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On October 1, Qiushi Magazine published an important article by the General Secretary of the CPC Central Committee titled 'Strengthening Inclusive, Fundamental, and Bottom-line Social Welfare Construction.'

China's official PMIs for September both rose into the expansion range: manufacturing at 50.1, non-manufacturing at 50.2. China's September RatingDog manufacturing PMI rose to a five-month high of 52.1, and the services PMI accelerated expansion for two consecutive months.

After the change in statistical standards, the Fed-favored inflation indicator, the core PCE price index, rose 3% year-on-year in August, below expectations; Goldman Sachs delayed the expected timing of the Fed rate hike from October to December. U.S. consumer spending in August recorded the fastest growth in over a year. The U.S. Q2 real GDP annualized quarter-on-quarter growth final value was revised up to 2.2%, with consumption and AI investment as the main support. U.S. 'small nonfarm' ADP employment in September added 90,000 jobs, exceeding expectations and reversing three months of slowing growth.

The Federal Reserve passed stress test reforms with a 6-1 vote: capital requirements to be halved in volatility, the sole dissenting vote warned resilience could be compromised. The Fed's $2.4 billion headquarters renovation internal investigation has been released: no illegal or regulatory violations were found, management flaws increased costs; Trump refused to acknowledge it and threatened to sue the government to force Powell to resign as a Fed governor.

South Korea's first batch of investment plans in the U.S. announced: $200 billion invested in energy projects, covering eight nuclear power plants, a natural gas power plant in Texas, and LNG in Alaska.

Iran says it has received a response from the U.S. regarding the proposal; reports state that there is no dispute over the content of the 'seven-day plan', and the differences in U.S.-Iran negotiations have narrowed to 'the order of implementation'.

A plane flying from the UAE to Israel took an unusual detour mid-flight. The Defense Minister said the plane experienced an 'attempted terrorist attack'; the Prime Minister said the pilot 'intentionally caused a crash.' The suspect has been arrested, and security agencies have been instructed to prepare for potential threats.

Russia has extended the diesel export ban until the end of October. Report: Under pressure from the midterm elections, Trump held urgent consultations with advisors on the diesel export ban.

U.S. regulator FTC reportedly increases investigation efforts on AI giants like Anthropic and OpenAI, with officials stating it will not hinder AI dominance.

Google launches a new generation flagship AI model, Gemini 4 Argon returns to the forefront of AI but access is limited.

EDA giant Synopsys reaches chip design AI cooperation with OpenAI, stock price rises over 7% intraday.

Micron's Q4 revenue increased nearly fourfold year-on-year, and Q1 guidance exceeded expectations. The CEO said that industry supply tightness in 2027 and 2028 will be more severe than this year, but the gross margin guidance is disappointing, with shares rising first and then falling after hours.

DeepSeek open-source Ascend version 'AI Toolbox', benchmarked against NVIDIA CUDA, performance close to hardware limit.

The 'strongest in history' weight loss drug is here? Eli Lilly trials show combination therapy can reduce weight by up to 23%, far exceeding the effect of a single drug.

Market Overview

After the US PCE, the three major US stock indices all opened higher, but their closing results varied: the S&P 500 and the Dow Jones fell for three consecutive sessions, while the Nasdaq rebounded; in September, the Dow fell for the first month in half a year, the S&P declined, and the Nasdaq rose for two consecutive months; in the third quarter, the S&P and Nasdaq increased for two consecutive quarters, while the Dow decreased for two consecutive quarters. Meta fell nearly 2%, but it gained nearly 27% in September, marking the largest monthly increase in nearly four years; in the third quarter, Microsoft rose nearly 40%, performing the best among the 'Big Seven Tech Giants.'

PCE data failed to continuously curb U.S. Treasury sell-offs. After the PCE, the U.S. Treasury yield curve steepened, and long-term bond yields continued to hit multi-year highs: the 2-year Treasury yield hit a one-week intraday low before rebounding, while the 10-year and 30-year Treasury yields both reached their highest levels since 2002; amid inflation concerns, global government bonds posted their worst quarterly performance since Trump was elected president in 2024.

After the US PCE, the US dollar index hit a daily low, then turned up, approaching a two-month high. Bitcoin surged past $85,000 intraday, rising more than 3% from the daily low, then gave back most of the gains, rising over 6% in September.

