Asia stocks weak for second day as tech, energy, materials lag

Asia Market Update: Asia stocks weak for second day as tech, energy, materials lag; US to cut UK tech dreams? US NFP for Oct-Nov tonight.

General trend and developments

- Asian stocks down heavily again for a second day (Hang Seng worst at -2.1%), following Wall St lower, with energy, materials and chips declining. Note that Coreweave in the US was off -8% in US trading, with the WSJ later (after-hours trading had already ended) attributing its cooling data center delay due to ‘a Texas rainstorm’.

- In China, AI-darling Cambricon down as much as -5%, with 12% losses over the past week, as the company announced it would be using some of its capital reserves to offset accumulated losses.

- Pres Trump may be throwing a wrench in the high-tech dreams of the UK, with FT reporting the US will suspend its Sept-announced “Tech Prosperity Deal”, citing trade disagreements.

- USD/JPY weaker again vs JPY, threatening to break two-week lows as BOJ decision looms on Friday.

- Australia consumer sentiment, after jumping to a 7-year high of 103.8 in the prior month, for December saw a crash back down to 94.5 as consumers appear to have quickly latched onto renewed inflationary pressures amid a more hawkish RBA going forward.

- Relatedly, National Australia Bank, which has a history of being ahead of the curve on RBA rate forecasts, now sees the RBA hiking in Feb by 25bps and another 25bps in May, 2026.

- New Zealand Treasury cut its FY25/26 bond issuance forecast buy NZ$3.0B. Kiwi dollar fell -0.3% over the next couple of hours to test last week’s lows with NZ 10-year bonds -8bps. Prior to that also saw weak November data out of NZ for both food prices and house sales.

- Japan’s December prelim Manufacturing saw a 6th month of contraction, while Australia prelim Dec Manufacturing PMI saw its 2nd month of expansion.

- Troubled property developer China Vanke’s largest shareholder is Shenzhen Metro, and today the Shenzhen local govt said it would “accelerate resolving key developer's risk”.

- Overnight saw offshore Yuan continue to strengthen into the 7.03 handle, and today the China PBOC again set the strongest fix since Oct 9th, 2024

- Hong Kong Q3 PPI and Industrial Production data both significantly higher than the previous quarter.

- Note that Japan’s new govt confirmed to be tightening foreign property ownership reporting rule.

Reminder that tonight sees a long-awaited catch-up for official jobs numbers in the US, with both Oct and Nov Non-farm Payrolls being released, although October figures only expected to be partial due to the extended US govt shutdown.

- US equity FUTs -0.5% to -0.8% during Asian trading.

Looking ahead (Asian-weighted focus, using Asian time zone)

Note: Australia Treasurer Chalmers: (This) week's Mid-year review [MYFEFO] will not be a mini-budget, will include savings.

- Tue Dec 16th Global Flash PMI’s, (Tue night US Oct & Nov Nonfarm Payrolls, US Oct Retail Sales, US Sept, Oct, Nov Building Permits and Housing Starts).

- Wed Dec 17th NZ Q3 Current Account, JP Nov Trade Balance, TH BOT Rate Decision, ID BI Rate Decision, UK CPI, (Wed night US Nov Retail Sales)

- Thu Dec 18th NZ Q3 GDP, (Thu eve UK and ECB Rate Decisions, US Nov CPI).

- Fri Dec 19th JP Nov CPI, BOJ Rate Decision (Fri night US Nov Existing Home Sales).

Holidays in Asia this week

- No holidays in Asia this week.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.1% at 8,645.

- AUSTRALIA DEC PRELIMINARY PMI MANUFACTURING: 52.2 V 51.6 PRIOR (2nd month of expansion).

- Australia Dec Westpac Consumer Confidence: 94.5 v 103.8 prior.

- New Zealand: Cuts FY25/26 bond issuance forecast to NZ$35.0B from NZ$38.0B prior; forecasts FY26 budget deficit of NZ$13.9B.

- New Zealand Nov Food Prices M/M: -0.4% v -0.3% prior.

- New Zealand Nov REINZ House Sales Y/Y: -5.7% v +6.1% prior- BNZ: New Zealand Nov Job Ads M/M: 0.8%.

- New Zealand Nov Non Resident Bond Holdings: 59.5% v 60.3% prior.

- RBNZ Gov Breman: Mortgage rate hikes 'risk dampening NZ economy' - interview on New Zealand TV (update.

China/Hong Kong

- Hang Seng opens -0.3% at 25,547; Shanghai Composite opens -0.2% at 3,861.

- Shenzhen local govt: To accelerate resolving key developer's risk - statement.

- EU reportedly plans crackdown on "very dangerous" Chinese parcels – FT [overnight update].

- China FX Regulator (SAFE): Pledge greater FX support for real economy and strengthen expectation guidance [overnight update].

