Breakfast | Mixed U.S. macro data, three major indices show mixed performance

Market Overview

U.S. data is mixed, with a strong services PMI and weak ADP employment figures. The sell-off in software stocks has spread to semiconductors, AI, and others. Funds are rotating into sectors like energy and materials. The Nasdaq fell 1.51%, while the Dow rose 0.53%.

Large tech stocks again significantly underperformed. The semiconductor index plummeted 4.4%. AMD fell 17% after earnings, marking its largest single-day drop in 8 years. Palantir dropped 12%. SanDisk fell nearly 16%. After hours, Google dropped over 2%.

The U.S. Treasury's quarterly refinancing plan met expectations, with the 30-year Treasury yield rising 2 basis points to 4.92%, and the 2-year Treasury yield slightly falling 1 basis point to 3.56%. The dollar rose 0.3%, recovering yesterday's losses.

Bitcoin plummeted, dropping over 5% to around $72,000. Ethereum fell over 5%, hitting a nine-month low.

Spot gold briefly returned above $5,000 but could not hold that level, ultimately rising 0.3%. Spot silver rose 3%.

During the Asian session, the Shanghai Composite Index surged back above 4,100 points in the afternoon, with a boom in photovoltaic stocks leading to a surge in limit-up trading, while tech stocks fell across the board. The Hang Seng Index dropped over 1%, Tencent fell nearly 4%, and Shanghai silver skyrocketed 11%.

Key News

China

Xi Jinping held a phone call with U.S. President Trump.

Xi Jinping held a video meeting with Russian President Putin.

The People's Bank of China: Focus on supporting the expansion of domestic demand, technological innovation, and key areas such as small and micro enterprises.

Elon Musk's team is investigating the photovoltaic industry chain, with listed companies responding intensively. The China Photovoltaic Industry Association: Space photovoltaic technology is still in the early stages of exploration and verification.

Reports: Zhongcai Futures shorted before the recent silver price crash, earning over $500 million.

Overseas

Employment has significantly slowed, with U.S. January ADP employment increasing by 22,000, below the expected 45,000.

U.S. January ISM services PMI reached a new high since 2024, with almost no expansion in employment and a rising price index.

Bessent hearing "Mars Sparks": denies tariffs caused inflation, reiterates strong dollar, holds the Federal Reserve accountable, and is criticized as a Trump lackey.

The U.S. Treasury maintains its bond issuance scale unchanged, with no increase in medium- to long-term bond issuance in the coming quarters.

The U.S. resumes the originally scheduled U.S.-Iran negotiations on the 6th, after the U.S.-Iran negotiations were on the verge of collapse.

Google All in AI: Q4 cloud revenue surged 48%, with this year's spending guidance nearly doubling expectations, causing a huge shock after hours.

Meta: Our new LLM large language model Avocado is the most powerful to date.

Nasdaq plans to introduce a "fast-track inclusion" rule to address large IPOs like SpaceX

The sales of weight loss drugs have exploded, with Eli Lilly's Q4 revenue increasing by 43% year-on-year, and net profit growth of 50%. The revenue guidance for 2026 is between $80 billion and $83 billion.

Novo Nordisk's European stock plummeted by 18%, with the CEO admitting: "Unprecedented pricing pressure" in 2026.

Market Report

US and European Stock Markets: The S&P 500 fell by 0.51%, closing at 6882.72 points. The Dow Jones rose by 0.53%, closing at 49501.30 points. The Nasdaq fell by 1.51%, closing at 22904.579 points. The European STOXX 600 index closed up 0.03%, at 618.12 points.

A-shares: The Shanghai Composite Index closed at 4102.20 points, up 0.85%. The Shenzhen Component Index closed at 14156.27 points, up 0.21%. The ChiNext Index closed at 3311.51 points, down 0.40%.

Bond Market: The yield on the US 10-year Treasury rose by 1.20 basis points, at 4.2775%. The yield on the 2-year US Treasury fell by 0.82 basis points, at 3.5614%.

Commodities: COMEX gold futures rose by 0.98%, at $4984.20 per ounce. COMEX silver futures rose by 5.11%, at $87.555 per ounce. WTI March crude oil futures closed up 3.05%, at $65.14 per barrel.

News Details

Global Highlights

China

Xi Jinping holds a phone call with US President Trump. According to CCTV News, Xi Jinping pointed out that the US has its concerns, and China has its own. China speaks with integrity and acts decisively, delivering on promises. As long as both sides uphold equality, respect, and mutual benefit, they can find ways to address each other's concerns. He emphasized that the Taiwan issue is the most important issue in China-US relations. Taiwan is part of China's territory, and China must defend its national sovereignty and territorial integrity, and will never allow Taiwan to separate. The US must handle the issue of arms sales to Taiwan with caution.

