Nvidia keynote short on sales, heavy on AI applications

Asia market update: Asia-CN bifurcation widens; Nvidia keynote short on sales, heavy on AI applications; Focus on US Dec ISM Services PMI + Nov JOLTS.

General trend

- Nikkei led Asia again, +2.6%, boosted by a weaker yen and Tokyo Electron +11%, Advantest +7%, Toyota +3.9% on Nvidia partnership. Kospi and Won (KRW) again stable after volatility end-Dec.

- A different story in China/HK, where Tencent and CATL shares fell >5% after US Pentagon added the firms to list of companies alleged to be assisting Chinese military.

- Hang Seng -2.0%, has now lost well over half of its last Sept / early October price burst when Chinese officials announced multiple stimulus plans.

- Hong Kong’s equities struggle comes as Hong Kong's overnight offshore Yuan HIBOR rises to 8.10273%, highest since Jun 30, 2021, with increased PBOC offshore note issuance in HK expected during January. Later, Chinese banks said to have reduced CNH liquidity (lending).

- Nvidia CEO Huang's highly anticipated keynote address at CES was at first a bit of a fizzle in terms of the sales prospects of the company, with his talk focusing on the company’s new chip’s [RTX 50 series] ability to generate real-time graphics and other high-powered applications.

- Nasdaq FUTs dipped into the red as Huang’s speech continued, the very evening after Nvidia hit a fresh record high just shy of $150/shr/.

- Later on Huang’s presentation announced a number of partnerships including Toyota, Aurora, Continental and Uber for autonomous driving, along with a new $3000 “AI Super computer” for desktop AI computing.

- Japanese yields continued higher, with JP 10-years as high as 1.14%. After recovering to 156 handle overnight JPY again lost ground, back to 158 handle and lowest level since July 17th. Japan Fin Min Kato assisted in arresting the rise (for now) by reiterating seeing one-sided and sudden FX moves; deeply concerned about recent FX moves.

- As foreshadowed earlier in the New Year Chinese officials from NDRC, MOF and PBOC will hold a briefing on the consumer goods trade-in program at 10am Wed local time (2am GMT). New programs as well as expanded existing programs that includes smartphones and other gadgets are expected.

- US equity FUTs -0.1%to -0.2% during Asian trading.

Looking ahead (Asian time zone)

- 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 8,260.

- Australia Nov Building Approvals M/M: -3.6% v -1.0%e.

- Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 87.5 v 83.9 prior (update - Note; final reading for 2024 was on Dec 16th).

China/Hong Kong

- Hang Seng opens -0.9% at 19,501; Shanghai Composite opens -0.1% at 3,203.

- China to hold briefing on consumer goods trade-in program at 10am Wed local time (2am GMT) - financial press; Officials from NDRC, MOF and PBOC will join the briefing.

- China NCRC posts guidelines on building a 'nationwide, unified market access Negative List' - financial press.

- China banks said to reduce CNH liquidity (lending) - US financial press.

- Outgoing US Treasury Sec Yellen's readout with China's He Lifeng released; Yellen raised concerns about China's "non-market policies" and industrial overcapacity (inline) - financial press.

- S&P: China retail spending to receive subsidies boost in 2025; Retail spending should expand by 4-5% in 2025, similar to that in 2024 - financial press.

- (US) Pres-elect Trump: Relations with China has to be a two-way street - press interview [overnight update].

- US Pentagon has added Chinese firms Tencent, CATL, Autel Robotics, Changxin Memory Tech, Quectel Wireless to list of companies alleged to be helping the Chinese military [overnight update].

- China Pres Xi: Stresses winning all-out battle against corruption [overnight update].

- Chinese exchanges reportedly ask some large mutual funds to restrict stock selling, asking them to buy more stocks than they sold each day; Similar requests made around the start of last year – press [overnight update].

- China PBOC sets Yuan reference rate 7.1879 v 7.1876 prior.

- China PBOC Open Market Operation (OMO): Injects CNY7B in 7-day reverse repos; Net drains CNB151B v drains CNY75B prior.

Japan

- Nikkei 225 opens +0.7% at 39,584.

- Japan Dec Monetary Base Y/Y: -1.0% v -0.3% prior [largest drop for since July 2023 of -1.3%].

