Dow Jones Industrial Average decreased by 0.46%, closing at 44632.99 points. The Nasdaq Composite dropped by 0.38%, closing at 21098.29 points. The European STOXX 600 index rose by 0.33%, closing at 550.58 points.

A-shares: The Shanghai Composite Index rose by 0.33%, closing at 3609.71 points. The Shenzhen Component Index increased by 0.64%, closing at 11289.41 points. The ChiNext Index rose by 1.86%, closing at 2406.59 points.

Bond Market: The yield on the U.S. 10-year Treasury bond fell by 7.95 basis points, closing at 4.3303%. The yield on the 2-year U.S. Treasury bond decreased by 5.05 basis points, closing at 3.8750%.

Commodities: COMEX gold futures rose by 0.44%, closing at $3324.60 per ounce. WTI September crude oil futures increased by 3.75%, closing at $69.21 per barrel. Brent September crude oil futures rose by 3.52%, closing at $72.51 per barrel.

News Highlights

Global Headlines

Trump indicates he may visit China upon invitation and states he has received an invitation, the Foreign Ministry responds. According to CCTV News, a reporter asked: President Trump stated today that he may visit China upon invitation and mentioned that he has received an invitation. Can the Foreign Ministry confirm whether the Chinese side has issued an invitation or provide more details? Guo Jia Kun stated that regarding the specific issue you mentioned, please refer to the press release previously issued by the Chinese side.

China and the U.S. will continue to promote the postponed 24% portion of U.S. reciprocal tariffs and China's countermeasures for a 90-day extension. According to Xinhua News Agency and CCTV News, China-U.S. economic and trade talks were held in Stockholm, Sweden, where both sides engaged in candid, in-depth, and constructive exchanges on issues of mutual concern regarding economic and trade relations and macroeconomic policies. Li Chenggang, the international trade negotiation representative and vice minister of the Ministry of Commerce of China, stated that the economic and trade teams of both sides will continue to maintain close communication and timely exchanges on economic and trade issues, and continue to promote the stable and healthy development of bilateral economic and trade relations.

U.S. court to begin oral arguments on Thursday, “reciprocal tariffs” face “cancellation risk”. The U.S. Court of Appeals will hold oral arguments this Thursday on a key lawsuit challenging the legality of Trump's imposition of tariffs under the International Emergency Economic Powers Act (IEEPA) Despite frequent actions by the Trump administration in the trade sector recently, the legitimacy of its tariff policy is facing fundamental doubts. If it loses the lawsuit, the recently reached trade agreements may become mere scraps of paper. Subsequently, the White House may initiate a lengthy "Tariff Plan B."

U.S. chip stocks rose broadly before the market, the EU may purchase €40 billion in AI chips under the U.S.-EU trade agreement. U.S. Secretary of Commerce: There is still a lot of "bargaining" with the EU, digital services tax and steel and aluminum will be key negotiation points.

• A spokesperson for the European Commission stated that the EU is confident that the trade agreement will gain support from member states, businesses, and citizens. The spokesperson noted that the EU conveyed the "good faith intention" of EU companies regarding U.S. energy procurement and investment.
• Lutnik stated that pharmaceuticals and automobiles are key areas for reaching a trade agreement with the EU, and the Trump administration will announce "huge" tariffs on non-U.S. pharmaceuticals within the next two weeks; the work on setting global equivalent tariffs will be completed before August 1. Media reports indicate that the U.S. and EU seek to finalize a joint statement before August 1, clarifying some agreement details, after which the U.S. will reduce tariffs in specific industries.
• Europe signs an "unequal treaty," with the dollar and euro respectively recording the largest increases and decreases since May. Leaders from Germany and France, along with various sectors in Europe, expressed strong dissatisfaction with the U.S.-EU trade agreement, calling it a "dark day" and believing that the EU "yielded to pressure." Analysts pointed out that investors realized this unequal "agreement" would negatively impact growth in other regions globally, driving funds toward the dollar as a safe haven, with the dollar expected to record its first monthly increase of the year in July.
• The U.S.-EU tariff agreement is better than expected, Goldman Sachs raises European economic growth forecasts. Considering the smaller effective tariff increases, potential decreases in trade policy uncertainty, and better-than-expected economic activity data, Goldman Sachs revised its estimate of the impact of trade tensions on the Eurozone's real GDP from a previous -0.6% to -0.4%, raising its growth forecasts for Europe in 2025 and 2026 by 0.1 percentage points each, to 1.1% and 1.2%, respectively.

