APAC Stocks mostly subdued amid mixed Caixin PMI, German CPI ahead – Newsquawk Europe Market Open

• APAC stocks traded mostly subdued following the lack of macro catalysts over the weekend and as participants digested the mixed signals from Chinese Caixin PMI data, while Japanese markets underperformed in their first trading session of 2025.
• Hang Seng and Shanghai Comp were choppy following the somewhat mixed PMI data in which Chinese Caixin Services PMI data beat expectations, but the Caixin Composite PMI figure slowed.
• US Republican Mike Johnson was re-elected as House Speaker on Friday. Elsewhere, Canadian PM Trudeau is likely to resign prior to the national caucus meeting on Wednesday, according to Canadian press.
• The percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT.
• European equity futures indicate a mildly higher cash open with Eurostoxx 50 futures up 0.6% after the cash market closed with losses of 0.9% on Friday.
• Looking ahead, highlights include EZ Sentix Index, German Prelim. CPI, EZ/UK/US Services & Composite PMI (Final), Factory Orders, Comments from Fed’s Daly, Supply from US, Earnings from Greggs.

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US TRADE

EQUITIES

• US stocks saw strong gains on Friday with outperformance in the tech-heavy Nasdaq 100 (+1.7%) which was supported by advances in Nvidia (NVDA) (+4.5%) and Tesla (TSLA) (+8.3%), while newsflow was sparse to the end the week as participants continued to return from the holidays ahead of risk events picking up in the week ahead with FOMC Minutes and the latest US jobs report scheduled.
• SPX +1.26% at 5,942, NDX +1.67% at 21,326, DJIA +0.80% at 42,732, RUT +1.65% at 2,268.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed’s Kugler (voter) said on Friday that the economy ended 2024 in a good place with good growth and the process of disinflation has kept going, while she added that the labour market remains resilient and has been cooling gradually. Furthermore, Kugler said data will drive what the Fed does with policy and that there is a view that the Fed can take time on future rate cuts, according to CNBC. Kugler also commented over the weekend that inflation has been coming down but the job on inflation is not done, while she said they have moved to a more moderate level of restrictiveness and that they are heading towards the 2% inflation target, according to Reuters.
• Fed’s Barkin (2027 voter) said on Friday that he still perceives core underlying inflation is coming down nicely, while he added the message from businesses is loud and clear that consumers are becoming more price sensitive. Barkin said he is in the camp of staying restrictive for longer given possible upside inflation risks and noted that conditions for cutting rates again include confidence in inflation’s return to 2% or weakening of demand.
• Fed’s Daly (2027 voter) said inflation remains uncomfortably above their target, according to Reuters.
• US Republican Mike Johnson was re-elected as House Speaker on Friday.
• New York became the first US city to launch a congestion charge zone on Sunday, according to FT.
• Canadian PM Trudeau is likely to resign prior to the national caucus meeting on Wednesday, according to Canadian press. There were separate comments from a source familiar with Trudeau’s that the PM is increasingly likely to announce he intends to step down but has not made a final decision. Furthermore, Polymarket’s odds for Trudeau to resign before February surged to over 70% over the weekend from around 33% on Friday, while Globe & Mail columnist Lawrence Martin commented on X that “Everybody’s gearing up for Trudeau’s resignation announcement, expected by Monday”.

APAC TRADE

EQUITIES

• APAC stocks traded mostly subdued following the lack of macro catalysts over the weekend and as participants digested the mixed signals from Chinese Caixin PMI data, while Japanese markets underperformed in their first trading session of 2025.
• ASX 200 failed to sustain early gains as strength in real estate and tech was offset by losses in materials and miners.
• Nikkei 225 retreated on return from the New Year holiday closures amid higher yields and after the US blocked Nippon Steel’s bid to take over US Steel, while a weaker currency failed to support the risk appetite as participants also braced for weak results from retailers including Fast Retailing and Seven & I Holdings.
• Hang Seng and Shanghai Comp were choppy following the somewhat mixed PMI data in which Chinese Caixin Services PMI data beat expectations, but the Caixin Composite PMI figure slowed, while comments late last week from the PBoC’s MPC, which recommended strengthening the intensity of monetary policy adjustments and said it will cut RRR and interest rates at the proper time, did little to spur demand.
• US equity futures were little changed and took a breather after last Friday’s consumer and tech-led advances.
• European equity futures indicate a mildly higher cash open with Eurostoxx 50 futures up 0.6% after the cash market closed with losses of 0.9% on Friday.

