Financial breakfast on August 6: The Federal Reserve's interest rate cut expectations are heating up, gold prices have risen to a near two-week high, and the increase in OPEC + supply has dragged oil prices down by nearly 2%.

On Wednesday (August 6, Beijing time), spot gold traded around $3,380.80/ounce, and gold prices climbed to a nearly two-week high on Tuesday, supported by rising expectations of U.S. interest rate cuts, while investors waited for President Trump to make a decision on the appointment of the Federal Reserve; U.S. crude oil traded around $65.30/barrel, and oil prices fell nearly 2% on Tuesday. The increase in OPEC + supply and concerns about weak global demand outweighed the impact of U.S. President Trump's threat to India to buy Russian oil.

Focus on the day

stock market

U.S. stocks closed lower on Tuesday as investors weighed in on the impact of trade tariffs as Yum Brands Group YUM. N and other companies mentioned them in their earnings or outlook. The U.S. trade deficit narrowed somewhat in June as imports of consumer goods fell sharply, and a measure of U.S. service sector activity stalled in July as companies said new import taxes were driving up costs.

Yum Brands, the parent company of KFC, missed expectations in its second-quarter results as hefty trade tariffs curbed consumer spending. Shares of the company fell 5.1 percent. Caterpillar rose 0.1 percent as the company warned that U.S. tariffs would pose a major challenge in the second half of the year and would cause losses of up to $1.50 billion in 2025. The U.S. second-quarter earnings season is drawing to a close, in which about 80 percent of S & P 500 companies beat analysts' earnings estimates.

"If you look at earnings, they are trending higher than low expectations," said Terry Sandven, chief equity strategist at Bank of America Wealth Management. "The impact of tariffs is still being felt gradually. We haven't seen any material impact from tariffs on corporate profitability. But we do know that the threat of them remains."

The Dow Jones Industrial Average fell 0.14% to 44,111.74; the S & P 500 fell 0.49% to 6,299.19; and the Nasdaq fell 0.65% to 20,916.55.

Trump said on Tuesday that the United States could impose "a small tariff" on drug imports before raising the rate. He also said he would announce tariffs on semiconductors and chips "in the next week or so."

"Today's market behavior reflects that investors are just sitting on the sidelines," Sandven said, noting that the stock market environment remains constructive this year.

The S & P 500 and Nasdaq have recently hit record highs, and the S & P 500 is still up 7.1% so far this year.

In other performance-related news, Marriott International cut its full-year revenue growth and profit forecast, and said there was slowing travel demand and uncertainty about the economy. Shares of the company closed 0.2 percent higher. While the earnings period is drawing to a close, investors are looking forward to more key earnings on Wednesday, with both Walt Disney and McDonald's set to release earnings.

Jin Shi

Gold prices climbed to a near two-week high on Tuesday, supported by rising expectations of US interest rate cuts as investors awaited President Trump's decision on Federal Reserve appointments. Spot gold was up 0.2 per cent at $3,380.20 an ounce after hitting its highest level since July 24. US gold futures closed 0.2 per cent higher at $3,434.70.

Last Friday's unexpectedly weak June jobs data, followed by Trump's firing of the head of the Bureau of Labor Statistics, comes as markets price in two rate cuts before the end of the year that began in September.

Daniel Ghali, commodity strategist at TD Securities, said: "The market is still digesting the impact of last week's data-intensive week and the Trump administration's decision to replace the head of the Bureau of Labor Statistics. Both of these events have driven gold's strength and really confirm our view that the dollar is partially losing its store of value."

At the same time, Trump said he would soon announce his interim replacement for Federal Reserve Governor Kugler (who announced her resignation on Friday), as well as his nominee for the next Fed chair.

Spot silver rose 1.2% to $37.85 an ounce, its highest level since July 30. Platinum fell 1% to $1,316.35; palladium fell 2.1% to $1,181.21.

oil market

Oil prices fell on Tuesday, as rising OPEC + supply and concerns about weak global demand outweighed U.S. President Donald Trump's threats over India's purchases of Russian oil.

Brent crude oil futures fell 1.63% to settle at $67.64 a barrel. U.S. crude oil futures fell 1.7% to settle at $65.16. Both indicators settled at their lowest levels in five weeks.

OPEC + agreed on Sunday to raise September oil production by 547,000 barrels per day, a move that would end its latest output cuts earlier than planned.

Andrew Lipow, president of Lipow Oil Associates, said: "The significant increase in OPEC supply has put pressure on the market."

Activity in the US services sector was unexpectedly flat in July, with little change in orders and further weakness in employment, but input costs rose by the most in nearly three years, highlighting the continuing drag on businesses from uncertainty over the Trump administration's tariff policy. This weighed on oil prices.

"The market will now be watching whether India agrees to significantly reduce its purchases of Russian crude oil in order to find alternative supplies," said Mr. Lipow.

