JP equities underperform after reopening 2025 while KR equities outperform again
|Asia market update: JP equities underperform after reopening 2025 while KR equities outperform again; CNH weakness seen manageable while JPY allowed to stay ~158.
General trend
- Japan markets reopened for first time in a week with Nikkei initially positive, but then fell -1.6%. Meanwhile the Kospi led major indices in Asia, +2.4%, again shrugging off the political back and forth over the potential arrest of suspended Pres Yoon to be (up ~5% since Dec 26th intermediate low).
- Taiwan’s Taiex led Asia overall, +2.6% on the Dec Rev figures from Foxconn (Hon Hai), with another strong figure on a y/y basis (though slightly down on the prior month). Foxconn also projected significant y/y growth for early 2025.
- As the Chinese Yuan weakens towards multi-year lows, the PBOC-backed Financial News said that the China PBOC has 'ample tool kits and experience' to react to any Yuan depreciation. Offshore Yuan clawed back a little of its recent losses against USD, though still threatening multi-year lows. CN bond yields held steady for a change.
- USD/Yen itself stronger again, despite 10-year JGBs +2.5bps, up to 1.116%, a 14-year high. Japanese officials gave their first comments for the year, led by BOJ Gov Ueda. However, no mention of FX levels, even as the USD headed back to the 158 level in the hours before they spoke – the Yen’s lowest level since July last year.
- China Dec Caixin PMI Services outperformed estimates with the highest reading since May 2024, keeping a 23-month streak of expansion intact.
- “Will he or won’t he?” saga around potential early resignation of Canadian PM Trudeau continued, with Canadian press pointing to this Wednesday’s National Caucus meeting as a likely time and venue. CAD/USD +0.4%.
- BTC threatening $100K level for first time since Dec 25th.
- US equity FUTs flat during Asian trading.
Looking ahead (Asian time zone)
- Mon Jan 6th (Mon eve DE prelim Dec CPI).
- Tue Jan 7th (Tue eve EU prelim Dec CPI, Tue night US Dec ISM Services PMI + Nov JOLTS).
- Wed Jan 8th JP Dec Consumer Confidence, AU Nov CPI, (Wed night US FOMC Minutes).
- Thu Jan 9th AU Nov Trade Balance, AU Nov Retail Sales.
- Fri Jan 10th JP Nov Household Spending, (Fri night CN New Yuan Loans, US Dec Non-Farm Payrolls, + Jan Michigan Consumer Sentiment).
- Sun Jan 12th CN Dec CPI/PPI, CN Dec Trade Balance.
Holidays in Asia this week
- Thu Jan 9th (US time), market holiday for former Pres Carter state funeral.
Headlines/economic data
Australia/New Zealand
- ASX 200 opens -0.1% at 8,242; Shanghai Composite opens -0.1% at 3,209.
- Australia Dec Final PMI Services: 50.8 v 50.4 prelim (11th month of expansion).
China/Hong Kong
- Hang Seng opens +0.4% at 19,848; Shanghai Composite opens -0.1% at 3,209.
- China Dec CAIXIN PMI services: 52.2 V 51.4E (23rd month of expansion and highest since May 2024).
- Hong Kong Dec PMI (whole economy): 51.1 v 51.2 prior (3rd month of expansion).
- *China PBOC has 'ample tool kits and experience' to react to Yuan depreciation - PBOC-backed Financial News.
- China PBOC to issue extra offshore notes in Hong Kong during Jan - China state media.
- China bond market might see greater volatility - China Securities Times.
- China PBOC promises more financial support for innovation and consumption [weekend update].
- China’s Cabinet asks all govt agencies to avoid on-site checks if companies’ information can be retrieved via written requests or other data sharing; Urges to curb random inspections and reduce burden on companies – press [weekend update].
- GM Reports Q4 China deliveries +40.6% q/q.
- China PBOC sets Yuan reference rate 7.1876 v 7.1878 prior.
- China PBOC Open Market Operation (OMO): Injects CNY14B in 7-day reverse repos; Net drains CNB75B v drains CNY89B prior.
Japan
- Nikkei 225 reopens +0.1% at 39,945 (first trading since Dec 30th).
- Japan Dec Final PMI Services: 50.9 v 51.4 prelim.
- Japan JGB 10-year JGB yields +2.5bps to 1.115%; highest since July 2011.
- BOJ Gov Ueda: Virtuous cycle gradually strengthened last year; To raise rates if economic improvements continue (inline) - financial press.
