Preview of US Stock Market | All three major stock index futures are rising, semiconductor stocks continue to gain momentum, and European stocks are strongly reaching new historical highs.

Pre-Market Market Trends 1. As of pre-market trading on July 31 (Friday), U.S. stock index futures are all up. As of the time of writing, Dow futures are up 0.54%, S&P 500 futures are up 0.34%, and Nasdaq futures are up 0.94%. 2. As of the time of writing, Germanys DAX index is up 0.45%, the UKs FTSE 100 index is up 0.18%, Frances CAC 40 index is up 0.79%, and the Euro Stoxx 50 index is up 0.76%. 3. As of the time of writing, WTI crude oil is up 2.12%, at $85.36 per barrel. Brent crude oil is up 1.92%, at $88.55 per barrel. Market News The $16 billion bloody chips settlement is complete: Is Citadel's AI crash wave the end of liquidation or the beginning of the domino effect? The hedge fund giant Citadel, led by Wall Street billionaire Ken Griffin, has reached a deal with the struggling hedge fund Situational Awareness, which has helped trigger a long-awaited irrational exuberance super rebound for AI computing-related stocks globally, particularly semiconductor stocks. This has led Wall Street traders to engage in intense debates: has the worst of the AI sell-off passed, or are there more potential market crashes related to the AI computing infrastructure supply chain to come? Some market participants believe that the forced liquidation of nearly all publicly traded AI investment positions by Situational Awareness helps explain the ongoing forced deleveraging and severe selling pressures in the global semiconductor sector observed in July: a round of selling tends to transmit through global markets, evolving into another round of massive sell-offs. Before retail investors and professionals significantly reduced their borrowings, the guarantee financing scale in South Koreas financial market even reached a historical high last month. After Citadel acquired most of the public stock portfolios at a discount, the market no longer had to bear the high leverage hedge funds selling off shares one by one in trading, and other investors no longer feared unknown massive forced liquidations. Short covering, dealer hedge adjustments, and fundamental capital inflows collectively fueled the violent rebound in global semiconductor stocks beginning Thursday. The AI engine has restarted, propelling European stocks to new historical highs! The pan-European Stoxx 600 index is aiming for a fourth consecutive gain. Driven by a rebound in global technology stocks and a revival in AI investment sentiment, European markets experienced broad gains on Friday, with the Stoxx 600 index reaching a historic high during the day, poised to achieve a monthly rise for the fourth consecutive month, rounding off a robust July market. The core driving force behind this round of gains comes from a rapid recovery in confidence across the global AI supply chain. The European technology sector surged more than 2%, perfectly reflecting the strength of the previous night's U.S. stocks and the explosive growth of Asian semiconductor stocks. Florian Elbo of Lombard Odier Investment Managers remarked, The most intense phase of position clearing is likely over. From a valuation perspective, I believe it is more reasonable now than it was a month ago, though it cannot yet be deemed cheap. Therefore, this does not mean the end of AI trading, but rather likely marks the conclusion of the easy phase where one could buy with eyes closed. Japan may have spent about $52.8 billion on market intervention Thursday, resulting in the yen's largest single-day gain in nearly three years. The Bank of Japan's account data released on Friday indicated that Japanese authorities might have invested approximately 8.45 trillion yen (around $52.8 billion) for exchange rate intervention on Thursday to bolster the yen's performance. This intervention occurred during the New York trading session, where the yen against the dollar temporarily surged about 3.3% during the day, marking the largest single-day increase since December 2023. Market participants noted that while Japan intervened, the U.S. also conducted exchange rate inquiries around midnight Beijing time, indicating both parties maintained communication amid increased volatility in the forex market. The scale of this suspected intervention far surpassed previous market expectations, reflecting the heightened vigilance of Japanese officials regarding the excessive depreciation of the yen. The market will closely monitor subsequent exchange rate movements and official statements to determine if there is scope for further action. South Korea reportedly made rare dollar sales, with traders suspecting a joint intervention in the forex market with Japan. Market insiders revealed that South Korean foreign exchange authorities implemented rare dollar selling interventions on Thursday, pushing the won to a nine-month high. This measure coincided with Japan's intervention in the New York market, buying yen and selling dollars, pulling the yen back from a 40-year low. The won appreciated 2% against the dollar on Thursday, reaching 1,418.0 won per dollar, the strongest level since October 20 of last year. The won had hit a 17-year low of 1,561.50 last month, but has risen over 8% this month, likely achieving the largest monthly gain since March 2009. A foreign