Mr. Trump on Tuesday renewed his threat to impose higher tariffs on Indian goods for buying Russian oil and suggested that falling energy prices could force President Vladimir Putin of Russia to stop the war in Ukraine. New Delhi called Mr. Trump's threats "unwarranted" and vowed to protect its economic interests, deepening a trade rift between the two countries.

currency market

The dollar rallied on Tuesday but remained hovering near the lows hit on Friday as markets continued to consolidate and a weak jobs report reinforced expectations of a rate cut by the Federal Reserve next month. Investors were also watching President Trump's nominations for Fed governors and his selection of the head of the Bureau of Labor Statistics.

Eugene Epstein, head of North American trading and structured products at Moneycorp, said: "We are now basically adjusting after the jobs data, the Fed is not in a hurry to cut rates, and we are not really seeing any signs of inflation, or maybe just a little bit of inflation. So between now and next week's CPI release, we are basically in a kind of purgatory. The dollar is consolidating and waiting for this data."

Wall Street economists polled by Reuters expect core consumer price inflation to rise 0.3 per cent month-on-month and 3.0 per cent year-on-year in July. In addition to economic data, markets are also watching personnel changes at the Federal Reserve, which could make it more dovish, in line with Trump's wishes.

Mr. Trump said on Tuesday that he would soon announce a short-term successor to Fed governor David Coogler, who resigned on Friday, as well as the next chairperson. Mr. Trump has ruled out Treasury secretary David Bescent's replacement as the current Fed chairperson, whose term ends in May 2026.

Trump said Bescent wants to continue in his current role, adding that the White House is considering four candidates to replace Powell.

"You could argue that Mr. Coogler's successor will be dovish on interest rates, which in turn means a weaker dollar down the road," notes Moneycorp's Mr. Epstein.

Mr. Trump also fired Erika McEntarfer, the head of the Bureau of Labor Statistics, on Friday after data showed weaker-than-expected job growth in July and sharply revised job gains for the previous two months. He said on Sunday that a new head of the Bureau of Labor Statistics would be announced within three to four days.

Tuesday's data had little impact on currency markets. Activity in the US services sector was unexpectedly flat in July, orders barely changed and employment softened further, but input costs rose by the most in nearly three years.

The euro was flat against the dollar at $1.1569 in afternoon trading, sending the dollar index up 0.2 per cent to 98.81 after earlier hitting a one-week low of 98.609.

According to the Chicago Mercantile Exchange's (CME) FedWatch tool, following the weak U.S. jobs report, the interest rate futures market now sees a 91% chance of the Federal Reserve cutting rates at next month's meeting, compared to a 35% chance a week ago.

The market also expects a 60 basis point rate cut by the end of December and a 130 basis point cut by October 2026, 30 basis points more than expected before Friday's U.S. jobs data.

Goldman Sachs expects the Federal Reserve to cut interest rates three times in a row starting in September by 25 basis points each, and could cut rates by 50 basis points if the next jobs report shows the unemployment rate rising further.

The dollar rose 0.4 per cent against the yen to 147.66 as the Bank of Japan meeting notes in June showed some policymakers believed there was room to resume raising interest rates once trade frictions over US tariffs eased.

However, investors remained focused on the uncertainty over tariffs, which Mr. Trump imposed on imports from dozens of countries last week, heightening concerns about the health of the global economy. The Swiss franc fell slightly to SFr0.8077 against the dollar, down 0.5 per cent in the previous session.

International News

Trump threatens to take over Washington, D.C. over crime

Mr. Trump reiterated his threat to take over Washington, D.C., where he said the crime problem was "out of control". He added that if Washington "does not act", the US would "have no choice but to let the federal government take over the city" and "if this continues, I will exercise my authority to federalise the city".

Ukrainian Prime Minister: The first meeting of the board of directors of the US-Ukraine Reconstruction Investment Fund is planned for September

On August 5 local time, Ukrainian Prime Minister Sviridenko posted on his official social platform that he had a phone call with US Treasury Secretary Vincent, and the two sides discussed the launch of the US-Ukraine Reconstruction Investment Fund. The first meeting of the fund's board of directors is planned for September this year, with the goal of launching the first three projects in the next 18 months. She said that the two sides are working to expand the mandate of the fund so that it can also invest in the defense sector. On the phone, Sviridenko particularly emphasized the potential defense agreement proposed by Ukrainian President Zelensky, including the production and sale of Ukrainian drones and the possible purchase of US weapons. The two sides also exchanged views on strengthening sanctions against Russia and cooperation with international financial organizations, and agreed to continue dialogue at the working level.

The Trump administration will officially cancel Musk's "weekly report" plan

On August 5 local time, it was learned that people familiar with the matter revealed that the Trump administration plans to officially cancel a "weekly report" program initiated by Elon Musk as early as the same day, which requires federal employees to summarize five work achievements in the previous week. The White House and the federal Office of Personnel Management did not immediately respond to requests for comment. On February 22, Musk, the then head of the "Department of Government Effectiveness", said that according to the instructions of US President Trump, all federal government employees will receive an email, which will ask federal government employees to list the five work items they have completed in the past week, and employees who fail to reply to the email at 23:59 on February 24 will be considered to resign. The move was opposed by multiple government departments and Democrats. (CCTV News)

Zelensky: Support the US ceasefire initiative and call for sanctions against Russia

On August 5 local time, Ukrainian President Zelensky said in a regular evening video address that day that he had a phone call with US President Trump that the most important topic was how to end the Russian-Ukrainian conflict as soon as possible. Zelensky said that the Ukrainian side fully supports the "immediate ceasefire" initiative proposed by the United States. In order to achieve a ceasefire, Ukraine has tried various solutions and forms of dialogue. "Ukraine has proposed the'air silence 'initiative to Russia - that is, a complete cessation of missile and drone attacks, and a cessation of attacks on civilian infrastructure, especially energy systems. However, the Russian side has repeatedly and blatantly violated these agreements."

