Summary:

• Australia’s manufacturing sector remained in expansion in December, with the PMI holding at 51.6 for a second straight month.

• New orders and output continued to grow, though momentum eased amid softer foreign demand and tighter competition.

• Employment rose at the fastest pace in nine months, supported by better candidate availability and rising workloads.

• Supply conditions deteriorated sharply, with delivery times lengthening at the fastest pace since late 2024.

• Input cost inflation accelerated, driven by higher material and shipping expenses, with output prices also rising.

• Business confidence improved to a four-month high, supported by expansion plans and new product launches.

Australia’s manufacturing sector ended 2025 on a modestly positive footing, with activity continuing to expand in December despite signs of easing momentum. According to PMI data from S&P Global, growth in new orders and output was sustained, hiring strengthened, and business confidence improved, even as supply constraints and cost pressures intensified.

The seasonally adjusted Manufacturing Purchasing Managers’ Index held steady at 51.6 in December, unchanged from November and comfortably above the 50.0 threshold that separates expansion from contraction. The reading marked a second consecutive month of modest improvement in operating conditions across the sector.

Down from the flash reading:

• Australia preliminary December PMI: Manufacturing 52.2 (prior 51.6) services 51.0 (52.8)

Production rose for the second month running, supported by higher inflows of new work. However, both output and new order growth slowed relative to earlier in the quarter. Firms reported that while domestic demand conditions were improving, softer market sentiment, heightened competition and weaker overseas demand limited overall growth. New export orders declined marginally for a fourth straight month, reflecting ongoing budget constraints among foreign clients.

Despite the moderation in demand growth, manufacturers increased hiring at the fastest pace in nine months. Improved labour availability supported workforce expansion, helping firms further reduce outstanding workloads. Purchasing activity also increased in response to higher production needs, though overall inventories continued to edge lower for a third consecutive month.

Supply-side pressures intensified notably in December. Delivery times lengthened at the sharpest pace in over a year due to material shortages and logistical delays, contributing to an acceleration in input cost inflation. Higher raw material and shipping expenses pushed costs up at a faster rate than in November, though inflation remained below long-term survey averages.

Manufacturers passed some of these cost increases on to customers, lifting output prices again in December. Encouragingly, business sentiment strengthened to its highest level in four months, with firms citing new product launches and expansion plans as key drivers of expected growth over the coming year.

—

Earlier, not a positive for AUD sentiment

• ICYMI: China slaps 55% tariff on excess beef imports under new three-year safeguard regime

This article was written by Eamonn Sheridan at investinglive.com.

TL;DR summary, and note there is AUD risk in this news:

• China will impose a 55% tariff on beef imports exceeding newly set quotas from January 1, 2026, under a three-year safeguard regime.

• The 2026 total import quota is set at 2.7 million tonnes, broadly in line with 2024 imports but below 2025 shipment levels for key suppliers.

• Brazil and Australia are most affected, with quota caps falling well below their recent export volumes to China.

• Beijing says the measures are needed to protect the domestic cattle industry, citing damage from rising imports and weak competitiveness.

• Analysts warn the policy is unlikely to fix structural weaknesses in China’s beef sector and may disrupt global trade flows amid tight supply.

• Exporters have pushed back, with Australia calling the move disappointing and Brazilian industry groups warning of billions in potential revenue losses.

China has announced new safeguard measures on beef imports, imposing a steep 55% tariff on volumes that exceed newly defined country-level quotas, in a move aimed at protecting its domestic cattle industry. The measures will take effect from January 1, 2026, and remain in place for three years, with quotas set to rise modestly each year

Under the new framework, China has set a total import quota of 2.7 million metric tonnes for 2026, broadly in line with the 2.87 million tonnes imported in 2024 but below shipment levels recorded by several major suppliers during 2025. Brazil and Australia, China’s two largest beef exporters, face quota limits that sit well under their year-to-date shipments, meaning a significant portion of current trade flows could be subject to punitive tariffs.

China’s commerce ministry said the surge in imported beef has caused “serious damage” to the domestic industry, following an investigation launched late last year. Officials argue the safeguards will help stabilise breeding-cow inventories and give domestic producers time to restructure, modernise and upgrade operations. Policymakers have already stepped up sector support in 2025, noting cattle farming profitability has improved in recent months.

Analysts, however, remain sceptical that tariffs alone can resolve structural challenges. Industry experts point out that China’s beef-cattle sector remains fundamentally uncompetitive relative to producers in Brazil and Argentina, for example, a gap unlikely to be closed quickly through policy or technological change.

The decision lands amid a tight global beef market, with supply shortages driving prices to record highs in several regions, including the United States. Exporters have responded cautiously. Australian officials described the move as disappointing, while industry representatives stressed that alternative export destinations remain available. Brazilian authorities struck a more measured tone, signalling potential negotiations with Beijing and an ability to redirect shipments, though domestic lobby groups warned the measures could cost Brazil up to US$3 billion in export revenue in 2026.

Overall, the safeguards underscore Beijing’s willingness to prioritise agricultural self-sufficiency, even at the cost of trade friction with key partners.

This article was written by Eamonn Sheridan at investinglive.com.

If you would like to stay in holiday mode again today I’ve good news for you. The vacation mood will carry on for today, Friday, January 2, 2026, with professional activity mainly returning on Monday the 5th.