- Japan Fin Min Kato: There are signs of Japan's (economic) recovery - financial press.
- Japan Econ Min Muto: Biden blocking the Nippon/US Steel deal is incomprehensible; Hearing strong expressions of concern from Japan industry over future investment between Japan and the US; Govt has no choice but to take this matter gravely [weekend update].
- US Steel: US Pres Biden confirms to block Nippon Steel deal as Japanese bidder might take action to impair national security of the US; Follow up: Nippon Steel said to plan to sue US Govt over Pres Biden blocking takeover of US Steel [weekend update].
Korea
- Kospi opens +0.5% at 2,453.
- South Korea Dec Foreign Reserves: $415.6B v $415.4B prior (update).
- South Korea Finance Ministry: US Sec of State Blinken expressed 'complete confidence' in the strength of South Korea's democracy.
- South Korean Foreign Min Cho: US, South Korea reaffirms 'airtight' alliance; pledges full restoration of trust - comments after meeting US Sec of State Blinken.
- Follow up: South Korea CIO (anti-corruption agency) hands execution of suspended Pres Yoon's arrest warrant to police - South Korea press.
Other Asia
- Taiwan accuses Chinese ship of breaking undersea cable to Taipei in act of sabotage - financial press.
- Foxconn (2317.TW) Reports Dec (NT$) Rev 654.8B, +42.3% y/y; 2024 Rev 6.86T v 6.82Te.
- India Dec Final Services PMI: 59.3 v 60.8 prelim (confirms 41st month of expansion).
- Singapore Dec PMI (whole economy): 51.5 v 53.9 prior.
- Thailand Central Bank (BOT): Economic recovery is diverging in different sectors - financial press.
- Thailand Dec CPI M/M: -0.2% v -0.1%e; Y/Y: 1.2% v 1.4%e.
- Vietnam Q4 GDP Y/Y: 7.6% v 6.7%e [2024 GDP +7.1% y/y; vs 5.1% GDP growth in 2023].
- Vietnam Dec CPI Y/Y: 2.9 v 3.0%e.
- Vietnam Dec Trade Balance: $0.5B v $1.2Be.
- Vietnam Dec Retail Sales Y/Y: 9.3% v 8.8% prior.
- Vietnam Dec Industrial Production Y/Y: 8.8% v 8.9% prior.
North America
- (US) Trump: Congress is 'getting to work' on one 'powerful' bill that will "bring our Country back, and make it greater than ever before" - post on Truth Social (update).
- (US) United States of America said to be likely lose its last remaining AAA sovereign credit rating; no sources cited – Barrons from Jan 3rd [update].
- (CA) Canadian PM Trudeau "likely" to resign prior to National Caucus meeting on Wed - Canadian press.
- (US) ERCOT [Texas energy regulator] issues weather watch from Jan 6-10th; cites forecast for cold weather.
- (US) Two US House Republicans switch votes to support Speaker Johnson, giving him enough votes to retain the position in the 119th Congress [weekend update].
- (US) Fed's Kugler (voter): Ended 2024 in good place; Disinflation continues while labor market remains resilient [weekend update].
- (US) Fed’s Barkin (non-voter for 2025): Labor market more likely tilted towards hiring than firing; There's increased understanding that long-term rates may not fall as much as had been hoped - speech text [weekend update].
- MSFT Expects to spend $80B on AI data centers in 2025 - blog post [weekend update].
- (US) DEC ISM MANUFACTURING: 49.3 V 48.2E [weekend update].
- US Surgeon General calls for cancer warnings on alcohol labels.
Europe
- (IE) Ireland Dec PMI Services: 57.1 v 58.3 prior (45th month of expansion).
- (UK) British Chamber of Commerce (BCC): Business confidence has slipped to its lowest level since the aftermath of the mini-Budget in Autumn 2022 – update.
- (IT) Italy PM Meloni: "Ready to work together" (with US Pres-elect Trump) - comments following visit to Mar-a-Lago.
Levels as of 00:20 ET
- Nikkei 225 -1.6%, ASX 200 flat, Hang Seng -0.4%; Shanghai Composite -0.2%; Kospi +2.4%.
- Equity S&P500 Futures flat; Nasdaq100 flat; Dax +0.3%; FTSE100 -0.1%.
- EUR 1.0295-1.0333; JPY 157.19-157.83; AUD 0.6207-0.6240; NZD 0.5610-0.5635.
- Gold -0.3% at $2,646/oz; Crude Oil -0.5% at $73.60/brl; Copper -0.3% at $4.0625/lb.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.