Traders wait for FOMC Wed

Asia market update: Traders wait for FOMC Wed; RBA holds but Gov moves markets with more hawkish tone; Focus on US Sept & Oct JOLTS.

General trend and developments

- Asian stocks overall were down on light volume as traders stay on the sidelines prior to Wednesday’s FOMC decision.

- Japan chip-relateds +2% after Nvidia (see below) but Korea’s Hynix -2% as the Korean Stock Exchange issued an investment warning due to the company’s >200% advance this year.

- RBA held rates, as expected, in a unanimous decision. AU 3-year yields trimmed their earlier 5bps advance. Aussie dollar initially spiked lower with the decision release but quickly recovered to move to fresh highs on the day while Aussie stocks largely unmoved. Today’s statement made no mention of this two-way sentence from the Nov decision... “The Board remains alert to the heightened level of uncertainty about the outlook in both directions.”, suggesting a more hawkish-hold outlook.

- However, AU yields then rose higher by 8bps to Nov 2024 levels, AU stocks fell and AUD moved to test levels last seen in Sept as RBA Gov Bullock later said in Q&A that if inflation remains persistent board may need to consider hikes and took cuts explicitly off the table.

- As Japanese yields kept driving higher yesterday no official news from the BOJ yet on their bond market participant meetings last night (there is a final meeting with the Buy-side today) but this morning Fin Min Katayama said she is closely monitoring developments in the bond market, and will enhance dialogue with bond market players. OIS chances of a BOJ hike next week fell slightly back below 90%.

- JP yield curve fell slightly prior to the JP 5-year JGB auction and stayed soft afterwards; the 5-year bid-to-cover >3x with a reasonably narrow tail, (although the bid was lower than prior and the 12-month average).

- Amid rising global rates, the Bank of Korea today held its first bond purchase since 2022 in order to "stabilize rising rates". South Korea reported to allocate 75% of 2026 budget to H1.

- Australia Nov Business Confidence unexpectedly fell sharply down to 1 (vs 6 prior) while Australian consumer confidence also fell back into the low 80’s mark as consumer inflation expectations rose to their highest level since 2023.

- Shares of Nvidia moved up a further 2.3% A/H after 1.7% regular session gains following US Commerce Dept confirming the opening exports of Nvidia H200 chips to China. [However, the question is whether the CCP will allow any to be bought in favor of its own domestic chips, or otherwise how many might enter China via the black market.].

- US equity FUTs +0.1% during Asian trading.

JP Looking ahead (Asian-weighted releases, using Asian time zone)

- Tue Dec 9th (Tue eve DE Oct Trade Balance, US Sept/Oct JOLTS).

- Wed Dec 10th KR Unemployment, CN Nov CPI/PPI, CA BOC Rate Decision, JP Nov PPI, (Wed night FOMC Rate Decision).

- Thu Dec 11th AU jobs, PH BSP Rate Decision, (Thu night US Sept Trade Balance, US Oct/Nov PPI).

- Fri Dec 12th NZ Nov Business PMI, (UK Oct GDP, IN Nov CPI).

Holidays in Asia this week

- Mon Dec 8th Philippines.

- Wed Dec 10th Thailand.

Headlines/economic data

Australia/New Zealand

- ASX 200 opens -0.3% at 8,602.

- Reserve Bank of Australia (RBA) leaves cash rate target unchanged at 3.60%; as expected.

- RBA Gov Bullock: Need to be cautious on monthly CPI series as yet - post-rate decision press conference.

- Australia Nov NAB Business Confidence: 1 v 6 prior.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 83.5 v 85.5 prior (update).
Australia consumer inflation expectations at the highest level since 2023.

- Australia Dep PM and Def Min Marles: We want to increase the US military footprint in Australia [overnight update].

- (US) Sec State Rubio: AUKUS program full steam ahead after Pres Trump directive - comments to media [overnight update].

- New Zealand: To introduce new planning system bills on Tues, estimates the changes will save the economy NZ$13.3B over 30 years.

China/Hong Kong

- Hang Seng opens flat at 25,780; Shanghai Composite opens -0.2% at 3,916.

- China Premier Li Qiang: Global economy in 2025 marked by turbulence and 'twists'.

- (HK) Hong Kong Securities Watchdog and HK Exchange: Have jointly asked investment banks to ensure quality and standard of IPO applications.

- Nvidia: US Commerce Dept reportedly opening exports of Nvidia H200 chips to China - Semafor.

- US FCC: May bar providers from connecting calls from Chinese telecom companies to US networks over robocall prevention efforts.

- China Pres Xi: 2025 has been unusual, Economic goals will be achieved this year; To reinforce economic growth momentum [overnight update].

- China Foreign Min Wang: Hopes Germany will view China more objectively and rationally adhere to the positioning of China-Germany partnership [overnight update].

- (DE) German Foreign Min Wadephul: A lot of work is still needed to persuade China to issue general export licences for rare earths - financial press [overnight update].

- China PBOC sets Yuan reference rate: 7.0773 v 7.0764 prior.

- China PBOC Open Market Operation (OMO): Injects CNY117B in 7-day Reverse Repos; Net drains CNY39B v injects CNY14.7B prior.