I thought we might have Rating Dog services PMI from China today, after we got official PMIs and Rating Dog Manufacturing PMI back on Friday:

• China official December 2025 PMIs: Manufacturing 50.1 (exp 49.2) Non-manu 50.2 (exp 49.8)
• China S&P Global/Rating Dog December 2025 Manufacturing PMI 50.1 (expect 49.8, prior 49.9)

But, no, we’ll be waiting until Monday for that. Instead today it’s a couple of minor data points from Australia:

The manufacturing PMI is the ‘final’ for December. We had the, preliminary / flash back in mid-December:

• Australia preliminary December PMI: Manufacturing 52.2 (prior 51.6) services 51.0 (52.8)
• The headline S&P Global Flash Australia Composite PMI Output Index eased to 51.1 in December from 52.6 in November, marking the lowest reading in seven months but remaining above the 50 threshold that separates expansion from contraction. The result extended the current expansionary run to fifteen consecutive months, underscoring ongoing growth across both services and manufacturing.

If you’ve read down this far, here’s a bit more. Some early FX pricing for the session. Its not from New Zealand markets as is usual at this time, NZ is out for a holiday today. It’s the “Day after New Year’s Day” holiday. Smart move, that.

But, what is usual is my standard caveat. Its not Monday, but given the global holiday on Thursday market conditions re thin liquidity are worthy of a caution:

• As is usual for a Monday morning, market liquidity is very thin until it improves as more Asian centres come online … prices are liable to swing around, so take care out there.

Not too much change from late Wednesday.

Whoops, nearly forgot … Happy New Year!

This article was written by Eamonn Sheridan at investinglive.com.

• Prior was 214K (revised to 215K)
• Continuing claims 1.866M vs 1.923M prior

The claims numbers over the holidays are highly volatile and subject to large seasonal revisions so they’re poor numbers to index from.

The drop over a number of weeks is notable though and is tracking towards the bottom end of this range again. Next week’s data will also be highly-subject to holiday seasonality but in early January, watch the numbers.

The US government shutdown made this a tough report to read through but it’s tough to see where the Federal Reserve is seeing weakening in the US jobs market based on this chart. Some policymakers argue it’s a ‘low higher, low firing’ economy and that there is some evidence for that but the ‘low firing part’ seems to be the most definitive, as shown in claims.

This article was written by Adam Button at investinglive.com.

Global Markets:

•  Asian Stock Markets : Nikkei down 0.37%, Shanghai Composite up  0.14%, Hang Seng down 0.87% ASX down 0.03%
• Commodities : Gold at $4,349.70 (-0.87%), Silver at $71.875 (-7.76%), Brent Oil at $61.35 (+0.03%), WTI Oil at $57.97 (+0.03%)
• Rates : US 10-year yield at 4.131, UK 10-year yield at 4.5010, Germany 10-year yield at 2.8533

News & Data:

• (USD) Chicago PMI  43.5 to 39.8 expected

Markets Update:

Stocks across the Asia-Pacific region traded within a narrow range on Wednesday as subdued activity prevailed amid multiple market closures for New Year’s Eve. Several key exchanges, including those in South Korea, Japan, and Thailand, remained closed for the holiday. Markets in Australia and New Zealand ended trading early, while Hong Kong was also scheduled for an early close, contributing to thin volumes and muted price movements across the region.

In Australia, equities finished the shortened session slightly lower. The benchmark S&P/ASX 200 Index slipped by 2.8 points, or 0.03 percent, to close at 8,714.30. The broader All Ordinaries Index also edged down, losing 3.6 points, or 0.04 percent, to settle at 9,018.80, reflecting cautious sentiment among investors.

Chinese equities showed mixed performance during morning trading. The Shanghai Composite Index was down 1.55 points at 3,963.57 shortly before the end of the morning session. Meanwhile, economic data offered some support to sentiment. According to the National Bureau of Statistics, China’s Composite PMI Output Index rose to 50.7 in December from 49.7 in November, marking its highest level since June. The Manufacturing PMI also surprised on the upside, climbing to 50.1 and exceeding market expectations of 49.2.

In Hong Kong, the Hang Seng Index was down 245.6 points, or 0.95 percent, at 25,609 in early trading, ahead of its early market close.

Upcoming Events:

• 01:30 PM GMT – USD Unemployment Claims

The post Wednesday 31st December 2025: Asia-Pacific Stocks Trade Narrowly as Holiday Closures Limit Activity first appeared on IC Markets | Official Blog.

IC Markets Global – Europe Fundamental Forecast | 31 December 2025

What happened in the Asia session?
China’s official manufacturing PMI unexpectedly rose to 50.1 in December, signalling expansion after eight months of contraction, while the non-manufacturing PMI climbed to 50.2. The PBOC set the USD/CNY reference rate stronger than expected at 7.0288, leaning against yuan appreciation. These releases occurred amid thin holiday liquidity on the final trading day of 2025.

What does it mean for the Europe & US sessions?
US indices closed slightly lower yesterday, S&P 500 down 0.14%, Nasdaq 0.24%, Dow 0.20% as markets eye 2025’s record highs fueled by rate cuts and AI enthusiasm. Asia saw mixed action with Hang Seng down 0.66% and ASX off 0.13%, while China PMIs earlier reinforced industrial slack. Many exchanges run short sessions or are closed for the New Year’s transition.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

The US Dollar traded steadily in thin year-end volumes, with the DXY index hovering near 98.28 after digesting Fed minutes signalling further 2026 rate cuts if inflation eases, capping a brutal annual drop of nearly 9.6%—its worst since 2017—amid euro and sterling strength from policy divergences.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labour market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
• Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
• Economic activity grew at a 3.8% annualised pace in Q2 2025, according to revised estimates. However, Q3 and Q4 are expected to face headwinds from trade tensions, fiscal restraint, and data disruptions, such as the government shutdown.
• September’s Summary of Economic Projections forecasts 2025 unemployment at a median 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signalling a gradual disinflation path; updates expected on December 10 may adjust for higher unemployment and lower growth.
• The Committee maintained its data-dependent approach, noting a softening labour market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.​
• The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
• The next meeting is scheduled for  27 to 28 January 2026.