Crude oil rebounded on Wednesday, rising for three consecutive months, with Brent crude rising more than 3% intraday. The situation in the Middle East drove a double-digit rebound in crude oil in the third quarter, with Brent up over 40% for the quarter. Gold surged and then retreated; after the U.S. PCE was released, futures gold initially expanded gains, rising nearly 2%, but later turned down, falling more than 6% in September and reversing two months of consecutive gains. LME copper ended a three-day losing streak, rising nearly 6% in the second quarter and marking two consecutive quarters of gains.

U.S. and European stock markets: The S&P 500 closed down 0.25% at 7,651.54 points, down 0.45% in September, and up 2.03% for the third quarter; the Dow Jones Industrial Average closed down 0.86% at 50,906.05 points, down 4.29% in September, and down 2.7% for the third quarter; the Nasdaq Composite closed up 0.24% at 26,861.06 points, up 1.86% in September, and up 2.47% for the third quarter. The European STOXX 600 index closed down 0.50% at 634.89 points, down 2.49% in September, and down 0.69% for the third quarter.

A-shares: The Shanghai Composite Index closed up 0.31% at 3,842.19 points. The Shenzhen Component Index closed down 0.11% at 12,887.62 points. The ChiNext Index closed down 0.23% at 3,135.28 points.

Bond Market: By the end of the bond market, the yield on the U.S. 10-year benchmark Treasury was about 5.28%, rising about 4 basis points intraday, up about 53 basis points in September, and up about 81 basis points for the third quarter; the 2-year U.S. Treasury yield was about 4.89%, rising about 1 basis point intraday, up about 55 basis points in September, and up about 72 basis points for the third quarter.

Commodities: WTI November crude oil futures closed up 1.16% at $90.42 per barrel, rising 5.43% in September and 30.1% in the third quarter. Brent November crude oil futures closed up 0.92% at $103.53 per barrel, rising 14.41% in September and 41.98% in the third quarter. COMEX October gold futures closed up 0.19% at $4,155.6 per ounce, falling 6.22% in September and up 3.3% in the third quarter. COMEX October silver futures closed down 0.94% at $60.098 per ounce, falling 9.25% in September and up 1.04% in the third quarter. COMEX October copper futures closed up 0.24% at $6.559 per pound, falling 0.52% in September and up 5.92% in the third quarter.

News Details

China

The reception celebrating the 77th anniversary of the founding of the People's Republic of China was held in Beijing, where the President delivered an important speech. He emphasized that since the beginning of this year, China's economy has pressed forward under pressure, moving towards new and better directions, showing strong resilience and vitality, and that the Party and the country's undertakings have achieved new progress and outcomes. We must adhere to the general principle of pursuing progress while maintaining stability, fully and accurately implement the new development philosophy, accelerate the formation of a new development pattern, further deepen reform and opening-up, better coordinate development and security, promote sustained economic development in new, better, and positive directions, effectively protect and improve people's livelihoods, strive to accomplish the annual goals and tasks, and achieve a good start to the 15th Five-Year Plan.

Xinhua News Agency: On October 1, Qiushi Magazine published an important article by the General Secretary of the CPC Central Committee titled 'Strengthening Inclusive, Fundamental, and Minimum Livelihood Construction.' The article points out that we must adhere to a people-centered approach, strengthen inclusive, fundamental, and minimum livelihood construction, properly realize, safeguard, and develop the fundamental interests of the broadest masses of the people, focus on effectively solving the urgent, difficult, and worrying problems of the people, improve the basic public service system, enhance the level of public services, strengthen balance and accessibility, and steadily advance common prosperity.

China's official PMI for September both rose into the expansion range: manufacturing at 50.1 and non-manufacturing at 50.2. September brought positive signals for China's economy. The manufacturing PMI returned above the 50% threshold for the first time in three months, with the production index rising month-on-month to 51.7%, and both medium-sized and small-sized enterprise PMIs recovering compared to August; the non-manufacturing PMI jumped 1.2 percentage points month-on-month to 50.2%, with the construction sector increasing sharply by 3.4 percentage points in a single month, returning to the expansion range; the composite PMI for September rose to 50.7%, indicating that overall economic momentum noticeably recovered at the end of the quarter.

China's manufacturing PMI by RatingDog in September rose to a five-month high of 52.1, and the services PMI accelerated expansion for the second consecutive month. The RatingDog composite output index increased from 52.1 in August to 52.4 in September, reaching a three-month high, with both manufacturing and services achieving comprehensive improvements in output, new orders, exports, and employment, while business confidence also rose to a four-month high.