Xi Jinping holds a video meeting with Russian President Putin. According to Xinhua News Agency, Xi Jinping emphasized that China will be more proactive in expanding high-level opening-up and sharing new development opportunities with countries around the world, including Russia. Both sides should seize historical opportunities, strengthen high-level exchanges, and enhance practical cooperation in various fields, ensuring that China-Russia relations continue to develop along the right track with deeper strategic collaboration and more proactive great power responsibility People's Bank of China: Focus on supporting the expansion of domestic demand, technological innovation, and key areas such as small and micro enterprises. The meeting called for vigorous development of technology finance, green finance, inclusive finance, pension finance, and digital finance, strengthening financial support in the consumption sector. Build a multi-level financial service system, focusing on supporting the expansion of domestic demand, technological innovation, and key areas such as small and micro enterprises. Continue to effectively resolve debt risks of financial support financing platforms, support local governments in continuously promoting the market-oriented transformation of financing platforms, and guide financial institutions to provide services according to market-oriented and rule-of-law principles.

Elon Musk's team inspects the photovoltaic industry chain, listed companies respond intensively. According to Shanghai Securities Journal, recently, a team under Elon Musk has been intensively inspecting China's photovoltaic industry chain, engaging with several companies including GCL-Poly Energy, JinkoSolar, TCL Zhonghuan, and Highstar. Many companies subsequently issued announcements clarifying that no formal agreements have been signed or orders formed yet, and reminded that "space photovoltaic" is still in the early exploration stage, with uncertainties.

• China Photovoltaic Industry Association: Space photovoltaic technology is still in the early exploration and verification stage. Space photovoltaic technology has gained significant attention in the capital market due to Musk's team's research, but the China Photovoltaic Industry Association pointed out that this technology is still in the early exploration stage, and industrialization is not yet mature. Currently, the mainstream for space applications is verified gallium arsenide batteries, while the technologies such as heterojunction/perovskite that are being hyped in the market are still in the laboratory phase; the industry should focus on research and development and avoid speculation. If breakthroughs in aerospace capacity occur in the future, the cost and scale advantages of Chinese photovoltaic manufacturing will face tremendous opportunities.

Report: Zhongcai Futures shorted silver prices before the recent crash, profiting over $500 million. Zhongcai Futures successfully established a large-scale short position before the recent crash in silver prices, with estimated profits exceeding $500 million. According to data disclosed by the Shanghai Futures Exchange, as of February 2, Zhongcai Futures had established a short position equivalent to approximately 484 tons of silver futures on the Shanghai Futures Exchange, valued at over $1.5 billion at current prices.

Overseas

Job growth slows significantly, U.S. January ADP employment increased by 22,000, below the expected 45,000. The U.S. January ADP employment data significantly fell short of expectations, with only 22,000 new jobs added, highlighting a weakening momentum in the labor market at the beginning of the year. The growth was entirely driven by the education and healthcare services sector, while several key industries such as professional business services and manufacturing experienced job shrinkage, indicating structural weakness. Although wage growth remained stable at 4.5%, the overall weak data may reinforce the Federal Reserve's cautious view on the economy. Meanwhile, due to the government shutdown, the official non-farm payroll report has been postponed again US January ISM Services PMI Hits New High for 2024, Employment Nearly Unchanged, Price Index Rises. The US January ISM Services PMI index is at 53.8, matching the highest level since October 2024, better than expected. The rebound in business activity supports the overall index, but new orders growth has slowed, employment has nearly no expansion, and the price index has reached a three-month high.

Bessent Hearing "Mars is on Fire": Denies Tariffs Cause Inflation, Reiterates Strong Dollar, Holds Fed Accountable, Criticized as Trump's Lackey. Bessent stated that Democratic lawmakers do not understand the difference between general inflation and one-time price increases, and after insisting that tariffs would not trigger inflation, he was told by lawmakers to "shut up." He said the Federal Reserve should maintain monetary policy independence, but during the Biden administration, the Fed allowed high inflation, and both the president and lawmakers have the right to intervene in Fed decisions; last year, US Treasury attracted a record inflow of foreign funds; criticized the Biden administration for reactive regulation instead of preventing crises, claiming its policies led to the "extinction" of cryptocurrencies; the Treasury has no authority to use tax dollars to buy Bitcoin and is currently not considering establishing a central bank digital currency; believes that regulation of small banks should not be as strict as that of large banks.