Trump sets a new deadline for Russia to reach a Russia-Ukraine agreement, reducing it from 50 days to 10 days, warning of tariffs on Russia, crude oil rose over 4% during trading. The new deadline means that Trump has moved the deadline for Russia to reach a Russia-Ukraine agreement from the previously proposed September 2 to August 8. Trump stated that if Russia does not make progress in ending the Russia-Ukraine conflict, the U.S. will begin imposing tariffs on Russia within 10 days and take other measures He is not worried about the impact of sanctions on Russia affecting the oil market, as the United States can increase oil production. Crude oil saw its largest intraday gain in six weeks on Tuesday since the conflict with Iran.

India pauses new trade concessions, preparing to respond to high U.S. tariffs, aiming to finalize an agreement before September or October. India has decided to pause new trade concessions ahead of the U.S. deadline on August 1, opting instead to seek a comprehensive bilateral agreement to resolve trade differences. An Indian official stated that the goal is to finalize a comprehensive bilateral agreement before September or October. The U.S. has indicated that negotiations with India require more consultations, as Trump is more focused on a good agreement rather than a quick one.

Trump and Mnuchin's specific tone: After interest rates decline, the U.S. will issue more long-term debt. President Trump and Treasury Secretary Mnuchin have recently publicly stated that they will wait for Powell to step down and for interest rates to decline before considering issuing more long-term government bonds, attempting to suggest a "timing" strategy to replace the "conventional and predictable" bond issuance principle that the U.S. Treasury has adhered to for decades. This move has raised market concerns that such speculative operations could increase risk premiums, even counterproductively raising borrowing costs.

U.S. June JOLTS job openings at 7.437 million, below expectations, hiring slows. The number of job openings in the U.S. in June decreased after two consecutive months of growth, but the overall level remains stable. The hiring rate in June slowed to 3.3%, the lowest level since November last year. The number of layoffs changed little and remained at a low level. The number of employees choosing to resign voluntarily decreased. Analysts say this JOLTS report supports the view that "the U.S. labor market is gradually cooling," although labor demand remains relatively healthy.

Significant drop in imports, U.S. goods trade deficit narrows more than expected, Wall Street raises Q2 GDP forecast. The U.S. goods trade deficit in June narrowed by 10.8% from the previous month to $86 billion, with the trade deficit lower than all economists' predictions in a media survey. U.S. imports in June fell by 4.2% to $264.2 billion. Among them, consumer goods imports dropped to the lowest level since September 2020, industrial goods imports fell to the lowest point since 2021, and automobile imports also declined. U.S. goods exports decreased by 0.6%.

U.S. key housing price index falls for three consecutive months, marking the largest decline since 2022. Housing prices in 20 major U.S. cities fell for the third consecutive month in May, declining by 0.34% month-on-month, the largest drop since the end of 2022, dragging the annual increase in national housing prices down to 2.3%, the lowest in nearly a year Experts point out that the spring market has limited driving force, making it difficult to speak of a trend rebound. With mortgage rates rising, housing prices may continue to be under pressure in the coming months.

Novo Nordisk's U.S. stock plummeted 28% pre-market, appointing a new CEO and lowering its full-year guidance, with sales of the weight loss drug Wegovy falling short of expectations. Novo Nordisk stated that the sales growth expectation at fixed exchange rates has been revised down from the previous 13%-21% to 8%-14%, and the operating profit growth expectation has been revised down from 16%-24% to 10%-16%. The main reason is that the sales performance of its flagship weight loss drug Wegovy through cash payment channels was below expectations, impacted by "unsafe and illegal large-scale generic drugs." Novo Nordisk fell nearly 22% on Tuesday, with an intraday drop of 28%, hitting a new low since February 2022.

Not just selling inventory, reports indicate that NVIDIA has placed a new order for 300,000 H20 chips from TSMC. Demand for H20 chips is strong, prompting NVIDIA to change its previous strategy of relying solely on existing inventory and instead increase new production orders. According to reports, the new orders will supplement the existing inventory of 600,000-700,000 H20 chips.