Japan

- Nikkei 225 opens +0.2% at 50,677.

- Japan Nov M3 Money Supply Y/Y: 1.2% v 1.0% prior; M2 Money Supply Y/Y: 1.8% v 1.6% prior.

- Japan sells ¥2.4T VS. ¥2.4T indicated in 5-year JGB bonds; AVG yield: 1.4350% V 1.2450% prior, bid-to-cover: 3.17X V 3.33X prior.

- Japan sells ¥3.5T vs. ¥3.5T indicated in 6-month Bills; Avg Yield: 0.6942% v 0.5893% prior, bid-to-cover: 3.51x v 3.04x prior.

- Japan Fin Min Katayama: Closely monitoring developments in the bond market; Will enhance dialogue with bond market players and work no appropriate debt management.

- Japan Trade Min Akazawa: No change so far in China's rare earth export controls.

- Japan Govt downgrades tsunami warning to tsunami advisory following Aomori prefecture quake.

- US lawmakers said to urge President Trump to ease Japan tariffs amid China coercion - Nikkei.

- NHK: Japan 7.6 magnitude earthquake in Aomori prefecture with intensity >6 (on Japanese scale with maximum at 7); Tsunami warning has been issued – press [overnight update].

- Japan Chief Cabinet Sec Kihara: Assessing damage from Aomori coast quake [overnight update].

- Japan business lobby Keidanren Chairman: Calls for limits on shareholder proposals - financial press [overnight update].

- Japan Fin Min Katayama: Deeply concerned about FX Moves; Will take appropriate response if see excessive FX moves - financial press [overnight update].

Korea

- Kospi opens -0.6% at 4,129.

- South Korea PM Lee: Calls for BOK, Govt coordination on FX, inflation - comments post-meeting with Bank of Korea (BOK) Gov Rhee (inline).

- Bank of Korea (BOK) Gov Rhee: Potential South Korean growth rate has fallen below 2% - text of speech.

- South Korea reported to allocate 75% of 2026 budget to H1 - Yonhap.

- South Korea Welfare Ministry: To conduct outsourced study in NPS (National Pension Service) FX funding - text message.

- Korea Stock Exchange issues investment warning due to Hynix shares having risen >200% over past year.

- Bank of Korea (BOK) will today hold its first bond purchase since 2022 in order to "stabilize rising rates" - Korea press.

Other Asia

- Indonesia Nov Consumer Confidence: 124.0 v 121.2 prior.

- (IN) US Treasury Sec Bessent: We're still working on the framework for an India trade deal.

North America

- (MX) Mexico Chamber of Deputies approved a reform that imposes tariffs of up to 50% on >1.0K products imported from countries without a trade agreement - local press.

- Larry Ellison reportedly told Pres Trump that Netlfix deal to buy Warner Bros would "hurt competition" - WSJ.

- (US) Pres Trump: Using some tariff revenue for farmer economic aid; Confirms $12B total agricultural aid package; Think China will buy more soybeans than promised - comments at White House.

- (US) Pres Trump: There must be one AI rulebook if we are to continue to lead; Will issue 'one rule' Exec Order this week - Truth Social post.

- (US) White House NEC Dir Hassett (presumptive Fed Chair nominee): Chairman Powell agrees rates should come down; Would be irresponsible to lay out 6-month rate pledge - CNBC.

- (US) White House official: Aide for farmers will be for those making <$900K/yr; Farmers will receive aid payments by end-Feb 2026 at latest.

- (US) Supreme Court conservative justices appear sympathetic to Pres Trump firing of Democratic FTC member - press.

- (US) Treasury's $58B 3-year note auction results: draws 3.614% V 3.579% prior; BTC 2.64 V 2.85 prior 2.64 over the last 9 auction.

Europe

- (IE) Ireland Nov Construction PMI: 46.7 v 48.1 prior.

- (UK) Nov BRC Sales Like-For-Like Y/Y: -1.2% v 2.5%e.

- (EU) ECB's Kazimir (acting Slovakia member): No reason to change interest rates; certainly no move at the Dec meeting.

- (IL) Israel Central Bank (BOI) Nov Minutes: Decision to cut by 25bps was unanimous.

- (IQ) Iraq reportedly shuts down entire West Qurna 2 production (~460K bpd) due to an export pipeline leak - press.

- (UK) BOE's Taylor (dovish dissenter): Foot still on the brake a bit still, but I see us achieving inflation target in near term; Wage and services inflation coming down - conference comments.

- (UR) UK PM's office: European leaders agree on the need to 'Ramp up' Ukrainian support.

Levels as of 01:20 ET

- Nikkei 225 flat; ASX 200 -0.5%; Hang Seng -1.1%; Shanghai Composite -0.3%; Kospi -0.7%.

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

- EUR 1.1634.116.49; JPY 155.74-156.11; AUD 0.6610-0.6648; NZD 0.5768-5791.

- Gold -0.1% at $4,214/oz; BTC -1.6% at $89,930; Crude Oil -0.3% at $58.70/bbl; Copper -0.4% at $5.4060/lb.