US Treasury Maintains Debt Issuance Scale, Will Not Increase Medium- and Long-Term Bond Issuance in the Coming Quarters. The US Treasury announced its quarterly refinancing statement on Wednesday, deciding to maintain the current medium- and long-term bond issuance scale, continuing the principle of "regular and predictable" debt management. This quarter, a total of $125 billion in bonds will be issued, including $58 billion in 3-year, $42 billion in 10-year, and $25 billion in 30-year Treasury bonds. The statement dispelled market speculation that the government might adjust the issuance structure to lower long-term borrowing costs. Meanwhile, the Treasury is closely monitoring the Fed's short-term Treasury bond purchase plan and private sector demand, and future policy paths may be influenced by the nomination of the new Fed chair.

US Resumes Scheduled US-Iran Negotiations on the 6th, After Plans Nearly Collapse. After several Middle Eastern leaders urgently lobbied the Trump administration to abandon the threat of withdrawing from negotiations, the scheduled US-Iran nuclear talks on the 6th were restored, with negotiations taking place in Oman. Earlier, the US had rejected Iran's proposal to change the original meeting location from Istanbul, Turkey, to Oman.

Google All in AI: Q4 Cloud Revenue Soars 48%, This Year's Spending Guidance Nearly Doubles Expectations, Huge After-Hours Shock. In Q4, Alphabet's total revenue increased by 18% year-on-year, reaching a new high, with R&D expenses surging 42% due to AI investments. After accounting for a one-time $2.1 billion Waymo compensation expense, the operating profit margin still exceeded 30%; Google Cloud revenue exceeded analyst expectations by over 9%; search revenue surpassed expectations with a 17% increase; revenue from other bets like Waymo fell by 7.5%, significantly below expectations; the median spending guidance for 2026 is $180 billion, over 50% higher than expected. The CEO stated that spending will help meet customer demands and seize growth opportunities. The stock price initially fell 7.5% after hours, then rose over 4%, before turning back down.

As software stocks plummet, Jensen Huang refutes the "AI replacement" theory: This is the most illogical thing in the world. NVIDIA CEO Jensen Huang explicitly refuted the view that "AI will replace software tools," calling it "extremely illogical." He emphasized that whether by humans or AI, the core lies in "using tools" rather than "reinventing tools," and urged companies to focus on core processes and actively deploy AI. Recently, the launch of a legal automation tool by AI startup Anthropic triggered a panic sell-off in global software stocks, with concerns that AI will disrupt traditional software business models.

Tech stocks' decline spreads, storage chip giants face "collective stampede"! SanDisk fell nearly 16%. The adjustment in storage chip stocks on Wednesday did not have a single "black swan"; SanDisk's fundamentals suddenly deteriorated, and during the tech stock sell-off, winners like SanDisk, which had benefitted from AI-driven storage demand narratives, experienced a sharper pullback. SanDisk's stock price has risen at least over 1100% in the past six months, and after releasing its earnings report last week, the stock price had increased nearly 29% over three days by this Tuesday.

Meta: Our new LLM large language model Avocado is the most powerful to date.

Nasdaq plans to introduce "fast entry" new rules to accommodate large IPOs like SpaceX. This proposed amendment, referred to as "fast entry," will allow newly listed companies to join the Nasdaq 100 index after the first 15 trading days following their listing. This time window is significantly shorter than the current requirement of at least a three-month waiting period. This proposal comes as a number of tech giants are expected to go public this year, including SpaceX, which could be valued at up to $1.3 trillion.

Sales of weight loss drugs explode, Eli Lilly's Q4 revenue surged 43% year-on-year, with net profit increasing by 50%, and revenue guidance for 2026 set at $80 billion to $83 billion. Thanks to the explosive sales of GLP-1 weight loss drugs, Eli Lilly's fourth-quarter revenue, profit, and full-year guidance all exceeded market expectations. In the peak showdown between the two weight loss drug giants, Eli Lilly seems to have provided the answer to the outcome. Novo Nordisk previously warned that due to intensified price wars, its sales could decline by 13% this year, while Eli Lilly expects its own sales to achieve a growth of up to 27% Novo Nordisk's European stock plummets 18%, CEO admits: "Unprecedented pricing pressure" in 2026. In the face of fierce market competition and expectations of declining sales in 2026, Novo Nordisk's CEO admitted that the price reduction of the star weight-loss drug Wegovy has caused "painful" financial impacts, but aims to exchange price for volume. To stabilize confidence, the company announced a stock buyback of up to 3.8 billion Danish kroner and plans to distribute dividends, while hoping that the new oral Wegovy tablet can drive future growth.