NVIDIA's brand new open-source model: three times the throughput, runs on a single card, and achieves SOTA in inference. NVIDIA's latest Llama Nemotron Super v1.5 open-source model is specifically designed for complex reasoning and agent tasks. The model achieves SOTA performance in science, mathematics, programming, and agent tasks while increasing throughput to three times that of the previous generation and efficiently running on a single card, achieving a more accurate, faster, and lighter "want it all."

Reports: Microsoft is in deep negotiations for long-term access to OpenAI technology, with an agreement possibly reached within weeks. The definition and triggering conditions of AGI have become key points of contention in the negotiations. Technically, the OpenAI board has the authority to determine when the company reaches AGI level, and once deemed qualified, Microsoft will lose the right to use the technology developed after that point. On the business side, if OpenAI proves it can generate approximately $100 billion in total profit for Microsoft, under this circumstance, Microsoft will lose the right to use all OpenAI technologies, including products developed before the triggering point.

GPT-5 benchmark test leaks, rumored to be released two days later? GPT-5 is coming, and it's making waves! The leaked benchmark tests + Minecraft practical tests have left the entire internet in shock: the GPT-5-pro, codenamed Zenith, flows seamlessly in the game and is dubbed "magical-level AI." There are more revelations that it will be released on July 31, crushing Grok 4 Heavy! Is OpenAI about to flip the table again?

The 2025 Fortune Global 500 list is announced, with Walmart ranking first for the 12th consecutive year, and Nvidia soaring to 66th place. Nvidia's ranking has soared to 66, entering the profit list's top ten for the first time, BYD has entered the top 100 for the first time, and all five major Chinese internet giants have seen their rankings rise, with Xiaomi ranking 297, up 100 places.

Domestic Macro

Hong Kong Monetary Authority: The regulatory framework for stablecoin issuers will take effect on August 1, and institutions wishing to apply for a license can submit their applications before September. The Hong Kong Monetary Authority announced in a press release that the regulatory framework for stablecoin issuers will be implemented starting August 1. Institutions wishing to apply for a license should contact the Monetary Authority by August 31. Some institutions believe they are well-prepared and hope to be considered early, and should submit their applications to the Monetary Authority by September 30. As of today, the Monetary Authority has not issued any licenses.

Shanghai: Report on the review opinions of the "Shanghai Private Economy Promotion Regulations (Draft)" has been heard. According to Shangguan News, the 23rd meeting of the 16th Shanghai Municipal People's Congress Standing Committee began today (July 29). The meeting heard the city government's explanations on the "Shanghai Private Economy Promotion Regulations (Draft)" and the "China (Shanghai) Pilot Free Trade Zone Regulations (Revised Draft)", as well as the review opinion reports from relevant committees of the Municipal People's Congress, and conducted group reviews of the relevant regulatory drafts.

China's stock market has achieved a "summer breakthrough," and Goldman Sachs believes that in the future, investors should focus on "light index, heavy individual stocks". Goldman Sachs pointed out that given the market has risen 25% since the beginning of the year and valuations are no longer at low levels, investors should pay more attention to stock selection (Alpha) rather than a broad market rally (Beta). Goldman Sachs has shifted its strategy focus to sectors such as insurance and materials, while also recommending attention to leading private enterprises in China (Prominent 10) and shareholder returns as two major themes.

Two main consensus lines are forming. Industrial Securities stated that since May, the intensity of industry rotation has continued to converge, and this convergence is still ongoing, with the "technology growth industry trend" and "low valuation cycle recovery" two main lines forming market consensus. This is partly due to the prosperity advantages of technology growth and cycles. On the other hand, the lack of incremental funds and the stronger pricing of marginal trading funds have also been important reasons for the previous rapid rotation in the market

Domestic Companies

The Photovoltaic Industry Association clarifies rumors involving polysilicon, “large-scale acquisition of small-scale” storage progress still has uncertainties. It is understood that the polysilicon production capacity being acquired involves several companies including Xinyi, Nanfang, Baofeng, Runyang, and Hesheng Silicon Industry. When discussing this matter, industry insiders believe that the progress of polysilicon storage still depends on the negotiation situation. Additionally, the key is to reduce inventory; companies with inventory should halt production to clear stock. Otherwise, even if the large-scale acquisition of small-scale in the polysilicon sector is completed, it will be impossible to allocate the subsequent operational load.