Trump says drug and chip tariffs will be announced "in the next week or so."

US tariffs on imports of semiconductors and pharmaceuticals will be announced "in the next week or so", President Donald Trump said, as the administration prepares to target key sectors of the economy in an effort to reshape global trade. "We will start with lower tariffs on pharmaceuticals, but within a year, no more than a year and a half at most, tariffs will go up to 150 per cent and then to 250 per cent because we want pharmaceuticals to be made in our country," Mr. Trump said in an interview on CNBC on Tuesday. "We will announce measures on semiconductors and chips, which is a different category," the president added.

Redefining "Generative AI", Google DeepMind Launches World Model Genie 3

Google DeepMind has announced the launch of Genie 3, a third-generation universal world model that can generate an unprecedented variety of interactive environments. Given text prompts, Genie 3 can generate dynamic worlds that can be navigated in real time at 24 frames per second and maintain consistency for a few minutes at 720p resolution. Compared to previous generation models (such as Genie 1/2) and video generative models (such as Veo 2, Veo 3's deep understanding of intuitive physics), Genie 3 is the first world model to allow real-time interaction, and its consistency and realism are also improved compared to Genie.

It is said that Russia will consider an aerial ceasefire, but will not agree to a comprehensive ceasefire

While Russia remains determined to press ahead with its military campaign, the Kremlin is weighing concessions to US President Donald Trump that could include an aerial ceasefire with Ukraine to try to avoid secondary sanctions. While expectations for a successful deal are low, a visit to Russia this week by Mr. Witkov, the US special envoy for the Middle East, is seen as one of the last chances for a deal with Mr. Trump, according to people familiar with the matter. One of the people said the suspension of air strikes, including drones and missiles, could be a potential de-escalation offer, provided Ukraine is also involved in signing it. However, Russian President Vladimir Putin will not agree to a comprehensive ceasefire in Ukraine because Russian forces are still advancing steadily on the battlefield and Russia's goals have not changed.

Two former U.S. Treasury secretaries have warned of risks to the U.S. Treasury market

Two former US Treasury secretaries who served as Treasury secretaries during the global financial crisis have warned of risks to the $29 trillion Treasury market, ranging from an unsustainable fiscal path to concerns about Washington's political system. When it comes to federal borrowing, "our current trajectory is not sustainable," Henry Paulson, the former US Treasury secretary, told CNBC on Tuesday. "I don't know if that means it's going to hit a wall in six months, or six years, or when." Timothy Geithner, who replaced Mr. Paulson in early 2009, said in the same CNBC interview that the 10-year Treasury yield was "at a pretty moderate level, reflecting some fundamental confidence that the US will govern rationally". "But it ultimately depends on whether the system can rebalance revenue and spending and bring the deficit down a bit," Mr. Geithner said, and preserve the elements that give confidence in Treasuries, such as the rule of law and the independence of the Federal Reserve. "These aspects are now in greater shadow than they have been in the past."

Domestic News

The maximum power load of Sichuan Power Grid reached 73.56 million kilowatts, setting a record high for the third time this year

On the evening of August 5, the official micro-message of the State Grid Sichuan Electric Power Company said that in the past few days, due to the continuous high temperature, sunny and hot weather, the cooling load of air conditioners and other cooling loads has surged. At 21:21 on August 4, the maximum power load of Sichuan Power Grid reached 73.56 million kilowatts, which is the third time this year to set a record high. Compared with last year's maximum load of 69.29 million kilowatts, an increase of 6%. At present, Sichuan Power Grid operates smoothly, and the power supply is safe and reliable. At present, the total installed capacity of the whole network of Sichuan Power Grid is 150 million kilowatts. Hydropower, new energy, thermal power and other types of power supplies should be sent out as much as

The progress is over 80%! The second domestic large cruise ship has more than 300 equipment completed

It was learned from CSSC that today (August 5), the first main generator of the second domestic large cruise ship "Aida Huacheng" officially generated power to provide power for the relevant equipment of the whole ship, which also marked that the construction of this cruise ship has entered the stage of equipment debugging and system function verification. The main generator is the core equipment of the cruise ship, just like the "heart" of the cruise ship, it is the main power supply of the ship's power distribution system and propulsion system. The official power generation means that more than 300 equipment related to it has reached the completion state. As of now, the overall progress of the second domestic large cruise ship "Aida Huacheng" project has exceeded 80%. The next phase will focus on the interior engineering and equipment system commissioning to ensure smooth undocking in March 2026 and completion and delivery before the end of the year. (CCTV)