Asian equities weak amid uncertainty and lack of fresh data at end-of-week

Asia market update: CN CEWC disappoints; Asian equities weak amid uncertainty and lack of fresh data at end-of-week; Kospi bucks trend back to pre-Martial law levels.

General trend

- China’s Central Economic Work Conference (CEWC) underwhelmed as it concluded last night without any specific timing or numbers, simply promises of more stimulus overnight; to raise the fiscal deficit and cut RRR rates. China’s record bond rally bulldozed forward, with 10-year yields plunging a further 11bps points over the past 24 hours to just 1.775% (was 2.04% on the last day of Nov). CN 30-yr yields -5bps to 1.999%, another record low. This all lends credence to reports overnight that the PBOC said to have considered the possibility the yuan could drop to 7.50 level to US dollar to counteract any trade shocks.

- In reply Pres-elect Trump's newly announced Senior Counselor for trade and manufacturing Peter Navarro warned against Chinese currency manipulation.

- Hong Kong and Shanghai stocks were not impressed with the CEWC output (above) with Hang Seng falling by the most in 3 weeks.

- Nikkei failed to be lifted by Japan Q4 overall business mood rising for the first time in two quarters, with the BOJ Tankan index for large manufacturers rising to the highest level since 2022 and the Small Non-Manufacturing Index rose to its highest since Aug 1991.

- USD/JPY broke 153 for the first time since late-Nov, as Japanese yields fell 2bps back below 1.04% for JP 10-yrs. More analysts jumping on the thought this week that next week’s BOJ meeting may see a pause in rates, rather than a hike. Euro also hit 2-week lows as US yields on the rise again.

- South Korea Pres Yoon impeachment drama continues as the opposition party continues to pick off ruling-party members one-by-one as the 200 votes required appears to edge ever closer.

- Australia 10-yr yields rose 17bps since yesterday’s hotter than expected jobs numbers.

- Further Trump news saw reports of his advisors said to be seeking to shrink or eliminate bank regulators in the US, including potentially abolishing the FDIC - WSJ.

- US equity FUTs +0.1% to +0.3% during the Asia session.

Looking ahead (Asian time zone)

- Sat Dec 14th CN Nov New Yuan Loans, FDI.

Holidays in Asia this week

- Tue Dec 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 down -0.5% to 8,285 in early trading.

- Australia Nov Port Hedland Iron Ore Exports: 48.8Mts v 45.6Mts m/m; iron ore exports to China 40.0Mts v 39.3Mts m/m.

- Reserve Bank of Australia (RBA) Asst Gov (Econ) Hunter: RBA’s views on jobs market and inflation are "evolving" - Q&A following prepared speech.

- New Zealand Oct Net Migration: 2.8K v 2.2K prior.

- New Zealand Nov Manufacturing PMI: 45.5 v 45.7 prior (21st month of contraction).

- (US) New Zealand Fin Min: Pleads case with US for exclusion of new tariffs following Pres elect Trump's international import threats.
[overnight update].

China/Hong Kong

- Hang Seng opens -0.8% at 20,238; Shanghai Composite opens -0.5% at 3,442.

- Trump's Senior Counselor for trade and manufacturing Peter Navarro: Warns against Chinese currency manipulation after financial press reports that China considering a weaker Yuan - financial press.

- China 10-year govt bond yields hit fresh record low of 1.77%; 30-yr yields -4bps to 2.00%, another record low.

- China President Xi: About to achieve the 2024 targets but economy still faces challenges; China and US should choose talks over confrontation - CEWC comments.

- China to raise fiscal deficit and cut RRR rates at a 'suitable time'; to roll out private economy promotion law – Press; No specific details provided.

- Hong Kong Q3 PPI Y/Y: 3.2% v 3.1% prior.

- Hong Kong Q3 Industrial Production Y/Y: -0.1% v +0.7% prior.

- China PBOC sets Yuan reference rate: 7.1876 v 7.1854 prior.

- China PBOC Open Market Operation (OMO): Injects CNY205B in 7-day reverse repos; Net injects CNY14B v net injects CNY29B prior.

Japan

- Nikkei 225 opens -0.56% at 39,624.

- Japan Q4 Tankan large Manufacturing index: 14 V 13E; large Manufacturing outlook: 13 V 12E (Large Manufacturing Index highest since 2022).

- Japan Oct Final Industrial Production M/M: 2.8% v 3.0% prelim; Y/Y: 1.4% v 1.6% prelim.

- Bank of Japan (BOJ) announcement related to outright bond buying operations: For 1-3 Years, 3-5 Years, 5-10 Years and 10-25 Years (Inline with prior purchases).

- Japan Chief Cabinet Sec Hayashi: Tankan Survey shows corporate investment appetite - financial press.