Goldman Sachs raises expectations for China's RoboTaxi market size, with Shanghai becoming a major commercialization hub! Goldman Sachs stated that the progress in Shanghai confirms their judgment that first-tier cities will lead the early development of the industry. Based on positive factors such as technological advancements, cost reductions, and ecosystem expansion, Goldman Sachs expects the acceleration of the commercialization process to bring considerable growth to the market. It is estimated that by 2030, the size of China's RoboTaxi market will reach $14 billion, with a fleet size of approximately 535,000 vehicles.

Morgan Stanley elaborates on TSMC's CoWoS capacity battle: Nvidia locks in 60%, cloud AI chip market expected to surge 40%-50% by 2026. TSMC's advanced packaging CoWoS has become a battleground in the AI competition. Morgan Stanley predicts that global demand for CoWoS wafers will reach 1 million pieces by 2026, with Nvidia monopolizing 595,000 pieces, while leading players like AMD, Broadcom, and Amazon fiercely compete for the remaining capacity. TSMC is accelerating the expansion of CoWoS capacity, expecting to reach a monthly capacity of 93,000 pieces by the end of next year, with AI business expected to contribute 25% of its total revenue this year.

Overseas Macro

ECB: The rise of dollar stablecoins will weaken European monetary policy control. The dominant position of dollar stablecoins will bring strategic and economic advantages to the U.S., allowing it to finance its debt at a lower cost while exerting global influence. For Europe, this means higher financing costs relative to the U.S., diminished monetary policy autonomy, and geopolitical dependence.

Global stock markets continue YOLO? Central bank hawkish statements may trigger sell-offs. Market sentiment indicators have issued a mild sell signal. The real risk this week may lie in the possibility of the Federal Reserve or the Bank of Japan releasing unexpected hawkish signals. If central bank positions turn hawkish, the shockwaves will first sweep through developed market bonds, especially short-term bonds. Although the stock market is not directly in the "danger zone," its resilience will also face tests Morgan Stanley recommends "buy US Treasuries, short the dollar": Tariffs "will push up inflation in Q3 and lower growth in Q4," the market is too complacent. Morgan Stanley's economists' baseline forecast shows that tariffs will push core PCE inflation from 2.3% to 4.0% in Q3, while real GDP growth in Q4 will drop to just 0.2%. Although CEO confidence and price transmission do not pose a threat yet, Morgan Stanley believes market sentiment is too complacent and advises investors to buy US Treasuries and sell dollars to hedge risks, as slowing growth may catch the Federal Reserve and investors off guard.

Morgan Asset Management bullish on European stocks against the trend, refuting "three major doubts," says it's not too late to get in now. Strategist Karen Ward believes that despite structural issues, European companies have a strong historical profitability and will benefit from the application of AI technology. Additionally, the appreciation of the euro is not a negative factor for European stocks, and domestic consumption recovery and the financial sector will be the main drivers. Current valuations of European stocks remain low, providing a good investment opportunity to outperform US stocks.

Overseas Companies

Apple's earnings report key point: Can gross margin hold up under tariff impact? Bank of America expects Apple's Q3 gross margin to drop to 46.1% due to tariff impacts, a significant decline from 47.1% in the previous quarter. Analysts warn that if prices are not raised, tariffs effectively act as a tax on Apple's product costs. The real test will come in Q4, when Apple will face an additional $1 billion negative impact on gross margin from tariffs, causing the overall gross margin to further decline to 45%. Whether the new product cycle can bring enough ASP (average selling price) increase to offset cost pressures will be a key factor determining the stock price direction.

Apple loses another AI talent, the fourth person to leave for Meta's superintelligence team in a month. Apple's artificial intelligence team is facing a talent drain crisis, as multimodal AI researcher Zhang Bowen left last Friday to join Meta's newly established superintelligence team. In the past month, four core AI researchers have left for Meta's newly formed "superintelligence team." The departure of key members has thrown Apple's AI foundational model team into chaos, with several engineers considering alternative paths. As internal disagreements arise over whether to continue developing in-house models or switch to third-party technologies like OpenAI and Anthropic, morale has further declined. There are concerns that this may affect Apple's long-term competitiveness in the AI field.