Next 24 Hours Bias
Medium Bearish

Gold (XAU)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

Gold prices are showing resilience, rebounding toward $4,400 per ounce after a sharp 4%+ drop on Monday amid profit-taking following a record high above $4,500 earlier in the month. The metal traded around $4,348-$4,352 on December 30, up slightly from the prior session, buoyed by safe-haven demand from geopolitical tensions like Russia-Ukraine negotiations and positive Chinese PMI data. Despite recent volatility, gold has surged about 65-74% year-to-date.

Next 24 Hours Bias   
Strong Bullish

The Euro (EUR)

Key news events today

No major news event

What can we expect from EUR today?

The euro holds firm near 1.177 USD in subdued year-end trading, capping a stellar 13-14% annual rise driven by ECB-Fed policy gaps, eurozone resilience, and dollar softness from anticipated US rate cuts under President Trump, positioning it for further gains into 2026 despite holiday thinness and no major events today.

Central Bank Notes:

• The Governing Council of the ECB is widely expected to keep the three key interest rates unchanged at its 17–18 December 2025 meeting, maintaining the main refinancing rate at 2.15%, the marginal lending facility at 2.40% and the deposit facility at 2.00%. This would reflect policymakers’ assessment that the current policy stance remains broadly consistent with medium‑term price stability, while inflation hovers close to the 2% target and the economy expands at a modest pace. Market pricing and recent ECB commentary suggest a high “option value” in staying on hold, with no clear pre‑set path for the next move amid two‑sided risks around growth and inflation.
• Recent indicators point to broadly stable price dynamics around the ECB’s target. Headline HICP inflation is projected to hover near 2% through late 2025, with earlier energy‑related disinflation largely behind and food price pressures contained compared with previous years. Services and wage inflation remain somewhat firmer than anticipated, but the trend is one of gradual moderation, consistent with a scenario in which inflation stabilizes around but not persistently above 2% over the medium term.
• Eurosystem staff projections to be released in December are expected to show only small revisions from the September exercise, maintaining a profile of headline inflation close to 2% in 2025, dipping slightly below in 2026, and returning near target in 2027. Soft producer prices, fading pipeline cost pressures, and anchored long‑term inflation expectations limit upside risks, though officials continue to flag uncertainty from geopolitical tensions, commodity price shocks, and fiscal policy choices.
• Euro area GDP growth remains subdued but resilient, with most forecasters and survey‑based indicators pointing to an expansion around 1 — 1.25% in 2025 and 2026, followed by a similar pace into 2027. PMIs and confidence surveys suggest activity has stabilised after earlier weakness, with modest support from public investment and improving external demand offsetting soft private consumption and investment.
• The labour market remains tight in aggregate, with unemployment rates close to multi‑decade lows and participation relatively high, even as job creation has slowed from its earlier peak. Real income growth has turned slightly positive again as inflation normalises, underpinning household spending, while financing conditions, though tighter than in the pre‑hiking era, remain consistent with a gradual expansion in credit to households and firms.
• Business sentiment is mixed, reflecting uncertainty around global trade, the policy outlook in the United States, and the potential impact of future tariff or industrial policy shifts. At the same time, easing supply‑chain costs and a relatively competitive euro exchange rate versus major trading partners provide support to manufacturing and export‑oriented sectors at the margin.​
• The Governing Council is expected to reiterate that future decisions will remain data-dependent and taken meeting by meeting, based on an integrated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission. Officials have recently stressed that both further hikes and eventual cuts remain contingent on incoming data, implying no commitment to a particular path and a readiness to adjust if inflation or growth diverge materially from baseline projections.
• Balance sheet normalisation is set to continue gradually and predictably, with the stock of assets under the APP and PEPP declining as reinvestments have already been halted or scaled back in line with prior guidance. The ECB is expected to confirm that the current pace of portfolio runoff remains appropriate, supporting a slow withdrawal of monetary accommodation without disrupting market functioning.
• The next meeting is on 4 to 5 January 2026

Next 24 Hours Bias
Weak Bearish

The Swiss Franc (CHF)

Key news events today

No major news event

What can we expect from CHF today?

The Swiss franc shows resilience with USD/CHF poised for downside amid technical bearish signals and global dollar headwinds, though a minor correction may precede deeper declines. Traders eye resistance at 0.7985 for trend shifts. The Swiss franc has appreciated, with USD/CHF up 0.38% to 0.7919 on December 30 amid broader dollar weakness influenced by Fed rate cut expectations.

Central Bank Notes:

• At its 11 December 2025 monetary policy assessment, the Swiss National Bank (SNB) is widely expected to leave the policy rate unchanged at 0%, extending the pause that began in September as the Governing Board judges that current settings are sufficient to keep inflation near, but still below, its target while avoiding an unnecessary move into negative rates.
• Recent data show that the tentative rebound in Swiss inflation has stalled, with headline CPI easing from 0.1% year‑on‑year in October to 0.0% in November and core inflation slipping to about 0.4%, reinforcing the view that underlying price pressures remain very weak and that deflation risks, while contained, have not fully disappeared.
• The SNB’s conditional inflation forecast is likely to remain close to the September projections, with inflation still seen averaging roughly 0.2% in 2025, 0.5% in 2026, and 0.7% in 2027 under an unchanged policy rate path, though the latest CPI prints argue for a slightly lower near‑term profile and keep open the option of renewed easing if activity or prices weaken further.
• The global backdrop has deteriorated further, as continuing U.S. tariff actions and softer external demand weigh on world trade, while uncertainty in key European and U.S. markets for Swiss exports persists, leaving the SNB cautious about the growth outlook despite Switzerland’s relatively resilient domestic demand.
• Business and labour-market sentiment in export‑oriented manufacturing remains subdued, with firms reporting pressure on margins from the still‑strong franc and softer foreign orders, although the broader economy is still expected to grow at around 1–1.5% in 2025 and unemployment only drifting up gradually from low levels.
• The SNB continues to stress its willingness to act if deflation risks re‑emerge, reiterating that it can ease policy through renewed rate cuts or targeted foreign‑exchange intervention if necessary, while also highlighting its commitment to transparent communication, including the publication of detailed minutes from recent assessments and ongoing dialogue with international partners on FX policy

The next meeting is on 19 March 2026.