- Japan Fin Min Kato: Reiterates seeing one-sided and sudden FX moves; deeply concerned about recent FX moves.

- Japan Foreign Min Iwaya: US, Japan ties have grown "stronger than ever" past 4 years - comments with US Sec of State Blinken.

- Japan sells ¥2.6T VS. ¥2.6T indicated in 10-year JGB bonds; AVG yield: 1.1400% V 1.0840% prior; bid-to-cover: 3.36X V 3.12X prior.

- Japan sells ¥4.5T vs. ¥4.5T indicated in 3-Month Bills; Avg Yield: 0.2178% v 0.1255% prior; bid-to-cover: 2.35x v 2.51x prior.

Korea

- Kospi opens +1.0% at 2,513.

- South Korea acting President Choi: Calls for mobilizing all resources to improve economy.

- North Korea may carry out an ICBM launch before Jan 20th (Pres Elect Trump's inauguration) - Korean press.

- Follow up: South Korea police said to consider arresting Presidential security service (PSS) members blocking access in the next attempt to execute arrest warrant for suspended Pres Yoon - South Korea press [overnight update].

Other Asia

- Philippines Central Bank (BSP): Affirms to maintain measured approach to monetary easing.

- Philippines Dec CPI M/M: 0.6% v 0.3%e; Y/Y: 2.9% v 2.6%e.

- (PH) Chinese state-sponsored hackers said to target Philippine President Marcos and stole military data and other sensitive data - financial press, citing sources.

- Philippine Central Bank: Commodity prices may rise due to geopolitical tensions and adverse weather.

- Taiwan Central Bank (CBC) reportedly increases scrutiny on FX forwards trading – press [overnight update].

North America

- NVDA CEO Huang: NVIDIA continues to focus on the intersection of technology and humanity, aiming to transform challenges into opportunities through AI and accelerated computing. - CES 2025 Keynote.

- (CA) Canada considers early release of the list of goods that could be targeted by retaliatory tariffs against the US - Canada press.

- Bridgewater [world's biggest hedge fund] cuts 7% of its workforce (affects ~90 employees ) - financial press, citing sources.

- (US) Pres-elect Trump's aides explore "universal" tariff plans for every country but which would only cover critical imports - WAPO [**Note: As a candidate, Trump called for “universal” tariffs of as high as 10-20% on everything imported into the US].

- (CL) Chile Central Bank (BCCh) Dec Minutes: Decision to cut by 25bps was unanimous.

- MX) Mexico Dec Vehicle Domestic Sales: 146.4K v 148.0K prior.

- (BR) Brazil Dec Services PMI: 51.6 v 53.6 prior (15th month of expansion).

- (IR) Reportedly some people close to Trump expect that he'll seek a deal with Iran before considering a strike; Officials and diplomats from the US, EU and Israel all told Axios they expect Trump to face an Iran crisis in 2025 - Axios.

- (US) Fed's Cook (voter): The Fed could proceed more cautiously in cutting rates.

- (US) Pres-elect Trump: Washington Post story that I'll pare back my tariff policy is wrong - Truth Social post.

- (US) Dec final S&P services PMI: 56.8 V 58.5E (confirms 23rd month of expansion).

Europe

- (UK) Dec British Retail Consortium (BRC LFL Sales Y/Y: +3.1% v -0.2%e.

- (DE) Germany Dec preliminary CPI M/M: 0.4% V 0.3%E; Y/Y: 2.6% V 2.4%E (highest annual pace since Jan 2024).

- (IL) Israel central bank (BoI) leaves base rate unchanged at 4.50%; as expected.

Levels as of 00:20 ET

- Nikkei 225 +2.2%, ASX 200 +0.3%, Hang Seng -2.0%; Shanghai Composite -0.1%; Kospi flat.

- Equity S&P500 Futures -0.1%; Nasdaq100 -0.2%; Dax -0.5%; FTSE100 -0.3%.

- EUR 1.0376-1.0305; JPY 157.52-158.42; AUD 0.6238-0.6263; NZD 0.5635-0.5665.

- Gold +0.2% at $2,653/oz; Crude Oil -0.1% at $73.50/brl; Copper -0.1% at $4.1565/lb.