The day after the mortgage interest subsidy policy was implemented, the six major banks collectively announced 'enjoy the benefits without application.' The Industrial and Commercial Bank, Agricultural Bank, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China issued announcements regarding the implementation of the residential mortgage interest subsidy policy. All six large state-owned commercial banks stated that they are actively promoting the interest subsidy work for commercial personal housing loans, optimizing the handling process, simplifying procedures, and providing interest subsidy services to customers who meet policy requirements. The six major banks reminded that during the handling of commercial personal housing loan interest subsidy business, the banks will not charge any fees.

Targeting NVIDIA CUDA! DeepSeek open-sources the Ascend version of the 'AI Toolbox', with performance close to hardware limits. DeepSeek announced the open-sourcing of complete infrastructure components for the Huawei Ascend platform, including the TileLang programming language comparable to NVIDIA CUDA, as well as five major computing and communication components. Test performance has already approached the hardware limits. Huawei and DeepSeek are jointly promoting a 128-card supernode solution based on Ascend 950. Media evaluations suggest that the related tools could become a potential alternative to NVIDIA's software ecosystem.

Overseas

After the revision of statistical standards, the Fed-favored inflation indicator, the U.S. core PCE price index, increased by 3% year-on-year in August, below expectations; U.S. consumer spending in August recorded the fastest growth in over a year. The month-on-month increase of the core PCE in August was also below expectations, and both the year-on-year and month-on-month growth rates for July were revised down. Traders have lowered their bets on a Fed rate hike in October. CME data show that the financial market estimates the probability of a Fed rate hike at the October meeting to be about 39%, lower than the probability of about 45% before the PCE release; the probability of a rate hike in December this year is 90%.

- U.S. August PCE to be released tonight: Changes in statistical methodology may depress the reading, but inflation resilience remains and pressure for rate hikes has not disappeared.

- How does Wall Street view the PCE? Goldman Sachs delays expectations for a Fed rate hike. After the release of the PCE data, Goldman Sachs postponed its expectation for the Fed's second rate hike of the year from October to December, and stated that it does not rule out the possibility that the Fed may ultimately decide that no further rate hikes are needed. 'New Fed Communications Agency' Timiraos noted that the PCE did not change the previously known trend of rising inflation. The yield on 2-year US Treasury bonds slightly fell then rebounded after the PCE release, while the 10-year yield continued to rise.

The final value of the U.S. Q2 real GDP annualized quarter-on-quarter growth was revised up to 2.2%, mainly supported by consumption and AI investment. The quarterly annualized GDP growth in Q2 was significantly revised up from the initial 1.5%. Consumption expenditure growth rose to 3.8%, non-residential fixed investment grew by 9%, with AI-related investment being an important support; imports increased by 12.6%, which pulled down the GDP growth by nearly 1.7 percentage points.

The U.S. 'small non-farm' ADP employment increased by 90,000 in September, surpassing expectations and reversing three months of slowdown. The U.S. ADP private employment report, known as the 'small non-farm,' showed that the U.S. private sector added 90,000 jobs in September, significantly higher than the market expectation of 75,000 and a sharp rebound from the revised 36,000 in August, ending the three-month slowdown in ADP employment growth. Wage growth remains resilient, with wages for job switchers increasing by 7.3% year-on-year. The market will focus on the official non-farm employment report to be released on Friday, and economists expect that September will also see an increase of 90,000 jobs.

The U.S. goods trade deficit in August unexpectedly widened to $132.6 billion, reaching the highest level in more than a year. The month-on-month surge of 16.6% in imports of industrial goods was the main driver of the deficit expansion, and net exports may further drag on third-quarter GDP. The U.S. government's complete trade data, including service trade, will be released on October 6.

Internal investigation of the Federal Reserve's $2.4 billion headquarters renovation released: no illegal or regulatory violations found, management flaws drove up costs. The Federal Reserve's internal oversight agency report listed management flaws such as failing to submit construction cost estimates and lack of bidding, pointing out that these issues caused project costs to soar from the initial budget of $1.3 billion to $2.4 billion. Walsh responded that the General Services Administration will be brought in to take over the project and an independent audit will be launched. This project controversy was previously central to Trump's pressure on former Fed Chair Powell and had sparked heated discussions about the Fed's independence.