Next 24 Hours Bias
Medium Bearish

The Pound (GBP)

Key news events today

No major news event

What can we expect from GBP today?

The British pound remains stable near 1.3460 against the USD in low-volume trading due to year-end holidays, with analysts forecasting a corrective test of 1.3405 support before potential rises to 1.3715 amid bullish channel patterns and buying pressure; however, breaks below 1.3305 could signal deeper declines toward 1.3165, influenced by recent FOMC minutes and thin market conditions.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) will meet on 18 December 2025, with the current Bank Rate standing at 4.00 per cent after being held in a close 5–4 vote at the 5 November meeting. Market pricing and analyst commentary point to a high risk of a 25‑basis‑point cut to 3.75 per cent, but this remains conditional on incoming inflation and labour‑market data, so the December note should be treated as pre‑decision guidance rather than an ex‑post summary.
• The BoE is expected to leave its quantitative tightening (QT) framework broadly unchanged through year‑end, maintaining the lower reduction pace in gilt holdings that was set earlier in 2025. Official communications still characterise the existing QT path as consistent with a restrictive stance, with policymakers stressing that balance‑sheet reduction will remain gradual and sensitive to market‑liquidity conditions.
• Headline CPI inflation eased to 3.6 per cent year‑on‑year in October 2025, down from 3.8 per cent in September, helped by softer energy and goods prices, though it remains almost twice the 2 per cent target. Underlying inflation pressures, particularly in services, have continued to moderate only slowly, so the MPC’s central projection still envisages inflation moving closer to, but not yet reaching, 3 per cent over the course of 2026, contingent on further normalisation in energy and wage dynamics.
• UK economic activity remains weak heading into the December meeting, with the labour market showing further signs of slackening. The unemployment rate has risen toward just above 5 per cent on the latest three‑month figures to October, while overall regular pay growth has slowed to around the mid‑4 per cent range, reinforcing the view that domestic cost pressures are gradually easing.
• External conditions continue to cloud the outlook, with fragile global growth and fluctuating commodity prices contributing to bouts of financial‑market volatility. The MPC has highlighted that renewed global energy or food price shocks could temporarily slow the pace of disinflation, but such risks are currently judged unlikely to derail the medium‑term downward trajectory for inflation if domestic demand stays subdued.
• The balance of risks around the inflation outlook remains finely poised. Downside risks are linked to persistently weak domestic demand and rising unemployment, while upside risks come from still‑elevated inflation expectations, sticky services inflation, and the possibility that structural changes in the labour market leave less slack than conventional indicators suggest.
• Overall, the MPC’s stance going into December is restrictive but increasingly open to a gradual easing cycle, with any rate cuts expected to be measured and data‑dependent. Policymakers have reiterated that the Bank Rate will need to stay in restrictive territory until they are confident inflation is on a sustainable path back to the 2 per cent target, and they have signalled that the profile of cuts, once started, is likely to be shallow rather than rapid.
• The next meeting is on 5 February 2026.

  Next 24 Hours Bias
  Medium Bullish

The Canadian Dollar (CAD)

Key news events today

No major news event

What can we expect from CAD today?

The Canadian dollar (CAD) shows modest weakness against the US dollar, with the USD/CAD pair trading around 1.3700 amid thin year-end volumes. Forecasts suggest potential testing of resistance near 1.3725, followed by a possible decline if breached, influenced by relative strength indicators and broader commodity trends.
​
Central Bank Notes:

• The Governing Council left the target for the overnight rate unchanged at 2.25% at its 10 December 2025 meeting, in line with market expectations and signalling that the earlier easing cycle has likely concluded. The Bank noted that while global tariff tensions and trade uncertainty persist, the external backdrop has stabilised somewhat, reducing the need for additional insurance cuts even as world trade remains fragile.
• The Council acknowledged that uncertainty around U.S. trade policy and tariffs continues to weigh on business sentiment, but recent data show Canadian manufacturing and goods exports holding up better than anticipated. Surveys cited by the Bank suggest export order books have stopped deteriorating, with firms reporting some rebuilding of backlogs despite still‑cautious capital spending plans.
• Canada’s economy rebounded more strongly than expected in the third quarter, with real GDP expanding at an annualised pace of about 2.6% after a 1.8% contraction in Q2, largely on the back of higher crude exports and government spending. Monthly data show output rising 0.2% in September, though flash estimates point to a softer start to Q4 as some sectors give back earlier gains.
• Service sector activity has firmed, with indicators showing the services PMI back above the 50 threshold and broadening gains in business and professional services. However, consumer-facing categories remain mixed, as still‑elevated price levels and only modest real income growth keep a lid on discretionary spending even as tourism and technology‑related services expand.
• Housing markets have continued to stabilise, with national resale activity and prices edging higher through the autumn alongside the earlier decline in borrowing costs. The Bank noted that while some major urban centres are seeing renewed price pressures, tighter underwriting standards and still‑high affordability constraints are expected to cap the pace of any rebound.
• Headline CPI inflation eased to 2.2% year over year in October and is estimated to have remained near that rate in November, keeping it slightly above the 2% target but comfortably within the 1%–3% control range. Core measures have drifted lower, with CPI‑median and CPI‑trim around 3% or below, reinforcing the assessment that underlying price pressures are gradually moderating even as gasoline and some shelter components remain volatile.
• The Governing Council reiterated that the current policy rate is “about the right level” to keep inflation close to target while supporting the economy through a period of structural adjustment, and it signalled a shift away from near‑term easing expectations. While the Bank did not rule out future adjustments, officials stressed that, barring a material downside surprise to growth or inflation, further rate cuts are unlikely before 2026, and attention is now focused on the durability of the recovery and the evolution of core inflation.
• The next meeting is on 28 January 2026.

