Focus on US Nov CPI and BoE, ECB, BoJ rate decisions

Asia market update: Soft Asian EQs again following US lead as MU outperforms A/H; Trump focuses on US econ; NZ confirms rebound; CN gunning for ASML; Focus on US Nov CPI + BOE, ECB, BOJ rate decisions.

General trend and developments

- Equities again underperformed in the US cash session, flowing through to Asia - though Micron brought a little cheer to equity FUTs after hours, +8%, as the company outperformed Q1 estimates on earnings, Rev and margins, raised FY 26 capex by about 10%.

- Pres Trump’s live address to the Nation focused on the economy, inflation, tax rebates in 2026, cost of drugs but did Not mention Venezuela or foreign policy.

- New Zealand outperformed even the expected strong rebound in Q3 GDP, +1.1% for the quarter after the nasty contraction in Q2.

- China continuing its efforts to displace the need for Holland’s ASML with its own EUV prototype reportedly targeting 2028 for working chips.

- Australia cut its debt issuance by A$25B for FY26 after a better-than-expected forecast surplus from its mid-year review yesterday.

- Continued warnings out of South Korean officials concerning the weak Won, amid consideration of the easing of rules in order to expand USD liquidity.

- Japan said to be planning a record ¥9.0T on defense spending over the next year.

- Taiwan Semi reportedly to install 3nm chip tools at its US Arizona plant next summer.

- Overnight the Thailand Central Bank cut by 25bps, as expected, with the BOT worried about the possible need for more cuts due to deflationary pressures and/or growth prospects worsening. Cut 2026 GDP forecast by a further -0.1% and cut 2026 CPI forecast by a further -0.2%.

- Overnight the Indonesia Central Bank left rates on hold, as expected, with the BI concerned about keeping the Rupiah stable amid healthy 2026 forecasts for CPI (1.5-3.5%) and GDP (4.9-5.7%).

- China PBOC injected additional funds in 14-day Reverse Repos, heading into year-end liquidity smoothing operations (first 14-day ops since Sept 26th, prior to the extended Autumn holidays).

- Spot Platinum rose a further +3% to $1,955/oz, highest since 2008.

- US equity FUTs +0.1% to +0.3% during Asian trading.

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

- Thu Dec 18th 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 -0.4% at 8,558.

- Australia Dec Consumer Inflation Expectation: 4.7% v 4.5% prior.

- AOFM [Australia debt agency]: Cuts FY26 bond issuance forecast to ~A$125.0B (prior: ~A$150.0B).

- NEW ZEALAND Q3 GDP Q/Q: 1.1% V 0.9%E; ; Y/Y: 1.3% V 1.3%E.

- RBNZ RRP: Offer at NZ$1.0B, total bids NZ$2.7B.

- Fonterra: Cuts 2025/26 season farmgate milk price forecast to (NZ$) 8.50-9.50/kgms (prior 9-10).

China/Hong Kong

- Hang Seng opens -0.5% at 25,330; Shanghai Composite opens -0.4% at 3,857.

- China Nov Swift Global Payments (CNY): 2.9% v 2.5% prior.

- China PBOC said to be consulting traders on demand for 14-day Reverse Repos - US financial press.

- China PBOC rate cut room 'shrinks' amid shift of focus to policy mix; notes aggressive RRR cuts are less needed - China Securities Times.

- Chinese researchers reportedly completed a working EUV prototype in early 2025; Targeting 2028 for working chips – sources [overnight update.

- China State Administration for Market Regulation official Fan Lei: Warns that platforms requiring merchants to offer products at “lowest price across the web” may violate anti-monopoly laws [overnight update].

- US financial press note that the lowest interest rate that banks paid the China PBOC for its fund injection via 14-day reverse repurchase today has dropped 5bps to 1.4% from the last operations (Sept 26th, 2025).

- HKMA PBOC to issue CNY40.0B of 6-month Yuan bills at par value in Hong Kong.

- China PBOC sets Yuan reference rate: 7.0583 v 7.0573 prior.