- China Commerce Ministry (MOFCOM): To support cities on cloud computing and AI outsourcing [overnight update].

- China approves first batch of Level 3 autonomous driving vehicles for two models - China state media [overnight update].

- Hong Kong Q3 Industrial Production Y/Y: 5.4% v 0.9% prior [overnight update].

- Hong Kong Q3 PPI Y/Y: 7.7% v 4.0% prior [overnight update].

- China PBOC sets Yuan reference rate: 7.0602 v 7.0656 prior (strongest since Oct 9th, 2024).

- China PBOC Open Market Operation (OMO): Injects CNY135B in 7-day Reverse Repos; Net injects CNY18B v injects CNY8.6B prior.

Japan

- Nikkei 225 opens -0.2% at 50,051.

- Japan Dec preliminary PMI Manufacturing: 49.7 V 48.7 PRIOR (6th month of contraction).

- Japan Fin Min Katayama: Confirms to tighten foreign property ownership reporting rule.

- Japan PM Takaichi: Govt stance is consistent on survival-threatening issue; No survival-threatening case without armed attack - financial press.

- Japan MOF sells ¥648.7B v ¥650B indicated of JGBs in Liquidity Enhancement Auction.

Korea

- Kospi opens flat at 4,093.

- Korea Oct M2 Money Supply M/M: 0.9% v 0.7% prior [y/y has the fastest growth since Jun 2022].

- Bank of Korea (BOK) comments on Oct Money Supply Data: Excessive liquidity is not the sole factor behind housing market surge, weak Won.

- South Korea government plans to invest KRW4.5T on securing overseas logistics hubs for exporters – Yonhap.

- South Korea NPS extends $65B currency swap line with BOK, South Korea FX Authorities (update. as expected).

- South Korea government plans KRW30.0T investment in AI and chip sectors through the Public Growth Fund in 2026 - South Korea press.

- South Korea nominee for broadcast and media commission: Seeks social media use restrictions for teenagers – Yonhap.

Other Asia

- India Dec Preliminary PMI Manufacturing: 55.7 v 56.6 prior (54th month of expansion).

- (TW) Follow up: Taiwan cabinet rejects Fiscal Revision passed by legislature - comments by Premier Cho Jung-tai [overnight update].

North America

- (US) Fed's Miran (FOMC voter): Faster pace of cuts would move us closer to neutral rate; Market-based core (ex-shelter) inflation running below 2.5%.

- (CA) CANADA NOV CPI M/M: 0.1% V 0.1%E; Y/Y: 2.2% V 2.3%E.

- (US) DEC EMPIRE MANUFACTURING: -3.9 V 10.0E; New Orders: 0.0 v 15.9 prior.

- (US) Fed's Williams (voter): Data show labor demand has softened more than supply.

- (US) DEC NAHB HOUSING MARKET INDEX: 39 V 39E.

- (MX) Mexico Econ Min Ebrard: Inflationary impact of Mexico tariffs will be only 0.2%.

- (US) Fed's Collins (voter in 2025; non-voter in 2026): Sees future inflation risks as lower than they were.

- (MX) Mexico Nov Total Formal Job Creation: +48.5K v +217.5K prior.

- (US) Fed's Williams (voter): Expects the jobs report to confirm signs of gradual cooling; It's too early to remark on Jan Fed decision.

- (US) Reportedly US Trade Court won't pause customs process amid ongoing tariff fight - press.

Europe

- (UK) US said to suspend technology deal with the UK; relates to the £31.0B 'tech prosperity deal'; cites trade disagreements - FT.

- (EU) Trade Commissioner Sefcovic: In almost permanent contact with US regarding steel and machinery; Clear trade deficit with China is too high.

- (PT) Portugal debt agency: See 2026 borrowing needs at €13B v €10.8B in 2025.

- (UR) Ukraine Pres Zelenskiy: Talks with US were not easy, but productive.

- (UR) German Chancellor Merz: The US offer of Ukrainian security guarantees is 'Remarkable;' The decision for using Russian foreign assets is decisive for the EU; Failure to agree on assets would cause 'massive damage'.

Levels as of 01:20 ET

- Nikkei 225 -1.4%; ASX 200 -0.4%; Hang Seng -2.1%; Shanghai Composite -1.2%; Kospi -1.7%.

- Equity S&P500 Futures -0.5%; Nasdaq100 -0.8%; DAX -0.7%; FTSE100 -0.2%.

- EUR 1.1747.117.59; JPY 154.71-155.30; AUD 0.6618-0.6648; NZD 0.5759-5789.

- Gold -0.5% at $4,311/oz; BTC -4.1% at $86,031; Crude Oil -0.6% at $56.31/bbl; Copper -1.4% at $5.3325/lb.