Next 24 Hours Bias
Medium Bullish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Oil prices reflect a bearish outlook with Brent near $61 and WTI under $58, driven by surplus fears, stalled OPEC+ hikes, and Ukraine talks boosting Russian supply risks—setting up a volatile year-end ahead of key meetings. Brent crude closed above $61 per barrel on December 30, down slightly, while West Texas Intermediate (WTI) traded below $58, marking a fifth monthly loss. Crude oil reached $58.25 on December 30, up marginally 0.29% from the prior day but down 18.78% year-over-year.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global – Europe Fundamental Forecast | 31 December 2025 first appeared on IC Markets | Official Blog.

IC Markets Global – Asia Fundamental Forecast | 31 December 2025

What happened in the U.S. session?

Overnight in the U.S. session, trade unfolded in quiet, year‑end conditions, with no major data shocks and attention fixed on the looming Fed minutes and how strongly they might challenge 2026 rate‑cut bets. U.S. equity indices drifted slightly lower after their recent rally, the dollar was broadly stable but stayed on the back foot versus key peers, and precious metals like gold and silver bounced as traders rebuilt long exposure in a low‑liquidity environment.

What does it mean for the Asia Session?

Asian traders on Wednesday will be focused on thin, holiday‑hit liquidity in regional markets, China’s manufacturing PMIs, and the latest batch of US labor data, especially weekly jobless claims, which together could drive end‑of‑year volatility in currencies, indices, and commodities.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from DXY today?

The Dollar is trading in relatively quiet, year‑end conditions today, with the dollar index (DXY) hovering just below the 99 area after a weak 2025 and with attention mainly on U.S. jobless claims data and Federal Reserve policy expectations rather than any single major new catalyst.

Central Bank Notes:

• The Federal Open Market Committee (FOMC) is widely expected to lower the federal funds rate target range by 25 basis points to 3.50%–3.75% at its December 9–10, 2025, meeting, marking the third consecutive cut after the October reduction to 3.75%–4.00%
• The Committee continues to pursue maximum employment and 2% inflation goals, with the labor market showing further softening as the unemployment rate rose to 4.4% in September 2025 amid modest job gains.
• Officials note persistent downside risks to growth alongside resilient activity, with inflation easing to 3.0% year-over-year CPI in September but remaining elevated due to tariff effects; core PCE stands at around 2.8% as of October.
• Economic activity grew at a 3.8% annualized pace in Q2 2025 per revised estimates, though Q3 and Q4 face headwinds from trade tensions, fiscal restraint, and data disruptions like the government shutdown.
• September’s Summary of Economic Projections forecasts 2025 unemployment at a median of 4.5%, with PCE inflation near 3.0% and core PCE at 3.1%, signaling a gradual disinflation path. Updates expected on December 10 may adjust for higher unemployment and lower growth.
• The Committee maintained its data-dependent approach, noting a softening labor market and inflation above the 2% target, while deciding to lower the federal funds rate target range by 25 basis points to 3.50%-3.75%. Dissent persisted, with multiple members opposing the cut or advocating for a hold, reflecting divisions similar to recent meetings.​
• The FOMC confirmed the conclusion of its quantitative tightening program effective December 1, 2025, with Treasury rolloff caps at $5 billion per month and agency MBS caps at $35 billion per month to ensure ample reserves and market stability.
• The next meeting is scheduled for 27 to 28 January 2026.

Next 24 Hours Bias

Medium Bearish 

Gold (XAU)

Key news events today

Unemployment Claims (1:30 pm GMT)

What can we expect from Gold today?

Gold enters Wednesday, holding near 4,300–4,350 USD/oz after a sharp year‑end correction from fresh all‑time highs above 4,550, with intraday trade dominated by consolidation in thin holiday liquidity. Technical analyses for today flag 4,300 as key support and 4,440–4,460 as near‑term resistance, suggesting a range‑bound session unless a new macro catalyst emerges.

Next 24 Hours Bias
Medium Bullish

The Australian Dollar (AUD)

Key news events today

No major news event

What can we expect from AUD today?

The Australian dollar is trading near recent highs against the US dollar, supported by a relatively hawkish Reserve Bank of Australia (RBA) stance and expectations of firmer Chinese data, while a thin year‑end market and a mildly stronger US dollar are capping further gains.