FX

• DXY traded little changed following the lack of major catalysts from over the weekend and after comments from Fed’s Kugler provided little to shift the dial in which she reiterated the US economy ended 2024 in a good place and noted inflation has been coming down but the job on inflation is not done, while participants await this week’s key events including FOMC Minutes and the latest NFP report.
• EUR/USD eked marginal gains against the dollar but with upside capped by quiet newsflow from the bloc and with political uncertainty in Austria, where talks between the two largest centrist parties on forming a government without the far-right Freedom Party collapsed, and far-right leader Kickl is now expected to be tasked with forming a government. Furthermore, a recent poll by FT noted Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve.
• GBP/USD remained afloat following its recent reclaim of the 1.2400 handle, while a survey by the British Chambers of Commerce showed the number of UK businesses planning to raise prices in the coming three months surged to about 55% from 39% as tax increases and higher wage costs caused confidence to slump.
• USD/JPY gained a firmer grip of the 157.00 handle as Japanese participants returned to the market despite the negative risk sentiment in Tokyo and the higher yield environment, while the pair was also unfazed by comments from BoJ Governor Ueda who stated that he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on economy and inflation.
• Antipodeans benefitted alongside the early strength in CNH after the PBoC continued to set a much stronger-than-expected yuan reference rate setting although the upside was limited and there was a relatively muted reaction to the varied Caixin PMI data.
• PBoC set USD/CNY mid-point at 7.1876 vs exp. 7.3035 (prev. 7.1878).

FIXED INCOME

• 10yr UST futures were lacklustre following last Friday’s retreat in the aftermath of the ISM Manufacturing data in which the headline topped analysts’ forecast range and prices paid accelerated, while demand was also subdued ahead of this week’s supply.
• Bund futures languished near a two-month low after its recent slide beneath the 133.00 level and with German CPI data due later.
• 10yr JGB futures tracked weakness in global counterparts with the Japanese 10yr yield printing its highest since July 2011.

COMMODITIES

• Crude futures held on to the majority of the prior week’s gains but with further upside restricted amid a lack of energy-specific drivers and somewhat varied geopolitical commentary regarding Israel-Hamas negotiations.
• Saudi Arabia set February Arab light crude OSP to Asia at Oman/Dubai + USD 1.50/bbl, according to Reuters.
• US plans more sanctions on tankers carrying Russian oil, according to a source cited by Reuters.
• LNG tanker Coral Nordic will unload at Belgium’s Zeebrugge terminal on January 9th from Ruvys.
• German energy import Uniper’s (UN01 GY) CEO Mike Lewis said the company is working to protect its fleet of LNG tankers from seizure by nations friendly to Russia after it was hit with a EUR 14bln penalty by a Russian court in March as part of an international dispute with a subsidiary of Russian state-backed gas company Gazprom, according to FT.
• Spot gold attempted to nurse some of last Friday’s losses but then faltered amid a rangebound dollar and ahead of the key events from the US later this week, while Goldman Sachs also recently pushed back its USD 3,000/oz target to mid-2026.
• Goldman Sachs cut its gold price forecast in which it sees the precious metal to reach USD 2,910/oz by year-end and pushed back its USD 3,000/oz target to mid-2026, citing slower-than-expected Fed easing.
• Copper futures lacked conviction amid the mixed risk appetite in Asia and conflicting signals from the latest Chinese Caixin Services and Composite PMI data.

CRYPTO

• Bitcoin gradually extended on recent gains and climbed back above the USD 99,000 level.

NOTABLE ASIA-PAC HEADLINES

• PBoC pledged more financial support for innovation and consumption, while it will encourage foreign capital to invest in domestic tech.
• PBoC is expected to ramp up offshore yuan bill sales in Hong Kong in January and has ample toolkits and experience to react to yuan depreciation, while China has the ability to keep the yuan basically stable at reasonable and balanced levels, according to PBoC-backed Financial News.
• BoJ Governor Ueda said the virtuous cycle strengthened gradually last year and he plans to increase interest rates with continued economic improvements but added the timing of an adjustment is dependent on economy and inflation, while Ueda added that momentum for wage increases is key and they must be vigilant to various risks in deciding timing for adjusting degree of monetary support.