Research Report Highlights

Dalio warns: We are on the brink of a "capital war". Dalio warned that the "capital war" is weaponizing funds through trade embargoes, capital market restrictions, and other means. Geopolitical tensions have intensified mutual fears and risks of capital controls. Central banks and sovereign funds are preparing to respond to capital controls. Dalio recommends holding gold as the best hedge asset and maintaining a diversified investment portfolio.

Is the gold bull still on? Analysts: The last two bull markets experienced multiple significant corrections, and declines present good buying opportunities. Analysts pointed out that despite last week's historic single-day drop in gold prices, this is merely a typical technical correction in a long-term bull market. Major gold bull markets since 1971 have all experienced multiple significant corrections, and the current decline actually provides a rare opportunity for investors to increase their holdings. The core logic supporting gold's long-term strength—geopolitical uncertainty, continued central bank purchases of gold, and expectations of a weaker dollar—remains unchanged.

Bernstein: There is one reason to be bearish on oil, but ten reasons to be bullish. While Wall Street is extremely pessimistic, Bernstein sees the current situation as an excellent opportunity for contrarian bets: oil prices have fallen below long-term marginal costs, and capital withdrawal from the industry indicates a bottoming cycle; with the end of the U.S. shale oil myth and China's strategic reserves providing support, the market has overly priced pessimistic expectations. For patient capital, oil is currently in the best odds range in three years.

"Big Short" Burry: Already down 40%, if Bitcoin drops another 10%, it will trigger "disastrous consequences". Burry warned that Bitcoin has already fallen 40%, and if it continues to drop by 10%, it could cause lasting damage to treasury companies, while this storm could spread to broader markets, leading to a "collateral death spiral" in tokenized metal futures, where speculators may need to reduce risk by selling profitable positions in tokenized gold and silver futures.

NVIDIA's reassessment of OpenAI: Why should it most concern Microsoft? A Bloomberg column pointed out NVIDIA's loosening of investment commitments to OpenAI and its private criticism of "business discipline." It is more like a severe judgment on Microsoft's execution capability. Microsoft holds top models but is being "beaten" at the application level by competitors. If Microsoft cannot quickly convert its exclusive dividends into product advantages, it will face the risk of falling behind.

Domestic Macro

Ministry of Commerce of China: The EU's investigation into China's wind power constitutes a trade and investment barrier, urging the EU to correct it immediately, and China will take necessary measures to protect the rights and interests of enterprises. China has consistently advocated resolving differences through dialogue and consultation, opposing the politicization and broadening of security issues in economic and trade matters. We urge the EU to immediately correct its erroneous practices, to use the FSR unilateral investigation tool cautiously, and to create a fair, just, and predictable market environment for China-EU cooperation. China will closely monitor subsequent developments and take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.

Domestic Companies

CATL's Zeng Yuqun: 2030 will be the inaugural year of the sustainable energy era. Zeng Yuqun, chairman of CATL, pointed out that 2030 will be the inaugural year of the sustainable energy era. He believes that while foundational scientific breakthroughs are possible, engineering and manufacturing will determine the speed of implementation. The core of the future energy system will be distributed, intelligent, and recyclable, while current technology only addresses less than 30% of zero-carbon energy demand, requiring full efforts to break through.

Overseas Macro

Eurozone January CPI further cools to 1.7%, the lowest level since September 2024, market expects the ECB to "hold steady" at this week's meeting. The inflation rate in the Eurozone fell to 1.7% in January, continuing its downward trend and further below the ECB's 2% policy target. The market maintains expectations that the European Central Bank will keep interest rates unchanged at the upcoming meeting. Despite the ongoing decline in inflation, several economists point out that due to persistent underlying price pressures and high thresholds for policy adjustments, the ECB is more likely to remain cautious in the short term, and does not rule out the possibility of raising interest rates in the future if economic conditions change.

Japan's Composite PMI at 53.1, a 32-month high. Japan's service PMI rose to 53.7 in January, reaching an 11-month high; the composite PMI rose to 53.1, a 32-month high. The demand in the country's manufacturing and service sectors improved simultaneously for the first time in two and a half years, with export business achieving the fastest growth in over four years. In terms of prices and profits, there is a trend of "costs decreasing and selling prices increasing." However, Japanese companies still express concerns about labor shortages and the global economic outlook, with overall optimism declining.