- Trump does not acknowledge the investigation and threatened Powell with government prosecution to resign from the Federal Reserve Board.

The Federal Reserve passed the stress test reform with a 6-1 vote: capital requirements will see volatility halved, and the sole dissenting vote warned that resilience would be compromised. The Federal Reserve officially approved two final rules aimed at increasing transparency and reducing capital requirement volatility by about 50%. The new rules will publicly solicit opinions on stress test scenarios and calculate capital buffers based on the average of results from two consecutive years, with the averaging mechanism taking effect in 2028. This reform is the result of years of negotiation in the banking industry, and industry groups have expressed welcome. Fed Governor Barr warned that this reform will weaken the constraints of stress tests and reduce the overall resilience of the banking system.

South Korea's first batch of investment plans in the U.S. announced: $200 billion to be invested in energy. Trump announced South Korea's massive investment plan in the United States, with South Korea investing $200 billion in U.S. energy projects, covering eight nuclear power plants, a gas-fired power plant in Texas, and an LNG project in Alaska, as the first batch of projects under the $350 billion commitment in the U.S.-South Korea trade agreement. According to the U.S.-South Korea trade agreement reached last year, South Korea promised to invest $350 billion in the United States.

Iran says it has received the U.S. response to the proposal; reports indicate there is no dispute over the content of the 'seven-day plan,' and the U.S.-Iran negotiation differences have narrowed to the 'order of implementation.' U.S.-Iran negotiations are still ongoing, with both sides continuously exchanging views through Qatar. Iranian Foreign Minister Araghchi has received the U.S. response regarding the 'seven-day plan,' and the current differences mainly focus on the sequence of implementing measures, rather than the content of the plan. Araghchi has informed the Iranian cabinet of the relevant situation, and further negotiation arrangements are yet to be discussed.

A passenger plane flying from the UAE to Israel unexpectedly changed course, prompting the Prime Minister to hold an emergency meeting! Israeli media: The plane's return was not due to a hijacking. According to reports, on September 30, a commercial flight from Dubai, UAE, to Tel Aviv, Israel, reported a suspected security incident mid-flight that morning, but the possibility of a hijacking was later ruled out. Sources from Israeli security agencies revealed that the plane sent out an emergency signal, 'apparently due to a dispute on board.'

- In case of length: The Dubai Airlines plane incident was an 'attempted terrorist attack.'

- The Prime Minister described the pilot of the flight to Israel as 'intentionally crashing the plane.' Netanyahu released a video statement confirming that a pilot on board stabbed another pilot and then attempted to crash the plane, but was subdued by passengers and crew. The suspected attacker has been arrested and is currently being questioned by the Saudi government. He also stated that he has instructed security agencies to 'be prepared to respond to other potential threats.'

Russia has extended the diesel export ban until the end of October.

- Report: Under election pressure, Trump held emergency consultations with advisers regarding a diesel export ban. White House officials stated that Trump is 'assessing all options on the table' and has not yet made a decision on whether to suspend exports. U.S. diesel prices reached $6.53 per gallon last week, up more than 70% compared to before the outbreak of the Iran conflict. Republican lawmakers from agricultural states are pushing for the ban, while oil giants and several cabinet officials strongly oppose it.

South Korea's stock market was the worst globally in Q3: it fell nearly 19% over three months, due to massive liquidation of AI memory trades. The Korean stock index plummeted 18.8% in the third quarter, but still rose about 60% for the year. In July, Samsung Electronics and SK Hynix faced concentrated selling, and leveraged liquidations further amplified the decline, while AI memory trades experienced a valuation reassessment. Analysts believe that after the sell-off, chip stock valuations have significantly retreated, but rising global bond yields and potential oversupply risks may still limit valuation expansion, while AI infrastructure investment continues to support chip demand.

The U.S. FTC has been reported to increase its investigation efforts against AI giants such as Anthropic and OpenAI, with officials stating that it will not hinder AI dominance. According to reports on Wednesday, the U.S. Federal Trade Commission (FTC), which launched the investigation several weeks ago, is currently drafting a 'civil investigative demand' that will compel executives from AI labs like Anthropic and OpenAI to testify about their products and potential risks. An FTC official stated: 'We hope to maintain AI dominance, and our investigation should not in any way hinder this goal.'