Boeing's Q2 revenue grew 35% year-on-year, exceeding expectations, with net losses narrowing to $610 million and strong commercial aircraft deliveries. Thanks to an increase in new orders, Boeing's net new orders in Q2 reached 455 aircraft, bringing the total backlog to $619 billion at the end of the period Setting a new historical high, with commercial aircraft backlog orders exceeding 5,900 units, valued at $522 billion.

Price increases drive Procter & Gamble's Q4 performance beyond expectations, facing a $1 billion tariff impact in the next fiscal year. Procter & Gamble reported a 2% increase in net sales to $20.89 billion for the fourth fiscal quarter, exceeding market expectations, with earnings per share of $1.48, also surpassing the market expectation of $1.42. The personal care segment saw a 4% price increase, with sales growth "driven by innovation-based pricing." Procter & Gamble expects tariffs to cause approximately $1 billion in cost impact in fiscal year 2026.

Starbucks accelerates reforms, same-store sales in China return to growth, stock price rises 4.6% after hours. Despite Starbucks' third-quarter same-store sales and profits falling short of market expectations, the company's recovery signals are hard to ignore, with its stock price rising 4.6% after hours. Investors are focused on positive news, with CEO Kevin Johnson stating that the revitalization plan is "ahead of schedule" and promising a series of product innovations to be launched in 2026. Although same-store sales have declined for the sixth consecutive quarter, same-store sales in the Chinese market grew by 2%, marking the first rebound in a year and a half.

Kering's second-quarter revenue declines exceed expectations, Gucci sales drop another 25%, potential price increases this fall due to tariff impacts. Kering has reported revenue below expectations for four consecutive quarters, with same-store sales in the second quarter accelerating to a 15% decline compared to the first quarter, and its top brand Gucci's same-store sales dropping 25%, consistent with the first quarter's decline. Same-store sales in North America and the Asia-Pacific region, including China, slowed to declines of 10% and 19%, respectively, while Japan's same-store sales decline accelerated to 29%, attributed to local tourism consumption not matching last year's levels. The CFO stated that the 15% tariff from the EU and US agreements is in line with expectations, and Kering can manage through price adjustments, having already implemented some price increases in the second quarter, with a potential second wave of increases this fall. After the earnings report, Kering's US stock, which had fallen over 2% in early trading, turned positive.

Anthropic's valuation skyrockets, seeking to raise up to $5 billion at a $170 billion valuation. According to media reports on Tuesday, the company is in talks for a funding round led by Iconiq Capital, aiming to raise $3 billion to $5 billion, bringing its valuation to $170 billion. In March of this year, Anthropic completed a $3.5 billion funding round led by Lightspeed Venture Partners, with a valuation of $61.5 billion at that time.

A strong alliance in the cybersecurity field, Palo Alto CEO "bets big," plans to acquire CyberArk for $20 billion. If the deal goes through, it will be a strong alliance between two major players in the cybersecurity field and will represent Palo Alto Networks CEO Nikesh Arora's largest bet to date After the news broke, CyberArk's stock price soared by 18%, reaching a new high, while Palo Alto Networks' stock price fell by 5.1%.

The largest railway merger in U.S. history is finalized: Union Pacific acquires Norfolk Southern for $85 billion. Union Pacific announced it has agreed to acquire Norfolk Southern for approximately $72 billion in cash and stock. The merger will create the first railway operator in the U.S. that connects the Pacific to the Atlantic, with a total railway mileage exceeding 50,000 miles, covering 43 states. The transaction is expected to be completed by 2027, but it requires approval from the Surface Transportation Board (STB), and if denied, a breakup fee of $2.5 billion will be paid. Both companies' stock prices fell more than 3% on Tuesday.

Today's News Preview

U.S. Q2 real GDP and Personal Consumption Expenditures (PCE) annualized quarter-on-quarter preliminary values.

U.S. July ADP employment change.

Eurozone Q2 GDP.

Federal Reserve to announce interest rate decision, and Fed Chair Jerome Powell will hold a monetary policy press conference.

U.S. Treasury to release quarterly refinancing report statement.

Bank of Canada policy interest rate.

U.S. EIA crude oil inventory change last week.

Microsoft, Meta, Qualcomm, and Arm to release earnings reports.