Overseas Companies

Wall Street comments on AMD's earnings report: Operating expenses limit profitability, market focus shifts to AI rack scale in the second half of the year. Most Wall Street reports believe that while AMD's Q4 2025 revenue exceeded expectations, the market's focus is on the continuously exceeding expectations of operating expenses, which are seen as limiting the release of profitability The key focus shifts to whether the company can achieve market breakthroughs and operational efficiency improvements in the second half of this year with its next-generation rack-level AI products (MI455 series). Investment banks generally maintain a neutral rating, believing that although there is significant growth potential in its data center business, the company's valuation expansion will face constraints until new products are validated and lead to actual profit increases.

• AMD responds to doubts in the conference call: Very optimistic for the whole year! OpenAI's 6GW order is "on track," and MI450 will "significantly ramp up" in the second half. AMD's Q1 guidance unexpectedly "stalled," but Lisa Su emphasized that the second half is the "real turning point." She confirmed that OpenAI's 6GW order is progressing steadily, and MI450 chips will start ramping up in Q3 this year, with significant volume in Q4. The company disclosed for the first time that it aims to reach 2nm process by 2027 and reiterated that AI annual revenue will soar to "tens of billions of dollars." However, the company's traditional business segments such as PC and gaming remain under pressure.

Intel enters the GPU market! Intel takes on NVIDIA! It announced its entry into the GPU market targeting AI data center business and has recruited a Qualcomm executive as chief architect. Meanwhile, the 14A process foundry has been in deep discussions with clients and will begin ramping up production later this year. The market is focused on Intel's subsequent progress in GPU productization and foundry production.

Samsung's foundry considers raising prices for 4nm and 8nm processes by 10%! Samsung Electronics plans to increase prices for its 4nm and 8nm foundry processes, with an expected increase of about 10%. These two processes have entered a mature stage, with stable yields and capacity nearing limits. Analysts believe the price adjustment aims to support its advanced process R&D and enhance long-term profitability. Currently, TSMC is also raising prices due to a surge in AI orders and rising costs, with some processes potentially increasing by up to 20%.

The U.S. AI chatbot battle: ChatGPT's share drops from 69.1% to 45.3%, Gemini rises from 14.7% to 25.1%, Grok rises from 1.6% to 15.2%. Data shows that over the past year, although ChatGPT's absolute user numbers have still grown by 50%, Gemini's growth rate reached 647%. The market is showing three major trends: competition is shifting from a single dominant player to a multi-strong competition; 20% of users are using multiple applications; products like Claude are achieving differentiated competition through user stickiness, with average daily usage time increasing from 10 minutes to over 30 minutes.

Morgan Stanley comments on Lumentum's earnings report: Gross margin exploded, more importantly, CPO has secured a big order! Lumentum disclosed that it has received a multi-hundred-million-dollar CPO expansion order, expected to ship in the second half of 2027 At the same time, OCS's backlog of orders exceeds $400 million and is expected to reach a quarterly scale of $100 million two quarters earlier than anticipated. Morgan Stanley raised Lumentum's target price from $350 to $420 but maintained an equal-weight rating. Analysts pointed out that although the company's fundamentals are strong, the stock price has already reflected an optimistic expectation of approximately $20 earnings per share for the 2027 calendar year, and the current 25 times price-to-earnings ratio valuation is already quite full.

Investors find valuations too expensive! Stablecoin leader Tether cuts financing target from $20 billion to $5 billion. With the significant decline in cryptocurrency prices, investors are concerned about Tether's $500 billion valuation, and advisors are currently considering reducing the financing amount to a minimum of $5 billion. Tether's profit structure is highly dependent on the performance of the cryptocurrency market and investments in reserve assets, with profits expected to decline by 23% year-on-year to $10 billion in 2025.

Uber's pre-market stock price once plummeted 10%, closing down over 5%! Q4 booking volume surged but could not offset profit concerns, new CFO signals "focus on Robotaxi". Uber's net profit for the fourth quarter was $296 million, a significant year-on-year decline of 96%. For the current quarter, the company expects adjusted earnings per share to be between $0.65 and $0.72, below the average analyst expectation of $0.77 compiled by Bloomberg, and the median forecast for adjusted EBITDA also fell short. Despite concerns about profit prospects, Uber's booking volume guidance is quite optimistic. The company expects booking volume for this quarter to be between $52 billion and $53.5 billion, exceeding market expectations.

Today's News Preview

Initial jobless claims in the U.S. for last week.

U.S. trade balance for December.

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

Bank of England interest rate decision, Governor Bailey holds a press conference.

Atlanta Federal Reserve President Bostic speaks.

Amazon announces earnings report.