exchange official from the South Korean Ministry of Finance refused to confirm the intervention. A South Korean forex trader stated that the market suspects a joint intervention between South Korea and Japan since both countries had previously indicated close coordination. On July 2, the South Korean Vice Minister of Finance stated at a press conference that Seoul is maintaining close communication with Japan and other major allies on foreign exchange issues. The senior foreign exchange official from Japan subsequently reiterated on July 7 that Tokyo is closely communicating with Seoul's foreign exchange officials due to similar volatility trends in the financial markets of both countries. Global equity funds attracted over $27 billion in a single week, with technology stocks becoming the main driver of the rebound, with the AI narrative remaining the core drive. For the week ending July 29, global equity funds recorded a net inflow of approximately $27.2 billion, the highest level in three weeks. Investors increased their positions following earlier pullbacks, betting on further upside in the AI-driven market. U.S. equity funds reversed their previous two weeks of outflows, with a net purchase of approximately $11.8 billion for the week. European and Asian equity funds attracted net inflows of approximately $7.8 billion and $5.4 billion, respectively, showcasing a synchronized recovery in global risk sentiment. Technology sector funds saw a net inflow of approximately $5.7 billion for the week, the largest weekly inflow since July 8. Earlier concerns over cash flow data for Alphabet (GOOGL.US) and Tesla, Inc. (TSLA.US) had raised market anxieties, but robust earnings reports from Microsoft Corporation (MSFT.US) and Amazon.com, Inc. (AMZN.US) alleviated investors' worries regarding substantial capital expenditures in AI, boosting sentiment in the sector. Global bond funds recorded a net inflow of approximately $6.2 billion for the week, the lowest in 17 weeks. High-yield bond funds saw outflows of about $800 million, reversing the previous week's net buying trend. The inflows in government bond funds and short-term bond funds also significantly narrowed compared to the prior week. Money market funds faced a third consecutive week of net redemptions, totaling approximately $6.6 billion. Gold and precious metals funds recorded net inflows for the third week, totaling about $280 million. In emerging markets, equity funds saw a net inflow of approximately $1.8 billion for the third consecutive week, while bond funds faced redemptions of about $800 million. Leading AI models have gone "out of control"! Anthropic and OpenAI have reported network intrusion incidents one after another, raising the call for increased regulation. Alarms are ringing in the AI industry. Anthropic disclosed on Thursday that its AI model Claude infiltrated the systems of three companies during testing. Just days earlier, its competitor OpenAI reported a similar threat: its AI agent autonomously breached the systems of the open-source platform Hugging Face. Anthropic stated in a blog post that after reviewing its cybersecurity tests following OpenAI's intrusion incident announcement, they identified the issue. Anthropic noted that in both OpenAI's and Anthropic's tests, AI models were able to access the internet from what should have been a closed test environment. Anthropic reported that it reviewed 141,006 evaluation test reports and found that its Claude AI tool accessed the internet and infiltrated "the real infrastructure of external organizations" three times. The earliest incident occurred in April. During cybersecurity testing, Anthropic's Claude model was told it could not access the internet; however, due to a communication error with the assessment partner, the test system was actually connected to the public network. This vulnerability ultimately led to the model unauthorizedly intruding into three institutions, names of which the company did not disclose. Individual Stock News U.S. semiconductor stocks continue their upward trend. After hitting a low and bouncing back yesterday, the semiconductor sector in the U.S. stock market continued to rise before the market opened on Friday. As of the time of writing, SK Hynix (SKHY.US) is up about 7%, SanDisk (SNDK.US) and Western Digital Corporation (WDC.US) are up 6%, Micron Technology, Inc. (MU.US) and Intel Corporation (INTC.US) are up 5%, and AMD (AMD.US) is up 4%. South Korea's KOSPI index closed up 18% on Friday, significantly reversing the downward trend of the previous three days, marking the largest single-day increase in history. According to data from LSEG, five of the ten largest single-day increases in KOSPI history have occurred since March, while three of the four largest single-day declines in the past ten years happened within the last five weeks. Executives from Samsung Electronics (SSNLF.US) and SK Hynix have individually "dug into their own pockets" to buy back company stock. Reports indicate that SK Group Chairman Chey Tae-won purchased SK Hynix shares in the secondary market for a total of about 4.8 billion won. Samsung Electronics' DX division president and co-CEO, Roh Tae-moon, also invested approximately 700 million won to buy more company stocks. South Korea's Financial Supervisory Service's electronic disclosure system (DART) revealed on July 31 that Roh bought 3,045 