- Trump refuses to legislate AI regulations, signs an AI 'ethical restraint' agreement, and promotes industry self-regulation, planning to establish a supervisory 'committee.' On Tuesday, Trump held a closed-door lunch at the White House with global top AI company leaders including Musk, Bezos, and Zuckerberg, clearly refusing legislative regulation, promoting industry self-regulation, and announcing that 'artificial intelligence' will be renamed 'superintelligence.' He emphasized that the key to the U.S.'s AI leadership advantage is 'not stifling growth,' and positioned the Department of Justice and the FBI as the core mechanisms for regulating AI.

Google has launched a new generation of flagship AI model, Gemini 4 Argon, returning to the forefront of AI, but access is limited. Gemini 4 Argon is Google's most advanced model to date, with significant improvements in programming, cybersecurity, and complex professional tasks. Google stated that the new model will initially be available only to certain companies and organizations focused on cybersecurity defense. The model will be more widely released after defenders have had the opportunity to patch system vulnerabilities and fix defects discovered by the model.

EDA giant Synopsys has reached a chip design AI collaboration with OpenAI, and its stock price once rose more than 7%. Synopsys and OpenAI have signed a multi-year legally binding agreement to jointly develop GPT-Synopsys, a model that will be specifically trained and tuned to undertake chip design tasks. OpenAI will pay Synopsys a subscription fee for the tool license, and the two sides will share revenue based on the improvements in chip design when customers use the product.

Micron's Q4 revenue increased nearly fourfold, and Q1 guidance exceeded expectations, but the gross margin guidance was disappointing, with after-hours trading first rising then falling. Storage chip leader Micron Technology's fourth fiscal quarter revenue rose 379% year-on-year to $54.229 billion, exceeding the market expectation of $51.49 billion. The median revenue forecast for the first fiscal quarter of 2027 is $61.5 billion, also higher than the market expectation of $57.02 billion. The CFO stated that the pace of price increases will moderate. The CEO said that the supply tightness in 2027 and 2028 is expected to be more severe than in 2026. Micron's after-hours trading first rose more than 2% but then turned down, at one point falling over 1%.

The "strongest in history" weight loss drug is here? Eli Lilly's trial shows combination therapy can reduce weight by up to 23%, far exceeding the effect of a single drug. Data from Eli Lilly's next-generation weight loss drug combination therapy are impressive. After co-administration of the experimental drugs eloralintide and tirzepatide, patients in the highest dose group lost an average of 23.3% of their body weight over 48 weeks, significantly higher than the 14.8% seen in the tirzepatide-only group. Combining different mechanisms is becoming the direction for next-generation weight loss drug development, and Eli Lilly plans to initiate a Phase 3 trial of the aforementioned combination therapy in the fourth quarter of 2026.

Selected Opinions

Goldman Sachs strategist warns: Earnings support temporarily stabilizes the stock market, but if U.S. Treasury sell-offs accelerate, U.S. stocks may face pressure. Goldman Sachs strategist Peter Oppenheimer believes that healthy corporate earnings can still partially offset the pressure of high yields on U.S. stock valuations, and nominal economic expansion also supports corporate revenues. However, if bond yields rise quickly, especially with an accelerated pace of adjustment, this buffer will be significantly weakened, and the stock market may come under rapid pressure.

Falling oil prices can't save U.S. Treasuries! Goldman Sachs: The link between energy and interest rates is breaking down, and real yields are raising the return threshold for stocks. Rich Privorotsky, head of Goldman Sachs' trading desk, believes that the source of pressure on interest rate and credit markets may be shifting from energy shocks to fiscal financing needs, with high real yields attracting private capital into risk-free assets and raising the required return threshold for stocks.

Real interest rates are rising rapidly, and Goldman Sachs warns that a 'systemic sell-off' in U.S. stocks is gathering at the end of the quarter. Goldman Sachs believes that the rapid rise in real interest rates has put more direct pressure on U.S. stocks, with interest rate-sensitive sectors such as small-cap stocks and financial stocks particularly under pressure. On the funding side, Goldman Sachs estimates that pension funds may sell about $33 billion in stocks at the end of the month and quarter, and CTAs may sell about $5.3 billion in Russell 2000 index futures over the next week. For the market, unless issues with oil and interest rates are resolved, the AI narrative is 'almost irrelevant.'

Today's Focus

China

A-shares and Hong Kong stocks are closed due to the National Day holiday.

Overseas

South Korea's exports in September. Eurozone September manufacturing PMI final value. US initial jobless claims last week. US September ISM Manufacturing Index.