DATA RECAP

• Chinese Caixin Services PMI (Dec) 52.2 vs. Exp. 51.4 (Prev. 51.5)
• Chinese Caixin Composite PMI (Dec) 51.4 (Prev. 52.3)

GEOPOLITICS

MIDDLE EAST

• US President Biden notified Congress of USD 8bln arms sale to Israel, according to Axios.
• Hamas said it approved a list of 34 hostages presented by Israel to be exchanged in a ceasefire deal. However, it stated that any deal would depend on an agreement regarding a withdrawal and ceasefire, while it has not seen progress on issues regarding this, and Israeli PM Netanyahu’s office later stated that Hamas had not provided a list of hostage names.
• Saudi Foreign Minister met with US envoy Hochstein in Riyadh and discussed developments in Lebanon and regional issues.
• Syrian Foreign Minister Al-Shibani travelled to Doha to meet with senior Qatari officials.
• US is to ease aid restrictions for Syria in a limited show of support for the new government, according to WSJ.
• Iran will face a difficult year with the Trump administration which plans to increase sanctions on Iran, while the Trump administration sees Iran as still a threat to US allies and the Trump team is considering the option of air strikes to prevent Iran from building a nuclear weapon, according to WSJ.

RUSSIA-UKRAINE

• IAEA said staff reported hearing loud blasts near Ukraine’s Zaporizhzhia Nuclear Power Plant on Sunday which coincided with reports of a drone attack on the plant’s training centre, while the IAEA has not been able to confirm any impact and noted that reports stated there were no casualties and no impact on any nuclear power plant equipment, according to Reuters.
• Ukrainian President Zelensky said security guarantees for Ukraine to end Russia’s war will only be effective if the US provides them and he needs to sit down with US President-elect Trump to decide how to stop Russian President Putin before Ukraine can enter talks with the Russian side. Zelensky also said Europe must also have a voice in deciding a course of action before Ukraine talks to Russia and that Putin will destroy Europe if the US leaves the NATO military alliance, while he noted that North Korea has provided Russia with 3.7mln artillery shells in the war and that 3,800 North Korean troops fighting Ukraine in Russia’s Kursk region have been killed or wounded so far. Furthermore, Zelensky separately commented that there were heavy Russian and North Korean losses in Russia’s Kursk region.
• Ukraine’s air force said on Sunday morning that it had downed 61 drones launched by Russia in an overnight attack.
• Russia’s Defence Ministry said Russian forces took control of the Nadiya settlement in Ukraine’s Luhansk region, while it also announced that Ukraine launched a counter-attack in Russia’s Kursk region.

OTHER

• North Korea fired a suspected ballistic missile which was reported to have fallen shortly after and appeared to have landed outside of Japan’s exclusive economic zone, while the South Korea military said North Korea fired what appeared to be one intermediate-range ballistic missile.

EU/UK

NOTABLE HEADLINES

• The percentage of UK businesses planning to raise prices in the coming three months rose to about 55% from 39% as tax increases and higher wage costs caused confidence to slump, according to a survey of 5,000 businesses by the British Chambers of Commerce via FT.
• Austrian Chancellor Nehammer said coalition talks between the two largest centrist parties in Austria on forming a government without the far-right Freedom Party have collapsed, while he will stand down as Chancellor and leader of the People’s Party in the coming days. It was later reported that the Austrian President van der Bellen agreed to meet with far-right Freedom Party leader Kickl on Monday and that Conservative People’s Party (OVP) Secretary-General Stocker was named as interim party leader. Furthermore, Stocker expects far-right leader Kickl will be tasked with forming a government and said the OVP will take part in coalition talks with the far-right Freedom Party and take them seriously.
• Many Eurozone economists warned that the ECB has been too slow to cut interest rates to help the economy and 46% of the economists surveyed said the ECB had fallen behind the curve, according to a poll by FT.