In the Battle for AI, who will lead? 03/06/2025

HOT stories for today

US market wrap:

• Equities gained ground on Monday, kicking off June’s first trading session with positive momentum, as investors looked past escalating global trade disputes. The S&P 500 edged up by 0.41%, the Nasdaq Composite rose 0.67%, and the Dow Jones Industrial Average inched higher by 0.08%. Meanwhile, China rejected U.S. claims of breaching a temporary trade pact and instead accused Washington of not honoring its commitments — a signal that discussions between the world’s two largest economies may be deteriorating. 
• Tensions also escalated between the U.S. and the European Union, following Trump’s announcement to double steel tariffs to 50%. The EU criticized the move, saying it “jeopardizes” ongoing talks. Steel-related shares surged on the tariff news: Cleveland-Cliffs jumped 23%, while Steel Dynamics and Nucor both climbed 10%. A direct call between President Trump and Chinese leader Xi Jinping is “likely to happen this week,” according to a senior White House official speaking to CNBC’s Eamon Javers.

In the Battle for AI, who will lead?
 

• China’s artificial intelligence industry is booming, fueled by strong state investment and a rapidly expanding network of domestic tech innovators. This explosive growth creates both strategic opportunities and serious challenges for U.S. firms like Nvidia (NVDA), which are under mounting pressure from Washington’s export controls. Despite these restrictions, Nvidia is working to preserve its foothold in China, a market it views as critical to its long-term growth. Meanwhile, domestic competitors such as MetaX and Cambricon are developing increasingly sophisticated AI chips, narrowing the technological gap.
• Up-and-coming startups like DeepSeek are also making waves by building competitive models using open-source frameworks and commercially available hardware. CEO Jensen Huang has cautioned that losing access to China could mean forfeiting a “Boeing-sized” business opportunity, underscoring the market’s significance. As tensions between economic ambition and national security tighten, American tech companies must find new ways to innovate, collaborate, and adapt in an evolving global AI race.

Stock’s on the move:
 

• Tesla (TSLA) — Shares of the electric vehicle giant declined 3% after May sales dropped in multiple European countries. According to Reuters, Tesla experienced decreased demand in Sweden, France, Spain, Denmark, and the Netherlands, though sales improved in Norway, helped by the refreshed Model Y.
• Advertising stocks — Shares in advertising firms retreated Monday following a Wall Street Journal report stating that Meta Platforms (META) intends to fully automate its ad creation process using artificial intelligence by year’s end. Omnicom Group (OMC) slid 4%, while WPP (WPP) and Interpublic Group (IPG) each fell 2%.
• Applied Digital (APLD) — The digital infrastructure firm’s stock surged over 40% after signing two 15-year lease agreements with CoreWeave, a cloud services company backed by Nvidia (NVDA). The contracts are expected to generate $7 billion in total revenue over their term. CoreWeave’s valuation also rose roughly 6% on the announcement.

Watchlist: PLTR, CLF, APLD, TSLA, META, OMC, NVDA, DG

 

Today’s action

• Asia-Pacific markets mostly advanced on Tuesday, even as a private survey revealed that China’s manufacturing sector contracted in May at its fastest rate since September 2022. The Caixin/S&P Global manufacturing PMI dropped to 48.3, well below Reuters’ consensus forecast of 50.6 and down from April’s 50.4, signaling a sharp decline in factory activity. Hong Kong’s Hang Seng Index led regional gains, climbing 1.15%, while Japan’s Nikkei 225 trimmed earlier advances to close up 0.29%. 
• Meanwhile, U.S. stock futures edged lower Tuesday morning, following a strong start to June’s trading. S&P 500 futures dipped 0.39%, Dow futures declined 159 points (0.38%), and Nasdaq 100 futures eased 0.37%. Investors are eyeing earnings reports from Dollar General (DG), Signet Jewelers (SIG), and Nio (NIO) before the opening bell. Key economic data on April’s job openings, durable goods, and factory orders are also on deck.

Bitcoin

• Bitcoin started June on a shaky note, falling below $104,000 as renewed Russia-Ukraine tensions weighed on broader U.S. markets. The flagship cryptocurrency remains near its late 2024 all-time highs, but traders appear cautious, unsure of the next market direction.
• BTC/USD has now pulled back around 8% from its recent peak of $112,000, with some analysts suggesting that — absent a fresh catalyst — June may see mostly sideways price action. As Wall Street opened on June 2, Bitcoin hovered near $105,222, eyeing a possible retest of its previous highs.
  Watchlist: Bitcoin: 100 000-112 000, Ethereum:1500-2800, Solana: 80-183

Forex

• The euro weakened against the U.S. dollar on Tuesday, with EUR/USD retreating to around 1.1420 during Asian trading after gaining over 0.50% in the previous session. The pullback comes as the U.S. Dollar stages a modest technical recovery, even amid ongoing concerns over stagflation risks and weaker-than-expected ISM Manufacturing PMI data, which slipped to 48.5 in May. Meanwhile, the EU's warning that Trump’s proposed tariff hikes could derail U.S.-EU trade negotiations added pressure on the euro. Market focus now turns to upcoming Eurozone HICP inflation data and U.S. JOLTS job openings later in the day.
• In Japan, the yen (JPY) faced renewed selling as traders reacted to dovish signals from the Bank of Japan (BoJ). Speculation that the BoJ might delay tapering its bond purchases beyond 2026, combined with a broadly positive risk tone, continued to weigh on the currency. The USD/JPY pair extended its rebound from recent lows, although policy divergence between the BoJ and the Fed may limit further yen depreciation.
  Watchlist: EUR/USD: 1.0700-1.1600, USD/JPY: 140-151

Basic Materials
 

• Gold (XAU/USD) edged lower on Tuesday, pulling back from nearly four-week highs just below the $3,400 level as a modest rebound in the U.S. Dollar weighed on the metal. The greenback recovered slightly from multi-week lows, dampening demand for the non-yielding asset. Additionally, upbeat sentiment in equity markets reduced safe-haven flows into gold, trimming gains from the previous session.
• Meanwhile, WTI crude oil extended its rally, trading around $62.40 in early Asian hours. The move comes after OPEC+ announced a planned production increase of 411,000 barrels per day starting in July. Tensions surrounding Iran's rejection of a proposed U.S. nuclear deal also contributed to the upward pressure on oil prices.
  Watchlist: GOLD 2600-3500, US Oil: 55.60-70.00
  
   

Key Economic Events Today:

EST time
10:00 am: USD JOLTS Job Openings
10:00 am: USD Factory Orders
12:45 pm: USD FOMC Member Goolsbee Speaks
03:30 pm: USD FOMC Member Logan Speaks

Earnings

BMO (Before the US Market opens)
DG          Dollar General Corp.
DCI         Donaldson Company
NIO         NIO Inc.
AMC (After the US Market closes): HPE, HQY

 

The TEFS Analyst team wishes you a successful day!