shares of Samsung Electronics stock at a price of 230,000 won per share for a total of about 700.35 million won. After this acquisition, his total holdings increased to 124,280 shares. Is Tesla, Inc. considering divesting its China business? Tesla, Inc.'s response is: false news. Recently, there were reports from foreign media that Tesla, Inc. is considering a spinoff of its China operations to facilitate a potential merger with SpaceX (SPCX.US). Both companies are founded by Elon Musk, with the latter being a leading private aerospace company globally, involved in space launches, the Starship project, and Starlink satellite internet. This June, it listed on Nasdaq, setting the record for the largest IPO in history. Reports cited an insider saying that some Tesla, Inc. executives were advised to prepare for this. Other insiders revealed that Tesla, Inc.'s advisors had discussed various options, including spinoffs, sales, or closures of its China operations (including a factory in Shanghai), with the aim of addressing potential conflicts of interest from SpaceX's role as a major defense contractor for the U.S. In response to relevant media inquiries, Tesla, Inc.'s China division stated that this is false news. Musk himself also indicated on social media that the report about divesting the China business is fake news. Alibaba (BABA.US) Qianwen has begun testing in Tesla, Inc.'s in-car system. Reports indicate that the Doubao large model assistant has been integrated into some new Tesla, Inc. vehicles. Several insiders also revealed that Qianwen has already entered the deep testing stage of Tesla, Inc.'s in-car system and is close to going live. According to these insiders, Qianwen has completed extensive in-car testing work in an authentic Tesla, Inc. vehicle environment, with capabilities such as listening, responding, controlling the car, navigating, and performing tasks all already included in the plans. The capabilities that Qianwen may offer in Tesla, Inc.'s in-car system could far exceed the single definition of voice assistant. As for when Qianwen will officially go live in Tesla, Inc. vehicles, as of now, Alibaba Cloud and Tesla, Inc.'s China division have not made a formal response. Apple Inc. (AAPL.US) CEO Cook responds to rising memory prices. On July 30 local time, Apple Inc. CEO Tim Cook stated during the earnings call that as memory chip prices continue to rise, the company is evaluating all possible responses. He emphasized that the dynamic random-access memory (DRAM) market is currently dominated by three suppliers, and having more suppliers will help improve supply and positively influence product pricing. He also announced that Apple Inc. now has over 1.5 billion global paid subscribers. The cost of the computing arms race: CoreWeave (CRWV.US) sees rising debt issuance costs, leading investors to become wary of renewal risks. Despite AI cloud computing star company CoreWeave being accustomed to intense market fluctuations, recent turbulence in the capital markets has significantly affected its crucial debt financing costs. After experiencing a rollercoaster of plummeting and surging stock prices, the company had to complete a large-scale leveraged loan transaction at a higher cost. CoreWeave previously initiated a $2.6 billion leveraged loan issuance plan, initially targeting an interest rate of 425 to 450 basis points over the benchmark rate. However, due to a sudden shift in market conditions, the company was forced to raise its interest rates. According to Bloomberg calculations, the final interest rate locked in this week was a full 100 basis points higher than the original ceiling, which translates to an additional interest expense of approximately $30 million annually for the company. Insiders revealed that despite the increased pricing and adjusted terms, the transaction still attracted around $9 billion in subscription orders, indicating some enduring interest in AI infrastructure assets. The two major U.S. oil giants made a combined profit of $26.5 billion in Q2, potentially inciting anger from Trump. Financial reports from Exxon Mobil Corporation (XOM.US) and Chevron Corporation (CVX.US) showed that against the backdrop of the Trump administration's military actions against Iran, which elevated crude oil and gasoline prices, the two companies collectively achieved a net profit of $26.5 billion in the second quarter. The huge profits reported by these two largest U.S. oil companies on Friday will undoubtedly please investors but may also lead to a direct confrontation with President Trump, who has previously accused the energy sector of price gouging. Chevron Corporation reported a net profit of $12.2 billion for the second quarter, increasing nearly fivefold year-over-year, setting a record for the company's highest quarterly profit in history. Competitor Exxon Mobil Corporation reported a net profit of $14.5 billion, doubling year-over-year, marking its best quarterly performance since the onset of the Ukraine-Russia conflict in 2022. Important Economic Data and Event Forecasts At 20:30 Beijing time: Canadas May seasonally adjusted GDP monthly rate. At 21:45 Beijing time: U.S. July Chicago PMI. At 22:00 Beijing time: U.S. final consumer confidence index from the University of Michigan for July. At 01:00 the next day Beijing time: Total number of active U.S. oil rigs for the week ending July 31.