- China PBOC Open Market Operation (OMO): Injects CNY88B in 7-day Reverse Repos; Net injects CNY70B v drains CNY143B prior.

- China PBOC Open Market Operation (OMO): Injects CNY100B in 14-day Reverse Repos - statement.

Japan

- Nikkei 225 opens -0.7% at 49,060.

- Japan said to plan FY2026 defense spending of >¥9.0T [record high] - Press.

- Apple announces change in iOS due to stricter Japanese laws (Mobile Competition Act of Japan, MSCA); Introduces protections against new threats in Japan.

- Japan releases weekly flows data [period ended Dec 12th]: Foreign buying of Japan equities: ¥528.3B v ¥96.8B prior; Japan buying of foreign bonds: ¥356.4B v ¥452.9B prior.

- Japan sells ¥4.3T vs. ¥4.3T indicated in 3-Month Bills; Avg Yield: 0.6667% v 0.6241% prior; Bid-to-cover: 3.38x v 3.42x prior.

- Japan PM Takaichi: Extra budget is a step towards a strong economy and diplomacy; Plan to put together tax reform plan on Fri, Dec 19th - media conference [overnight update].

Korea

- Kospi opens -1.6% at 3,989.

- Follow up: South Korea Presidential Office to discuss FX with exporters; Eases FX Rules to boost dollar liquidity - Korean press.

- South Korea Fin Min reiterates increased volatility in FX market is a concern - financial press.

- South Korea to announce easing of rule in order to expand USD liquidity - Yonhap.

- South Korea Vice Fin Min: Sees herd behaviors in the markets.

Other Asia

- Taiwan Semi: To install 3nm chip tools at Arizona plant next summer (2026) - Nikkei.

- Thailand Central Bank (BOT) Gov Vitai: Reiterates the economy may improve in Q4; reiterates ready to cut rates further, monetary policy space is 'limited' [follows rate cut announcement on Dec 17th].

- Taiwan Defense Ministry: The US government has initiated the Congressional notification procedure for arms sales to Taiwan equal to $11.1B.

- Indonesia Central Bank (BI) Gov Warjiyo: Magnitude and timing of future rate cuts to be assessed at monthly meetings - post rate decision press conference [overnight update].

- Indonesia central bank (BI) leaves bi rate unchanged at 4.75%; as expected [overnight update].

- Thailand Central Bank (BOT) member Sakkapop: Will cut rates again if deflation risks escalate or economy is worse than expected [overnight update].

- Thailand central bank (BOT) cuts benchmark interest rate by 25bps to 1.25%; as expected [overnight update].

North America

- (US) Pres Trump Live Address to the Nation: Remarks on the economy, inflation, tax rebates, drugs and healthcare.

- (US) MBA Mortgage Applications w/e Dec 12th: -3.8% v +4.8% prior.

- (US) Fed's Waller (voter): Rates still 50-100bps above neutral; Prevailing view has come around to my view that labor market is very soft; Close to zero job growth.

- (MX) Mexico Pres Sheinbaum: Mexico opposes intervention and is against foreign interference in Venezuela; Calls for UN to intervene in US-Venezuela dispute.

- (US) NY Fed initial reserve management purchases: Buys $8.17B of T-bills, about 99% 3-month bills.

Europe

- (UK) DEC CBI INDUSTRIAL TRENDS TOTAL ORDERS: -32 V -35E.

- (EU) Parliament approves deal to phase out Russian gas imports by late 2027 - press (as expected).

Levels as of 01:20 ET

- Nikkei 225 -0.9%; ASX 200 flat; Hang Seng -0.2%; Shanghai Composite +0.4%; Kospi -0.9%.

- Equity S&P500 Futures +0.1%; Nasdaq100 +0.3%; DAX -0.2%; FTSE100 +0.2%.

- EUR 1.1735.117.46; JPY 155.43-155.81; AUD 0.6593-0.6613; NZD 0.5755-5778.

- Gold -0.2% at $4,366/oz; BTC flat at $86,735; Crude Oil +0.7% at $56.21/bbl; Copper -0.4% at $5.4075/lb.