JP officials attempt to stem Yen bleeding amid ever-higher JGB yields

Asia market update: Asian equities extend Fri turnaround as JP officials attempt to stem Yen bleeding amid ever-higher JGB yields; Shortened holiday week.

General trend and developments

- Asian equities extended Friday’s bounce-back, led by strong gains in Korean and Japanese tech, including chipmakers. (Reportedly Samsung's HBM4 chips have posted the highest scores in Nvidia tests for "Vera Rubin" AI accelerators, which may lead to large supply deals for Nvidia's expected demand in 2026. Meanwhile, one of China's recent AI chip IPOs, Moore Threads, announced the launch of its Huashan AI chip).

- Asia followed on from the US Friday session tech momentum as recently hammered CoreWeave & Oracle stock prices, along with discounted chipmakers Nvidia & AMD, rebounded strongly on Friday (Dec 19th to regain all of the week’s prior losses and more upon renewed AI sector optimism driven by Coreweave winning inclusion in the US Dept of Energy’s R&D Genesis Mission amid optimism originally kicked off last Wed night by Micron’s significant Q1 earnings beat. [** Note also Softbank making moves to fund its $22.5B commitment to OpenAI by year-end] .

- Further warnings from Japanese officials today on “excessive and sudden FX moves” saw the Japanese Yen claw back a minor portion of its Friday losses, still under pressure despite the Friday BOJ rate hike but amid a perceived lack of commitment to further tightening by Gov Ueda. {Friday saw record lows for JPY vs EUR and vs CHF & 17-year lows vs GDP. Meanwhile USD/JPY is approaching 158 and now threatening 2025’s high not seen since the early days of January this year. (Prior highs >160 July 2024).}

- Yen also helped today by big increases across the Japan yield curve; 2-year JGB yield +3bps to 1.11% (highest since 1997), 5-years +7bps to 1.547%, 10-years +8bps to 2.10% (highest since Feb 1999), 20-years +5.5bps to fresh record high of 3.02%. 30-years +3bps to 3.45% and 40-years +2bps to 3.73%

- China PBOC kept the monthly Loan Prime Rate for December unchanged, as expected.

- South Korea exports for first 20 days of Dec continue to be strong amid continually strong chip exports.

- Further pain for Thailand’s export-oriented economy as the Thai baht rises to its highest since mid-June 2021 amid high gold prices and capital inflows. (Note: Thailand has a high savings rate in gold by traders and individuals and 2025 also has seen companies inject capital into Thailand to avoid higher US tariffs on other countries, mainly China. Thailand's US tariff rate is 19%).

- New Zealand-India Free Trade Agreement reportedly has been finalized

- Precious metals saw Spot Platinum rise above $2,000/oz for first time since 2008 as Silver also saw fresh all-time highs +3% to >$69/oz and Gold finally broke above October’s all-time highs to hit $4,400/oz for the first time.

- Japan PM Takaichi may be travelling to the US trip in Jan or Mar of 2026. More than two months after her election win, Takaichi’s cabinet retains very high approval ratings of 75.9%.

- Reportedly Israel PM Netanyahu to brief Pres Trump about possible new Iran strikes.

- Over the weekend Tesla’s Delaware Supreme Court decision for CEO Musk’s $140B pay package from 2018 was reinstated after the close on Friday. {After-hours trading saw the stock only up about 1/3 of a percent indicating the market either had discounted the good news for Tesla, or is more focused on other factors.}.

Note: Holiday-shortened week for Xmas, Boxing Day will see a holiday-shortened week for the Americas, Europe and parts of Asia, with lower liquidity. Asian markets trading normally all this week including Japan, China, Taiwan, Vietnam, while countries such as Malaysia, Philippines, Singapore and South Korea off for only Christmas Day (Dec 25th).

- US equity FUTs +0.3% to +0.4% during Asian trading.

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

- Mon Dec 22nd to Sat Dec 27th (Beijing): China NPC Standing Committee 19th Session, with key discussions on national development planning, environmental codes and childcare expected.

- Tue Dec 23rd AU RBA Meeting Minutes, (Tue night US Oct Q3 GDP (2nd est.), US Oct Durable Goods).

- Wed Dec 24th KR Dec Consumer Confidence, JP BOJ MPM Minutes.

- Thu Dec 25th JP Nov Housing Starts.

- Fri Dec 26th JP Nov Unemployment, JP Nov Industrial Production, JP Nov Retail Sales.

Holidays in Asia this week

- Wed Dec 24th Early market closes for Australia, New Zealand, UK, US.

- Thu Dec 25th Australia, Hong Kong, Indonesia, Malaysia, New Zealand, Philippines, Singapore, South Korea, UK, US.

- Fri Dec 26th Australia, Hong Kong, Indonesia, New Zealand, UK, US.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens +0.4% 8,655.

- Australia Energy Min Bowen: Australia to move to gas reservation policy.