Central Bank Notes:

• The Reserve Bank of Australia held its cash rate steady at 3.60% at the November 2025 policy meeting, adopting a cautious tone amid a surprise uptick in inflation data for the September quarter. This marks the fourth consecutive pause since the 25 basis point cut in August. The Board attributed some of the inflation rise to temporary factors like higher petrol prices and council rates, but noted signs of more persistent pressures from consumer demand.​
• Policymakers emphasized vigilance on inflation, with trimmed mean inflation expected to remain elevated in the near term before nearing the 2–3% target midpoint by mid-2027. Recent data showed underlying inflation staying above target until at least the second half of 2026, prompting upward revisions to forecasts. Capacity pressures are seen as slightly more pronounced than previously assessed, delaying any easing.
• Headline CPI for the September quarter exceeded expectations, driven partly by temporary items, while underlying measures signal ongoing stickiness. The shift to monthly CPI reporting, with the first full edition in November 2025, will enhance real-time inflation monitoring. Housing and services remain resilient contributors to price pressures.
• Domestic demand shows firmness in services alongside below-trend growth elsewhere, with capacity pressures not expected to ease significantly. The labor market is gradually softening, with unemployment projected to stabilize around 4.4%, though wage growth and productivity dynamics keep unit labor costs a concern. Household spending faces headwinds from high borrowing costs.​
• Global risks include geopolitical tensions and commodity volatility, set against modestly revised-up world growth outlooks. The Board describes its policy as mildly restrictive and data-dependent, balancing inflation control with employment goals. No rate hike was considered despite the inflation surprise.
• Monetary policy remains mildly restrictive to address lingering price stability risks amid household and global vulnerabilities. Communications reaffirm the dual mandate of 2–3% inflation and full employment, with readiness to adjust based on incoming data.​
• Market expectations point to the cash rate holding through early 2026, with a possible modest cut to 3.3% mid-year if inflation eases as forecast. The new monthly CPI data will be key for timely insights.
• Monetary policy remains mildly restrictive, balancing progress on price stability against vulnerabilities in household demand and global outlook. Board communications reaffirm a dual mandate: price stability and full employment, while underscoring readiness to respond should risks materialize sharply.
• Analysts generally expect the cash rate to remain at current levels through early 2026, with only modest cuts possible later in the year if inflation moderates. The new monthly CPI release (first full edition Nov 2025) will be watched closely for timely signals on price trends.
• The next meeting is on 2 to 3 February 2026.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news event

What can we expect from NZD today?

The New Zealand dollar is trading near its recent three‑month highs against the US dollar going into Wednesday, 31 December 2025, supported by a rebound in New Zealand growth and expectations that the Reserve Bank of New Zealand will keep rates steady, while year‑end flows and a slightly softer US dollar keep NZD within the 0.58 handle against USD.

Central Bank Notes:

• The Monetary Policy Committee (MPC) left the Official Cash Rate (OCR) unchanged at 2.25% at its 26 November 2025 meeting, following the widely anticipated 25-basis-point reduction from 2.50%, and signaled that policy is now firmly in stimulatory territory while keeping the option of further easing on the table if needed.
• The decision was again reached by consensus, with members judging that the cumulative 325 basis points of easing over the past year warranted a period of assessment, even as several emphasized a willingness to cut further should incoming data point to a more protracted downturn or renewed disinflationary pressures.
• Headline consumer price inflation is projected to hover near 3% in late 2025 before gradually easing toward the 2% midpoint of the 1–3% target band through 2026, supported by contained inflation expectations around 2.3% over the two-year horizon and an expected pickup in spare capacity.
• The MPC noted that domestic demand remains subdued but shows tentative signs of stabilisation, with softer household spending and construction only partially offset by improving services activity; nevertheless, policymakers still expect services inflation to ease as wage growth moderates and the labour market loosens further over the coming year.
• Financial conditions continue to ease as wholesale and retail borrowing rates reprice to the lower OCR, contributing to gradually rising mortgage approvals and improving housing-related sentiment, although broader business credit growth remains patchy and sensitive to uncertainty about the durability of the recovery.
• Recent data confirm that GDP momentum is weak but not deteriorating as sharply as earlier in 2025, with high-frequency indicators pointing to a shallow recovery from a low base and ongoing headwinds from elevated living costs and fragile confidence weighing on discretionary consumption and investment.
• The MPC reiterated that external risks remain skewed to the downside, particularly from softer Chinese demand and uncertainty around United States trade policy, but noted that a lower New Zealand dollar continues to provide some offset via improved export competitiveness and support for tradables inflation.
• Looking ahead to early 2026, the Committee maintained a mild easing bias, indicating that a further cut toward 2.00–2.10% cannot be ruled out if activity fails to gain traction or if inflation undershoots projections, but current forecasts envisage the OCR remaining near 2.25% for an extended period provided inflation converges toward target and the recovery proceeds broadly as expected.
• The next meeting is on 18 February 2026.

Next 24 Hours Bias

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news event

What can we expect from JPY today?

The dollar‑yen pair is trading quietly but with a slight upside bias, holding near recent highs as low year‑end liquidity keeps USD/JPY confined to a narrow intraday band. The broader backdrop remains yen‑negative, with wide U.S.–Japan rate differentials and only gradual BOJ tightening encouraging funds to stay long dollars, though talk of potential intervention around 160 and hints of further BOJ normalization in 2026 limit aggressive bullish positioning.