- Follow up: Japan ruling-parties LDP, Komeito to postpone defense income tax hike - Japanese press.

- Japan Fin Min Kato: Funds for tax ceiling will be discussed by all three parties.

- Japan's parliament lower house passes ¥13.9T extra budget - press.

- Goldman Sachs analysts: Expect the BOJ to maintain its policy rate at 0.25% at the Dec 18-19th's meeting; Think the BOJ has not yet reached a situation where it can judge that it has sufficient confidence in the outlook.
[overnight update].

Korea

- Kospi opens -0.3% at 2,473.

- South Korea Nov Import Price Index M/M: 1.1% v 2.2% prior; Y/Y: 3.0% v -2.5% prior (update).

- One additional ruling PPP [party] member said to 'hint' that she will vote for impeachment - Press.

- South Korea opposition party submits bill to parliament in second attempt to impeach Pres Yoon - press [**Note: analysts point out that the likelihood of its passage increasing as more ruling party members indicate they will support it].

Other Asia

- Thailand Fin Min Pichai: Expects to implement global minimum corporate tax rate of 15% from Jan, 2025.

North America

- (US) Reportedly Trump advisors are seeking to shrink or eliminate bank regulators in the US; Advisors also discussed whether Trump should abolish the FDIC - WSJ.

- (US) House Speaker Johnson told Bret Baier that there probably will be "at least" two reconciliation packages; Opposition to two reconciliation bills is hardening among the rank-and-file House Republicans and committee chairs. - Punchbowl.

- (US) BOFA institute: Nov total card spending +0.6% Y/Y V +1.0% IN OCT; Spending on holiday items in the two weeks around Thanksgiving was 6.1% higher this year compared to 2023’s holiday period.

- (US) Nov PPI final demand M/M: 0.4% V 0.2%E; Y/Y: 3.0% V 2.6%E (highest since Feb 2023).

- (US) Initial jobless claims: 242K V 220KE (10-week high); continuing claims: 1.886M V 1.88ME.

- (CA) Canada Oct Building Permits M/M: -3.1% v -4.9%e.

- (US) Pres-elect Trump: Will get corporate taxes down from 21% to 15% for companies that make their products in the US - comments from NYSE.

- FDIC releases Q3 banking Profile: number of 'problem' banks rose by 2 to 68, with $87.3B in assets.

- (US) Weekly EIA Natural Gas inventories: -190 BCF VS. -165 BCF TO -173 BCF indicated range.

- (CA) Canada said to consider export taxes on uranium and oil if Trump imposes tariffs; Also mulling export tax on potash - press.

- (US) Treasure $22B 30-year bond reopening draws 4.535% V 4.389% prior; bid to cover 2.39 V 2.50 prior and 2.40 over last 8 reopenings.

Europe

- (UK) Dec GfK Consumer Confidence: -17 v -18e.

- (UR) Polish PM Tusk: No plans for now to send foreign troops to Ukraine when ceasefire is reached.

- (FR) Eurasia Group's Rahman: French Pres Macron will have bilateral talks with Polish PM Donald Tusk this morning; There have been reports in Polish and other European media that Macron is ready to discuss French (and possibly British) involvement in a post-ceasefire European peacekeeping force for Ukraine of up to 40,000 men.

- FR) French Pres Office: Will appoint PM Friday morning, previous announcement had expected today.

- (IE) Ireland Nov CPI M/M: -0.5% v +0.3% prior; Y/Y: 1.0% v 0.7% prior.

- (CH) SNB Chairman Schlegel: SNB will use negative rates it it has to; SNB doesn't like negative rates but they do work - press interview.

- (EU) ECB cuts key rates by 25BPS; as expected; drops pledge to keep policy "restrictive" from the statement; not pre-committing to any particular rate path; Disinflationary process 'well' on track; Financing conditions are easing.

- (DE) Germany Oct Current Account: €12.5B v €21.3B prior.

- (EU) ECB chief Lagarde: Discussed 50bps rate cut option but 25bps proposal agreed by all; No victory yet on inflation but on track to reaching target in the medium-term target - Q&A.

- (EU) NATO Sec Gen Rutte: Its time to shift to a wartime mindset; We are not ready for what is coming in the next 4 or 5 years.

- (EU) ECB said prepared for 25bps rate cuts at each of the next 2 meetings - press.

Levels as of 00:20 ET

- Nikkei 225 -1.0%, ASX 200 -0.4%, Hang Seng -1.9%; Shanghai Composite -1.6%; Kospi +0.6%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; Dax flat; FTSE100 flat.

- EUR 1.0457-1.0481; JPY 152.46-153.1; AUD 0.6354-0.6475; NZD 0.5758-0.5773.

- Gold -0.1% at $2,707/oz; Crude Oil +0.1% at $70.06/brl; Copper -0.4% at $4.2242/lb.