- New Zealand-India Free Trade Agreement reportedly on verge of being finalized - India press.

- New Zealand 6-month milk collections +3.2% y/y - DCANZ statement.

China/Hong Kong

- Hang Seng opens +0.4% at 25,795; Shanghai Composite opens +0.3% at 3,900.

- China PBOC monthly loan prime rate (LPR) setting: Leaves rates unchanged (as expected).

- China PBOC said to plan launch of one-off credit restoration measures for individuals – Press.

- China govt said to be soliciting opinions on insurers' assets and liabilities management - US financial press.

- China plans to target the operating liabilities of LGFVs as part of plan to contain debt risks; cites analysts - Shanghai Securities News.

- Moore Threads: Announced the launch of the Huashan AI chip - SCMP [update].

- (HK) Hong Kong said to be planning new crypto and infrastructure rules for insurers - financial press.

- (HK) HKMA: China PBOC sells CNY40B of 6-month bills in Hong Kong at 1.67%.

- The European Commission Opens an Anti-Dumping Investigation into Chinese Mobile Crane Imports [late Fri update].

- Some US legislators call for Pentagon to list DeepSeek as a Chinese military firm – press [late Fri update].

- China Nov Client FX Net Settlement (CNY-denominated): 1116.4B v 52.0B prior [late Fri update].

- China Dec Preliminary Retail Passenger Vehicle Sales -12.7% y/y – PCA [late Fri update].

- China PBOC sets Yuan reference rate: 7.0572 v 7.0550 prior.

- China PBOC Open Market Operation (OMO): Injects CNY67.3B in 7-day Reverse Repos; Net drains CNY63.6B v injects CNY36B prior.

Japan

- Nikkei 225 opens +1.1% at 50,078.

- Japan Top FX Diplomat Mimura: Seeing one-sided, sudden FX moves; Deeply concerned about currency moves.

- Japan Chief Cabinet Sec Kihara: BOJ monetary decision to hike on Friday was aimed at a sustainable 2% price target; Recently seeing one-sided, rapid FX moves.

- Takaichi’s cabinet retains approval ratings of 75.9% - FNN poll.

- Japan said to be considering subsidies for factories that use 100% renewables or nuclear power - Nikkei Asia (update).

- Japan Fin Min Katayama: Seeing rapid and one-sided moves in the FX market; Will take appropriate action against excessive FX moves [late Friday update, follows Yen weakness following BOJ and Gov Ueda) [late Fri update].

- Japan PM Takaichi said to be planning a US trip in either Jan or Mar - financial press [late Fri update].

- Softbank making moves to fund its $22.5B commitment to OpenAI by year end - press (late Fri update).

Korea

- Kospi opens +1.9% at 4,096.

- South Korea Dec Exports 1-20 Days Y/Y: 6.8% v 8.2% prior; Imports Y/Y: 0.7% v 3.7% prior.

- South Korea govt: In reference to FX markets, 'govt will not sit idly by' - Korea press.

- Reportedly Samsung's HBM4 chips have posted the highest score in Nvidia tests - Korean press.

Other Asia

- Thailand Central Bank (BOT) Gov Vitai: Proposes to keep 1.0-3.0% target range next year (2026) - financial press.

- (MY) Malaysia Nov CPI Y/Y: 1.4% v 1.5%e.

- Thailand Central Bank (BOT) Gov Vitai: Inflation to remain in 1.0-3.0% target range next year (2026).

- (TH) Thailand Baht (THB) rises to 31.310/USD amid rise in gold prices and capital inflows; THB highest since Jun 2021.

North America

- (US) Pres Trump to make announcement with Sec of War Pete Hegseth at 4:30pm Monday; Jeff Landry [Gov of Louisiana] named as the Special Envoy to Greenland - financial press.

- (US) Trump: I'm going to call a meeting of insurance companies in Florida or DC; Insurance companies have gotten rich and need to get their prices down [late Fri update].

- (SY) US has launched strikes against Islamic State in Syria in response to Palmyra incident, in which three US citizens, two soldiers and one interpreter, were ambushed and killed [late Fri update].

Europe

- (IR) Reportedly Israel PM Netanyahu to brief Pres Trump about possible new Iran strikes – NBC [late Fri update].

Levels as of 01:20 ET

- Nikkei 225 +2.0%; ASX 200 +1.0%; Hang Seng +0.2%; Shanghai Composite +0.6%; Kospi +2.2%.

- Equity S&P500 Futures +0.3%; Nasdaq100 +0.4%; DAX -0.1%; FTSE100 -0.1%.

- EUR 1.1706.117.22; JPY 155.23-156.71; AUD 0.6606-0.6629; NZD 0.5747-5772.

- Gold +1.0% at $4,432/oz; BTC +0.8% at $88,895; Crude Oil +0.9% at $57.00/bbl; Copper +0.5% at $5.5358/lb.