Central Bank Notes:

• The Policy Board of the Bank of Japan will meet on 18–19 December with markets almost fully pricing a 25-basis-point hike, which would raise the short-term policy rate from 0.50% to around 0.75%, as the bank moves further away from its ultra-loose stance while stressing that any tightening will remain gradual and data-dependent.
• The BOJ is expected to continue guiding the uncollateralized overnight call rate in a narrow band around the new policy rate, near 0.75%, while signaling that the pace and timing of any additional hikes will depend on how past increases affect bank lending, corporate financing conditions, and overall economic activity.
• The quarterly path of JGB purchases remains on a pre-announced, gradual taper: outright purchases are being reduced by about ¥400 billion per quarter through March 2026, then by roughly ¥200 billion per quarter from April to June 2026, with the bank still aiming for JGB purchases to settle near ¥2 trillion in Q1 2027 and retaining flexibility to adjust the pace if market functioning or yield volatility deteriorate.
• Japan’s economy has softened in the near term, with Q3 2025 GDP contracting at an annualized rate of approximately 2.3%, as weaker residential investment and external demand weighed on activity. Meanwhile, business sentiment in manufacturing has recently improved to a roughly four-year high.
• Core consumer inflation (excluding fresh food) accelerated to around 3.0% year-on-year in October, up from 2.9% in September and remaining above the BOJ’s 2% target, while the “core-core” measure excluding both fresh food and energy rose to about 3.1%, underscoring persistent underlying price pressures.
• In the very near term, some input-cost pressures are easing as earlier import price surges fade, but services inflation linked to labor shortages, along with steady wage gains, continues to support broader price momentum; firms’ and households’ medium-term inflation expectations remain anchored slightly above 2%, keeping short-term inflation risks tilted to the upside.
• For the coming quarters, the BOJ assesses that real growth will likely run below potential as the economy digests tighter financial conditions and past yen depreciation. However, accommodative real rates, positive real wage growth, and improving corporate sentiment are expected to help sustain a modest recovery in private consumption and business investment.
• Over the medium term, as overseas demand stabilizes and domestic labor markets remain tight, the BOJ expects wage settlements and inflation expectations to keep core inflation on a gradual upward trajectory around or slightly above 2%, providing room for further cautious rate normalization as long as financial conditions remain supportive and the recovery is not derailed.
• The next meeting is scheduled for 22 to 23 January 2026.

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

EIA Crude Oil Inventories (2:30 pm GMT)

What can we expect from Oil today?

Oil markets on Wednesday are relatively subdued, with Brent and WTI hovering in the low 60‑dollar range per barrel after a soft year marked by oversupply and only brief geopolitically driven spikes. The dominant narrative is that rising non‑OPEC production and slower demand growth are pushing the market toward a 2026 surplus, while OPEC+ is inclined to keep existing cuts and a production pause in place but has limited power to engineer a sustained rally.

Next 24 Hours Bias
Medium Bearish

The post IC Markets Global – Asia Fundamental Forecast | 31 December 2025 first appeared on IC Markets | Official Blog.

DXY (U.S. Dollar Index):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 98.40

Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 97.86

Supporting reasons: Identified as a multi-swing low support, indicating a potential area where the price could again stabilize.

1st resistance: 98.77
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement

EUR/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 1.1750

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 1.1712

Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once again.

1st resistance: 1.1804

Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

EUR/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 183.02

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 181.69
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could again stabilize.

1st resistance: 184.71
Supporting reasons: Identified as a swing high resistance that is supported by the 100% Fibonacci extension, indicating a potential level that could cap further upward movement.

EUR/GBP: 

Potential Direction: Bearish
Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 0.8746

Supporting reasons: Identified as an overlap resistance that aligns with the 50% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 0.8707
Supporting reasons: Identified as an overlap support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8793
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

GBP/USD:

Potential Direction: Bullish
Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 1.3438

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 1.3366
Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 1.3530
Supporting reasons: Identified as a swing high resistance, indicating a potential level that could halt further upward movement.

GBP/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 208.94

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement

1st support: 207.17
Supporting reasons: Identified as an overlap support, indicating a potential level where the price could stabilize once more.

1st resistance: 211.47
Supporting reasons: Identified as a swing high resistance that aligns with the 127.2% Fibonacci extension, indicating a potential level that could halt further upward movement.

USD/CHF:

Potential Direction: Bearish

Overall momentum of the chart: Bearish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 0.7932

Supporting reasons: Identified as a pullback resistance that aligns with the 50% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 0.7862
Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.7989
Supporting reasons: Identified as an overlap resistance, indicating a potential level that could cap further upward movement.

USD/JPY:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 155.41

Supporting reasons: Identified as a pullback support that aligns with the 61.8% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 154.44

Supporting reasons: Identified as an overlap support, indicating a strong area where buyers might return, and the price could stabilize once again.

1st resistance: 156.94

Supporting reasons: Identified as a pullback resistance. This level represents the next key area where upward movement could be capped amid increased selling pressure

USD/CAD:

Potential Direction: Bearish                                                                                                                                                                                        

Overall momentum of the chart: Bearish

The price could see a short-term pullback toward the pivot before continuing its bearish move down toward the 1st support.

Pivot: 1.3737

Supporting reasons: Identified as a pullback resistance that aligns with the 61.8% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 1.3650

Supporting reasons: Identified as a swing low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.3800

Supporting reasons: Identified as an overlap resistance, making it a possible target for bullish advances and a level where some sellers could return to cap gains

AUD/USD:

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 0.6674

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 0.6611

Supporting reasons: Identified as a pullback support, this area has provided strong support historically and may attract buying interest for a potential short-term bounce

1st resistance: 0.6742

Supporting reasons: Identified as a resistance is supported by the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

NZD/USD

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 0.5780

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 0.5744

Supporting reasons: Identified as an overlap support, this area has provided strong support historically and may attract buying interest for a potential short-term bounce

1st resistance: 0.5849

Supporting reasons: Identified as a swing high resistance, indicating a potential area that could halt any further upward movement.

US30 (DJIA):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 48,352.60

Supporting reasons: Identified as an overlap support that aligns with the 38.2% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 47,891.80

Supporting reasons: Identified as a pullback support, suggesting a potential area where the price could stabilize once again.

1st resistance: 48,725.70

Supporting reasons: Identified as a multi-swing high resistance, indicating a potential area that could halt any further upward movement.

DE40 (DAX):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 24,450.10

Supporting reasons: Identified as a pullback support, where renewed buying pressure could emerge to push the price higher.

1st support: 24,203.80

Supporting reasons: Identified as an overlap support, indicating a key level where the price could stabilize once more.

1st resistance: 24,863.22

Supporting reasons: Identified as a resistance that is supported by the 161.8% Fibonacci extension, indicating a potential area that could halt any further upward movement.

US500 (S&P 500): 

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could see a short-term pullback toward the pivot before rising again toward the 1st resistance.

Pivot: 6,859.63

Supporting reasons: Identified as a pullback support that aligns with the 38.2% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 6,770.50

Supporting reasons: Identified as an overlap support that aligns with the 78.6% Fibonacci retracement, indicating a potential level where the price could stabilize once again.

1st resistance: 6,923.60

Supporting reasons: Identified as a swing low resistance, indicating a potential area that could halt any further upward movement.

BTC/USD (Bitcoin):

Potential Direction: Bearish

Overall momentum of the chart: Bearish

The price has already reacted off the pivot and may continue its bearish move toward the 1st support. 

Pivot: 90,007.44

Supporting reasons: Identified as an overlap resistance that aligns with the 61.8% Fibonacci retracement, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 84,997.03

Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once more.

1st resistance: 94,626.23

Supporting reasons: Identified as an overlap resistance that aligns with the 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement.

ETH/USD (Ethereum):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

The price has already reacted off the pivot and may continue its bearish move toward the 1st support. 

Pivot: 3,031.60

Supporting reasons: Identified as an overlap resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 2,798.65

Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once more.

1st resistance: 3,159.44
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

WTI/USD (Oil):

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price has already bounced off the pivot and may continue its bullish move toward the 1st resistance

Pivot: 56.87

Supporting reasons: Identified as an overlap support that aligns with the 61.8% Fibonacci retracement, where renewed buying pressure could emerge to push the price higher.

1st support: 55.18
Supporting reasons: Identified as a swing low support, indicating a key level where the price could stabilize once more.

1st resistance: 58.90
Supporting reasons: Identified as an overlap resistance, indicating a potential area that could halt any further upward movement.

XAU/USD (GOLD):

Potential Direction: Bearish

Overall momentum of the chart: Bullish

The price has already reacted off the pivot and may continue its bearish move toward the 1st support. 

Pivot: 4,368.10

Supporting reasons: Identified as a pullback resistance, where selling pressures could intensify and potentially cap any upward retracement.

1st support: 4,262.94
Supporting reasons: Identified as a pullback support, indicating a key level where the price could stabilize once more.

1st resistance: 4,442.33
Supporting reasons: Identified as a pullback resistance, indicating a potential area that could halt any further upward movement.

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The post Wednesday 31st December 2025: Technical Outlook and Review first appeared on IC Markets | Official Blog.

• OPEC+ expected to maintain output pause amid growing global oil surplus, January 4 meeting
• China S&P Global/Rating Dog December 2025 Manufacturing PMI 50.1 (expect 49.8, prior 49.9)
• China official December 2025 PMIs: Manufacturing 50.1 (exp 49.2) Non-manu 50.2 (exp 49.8)
• PBOC sets USD/ CNY reference rate for today at 7.0288 (vs. estimate at 6.9945)
• China eases property taxes but avoids bold housing stimulus (property downturn drags on)
• China boosts consumer trade-in subsidies, expands scheme to digital products in 2026
• ICYMI: FOMC minutes reveal finely balanced rate cut and rising caution on inflation risks
• Oil: Private survey of inventory shows a headline crude oil build less than expected

It was a relatively subdued New Year’s Eve session across financial markets, with professional participants largely still in holiday mode. Liquidity was thin and price action muted, with most desks effectively waiting for markets to return in earnest from January 5. Despite the quiet backdrop, China delivered a cluster of data points that were notably better than expected and provided a modestly constructive end-of-year signal.

China’s official manufacturing sector unexpectedly returned to expansion in December, snapping an eight-month run of contraction. The headline manufacturing PMI rose to 50.1 from 49.2 in November, moving back above the 50 threshold that separates expansion from contraction. The outcome surprised economists, who had expected no change from contracting the prior month, according to a Reuters poll. The rebound came even as factory profits recorded their steepest year-on-year decline in more than a year last month, highlighting the fragile nature of the recovery.

Encouragingly, activity in China’s non-manufacturing sector also improved. The non-manufacturing PMI, which captures services and construction, climbed to 50.2 in December from 49.5 previously, following a dip into contraction in November. The composite PMI, combining manufacturing and non-manufacturing activity, rose to 50.7 from 49.7, signalling a broader pickup in overall business conditions. The data were released by the National Bureau of Statistics.

The private-sector survey painted a similar, though still cautious, picture. The S&P Global/RatingDog manufacturing PMI edged up to 50.1 from 49.9, pointing to tentative stabilisation in operating conditions. The improvement was driven primarily by firmer domestic demand and new product launches, while export orders remained under pressure amid weak global conditions. Output returned to modest growth, but firms continued to pare back hiring, with employment contracting for a second month. Cost pressures intensified as input prices rose for a sixth consecutive month, yet manufacturers continued to cut selling prices to support sales, keeping margins under strain.

Overall sentiment among Chinese manufacturers remained positive heading into 2026, though optimism eased and stayed below historical averages. The data suggest the sector may be finding a floor, but the recovery remains fragile and heavily dependent on sustained domestic demand and ongoing policy support.

In chip news, the South China Morning Post reported that ByteDance will splurge US$14 billion into Nvidia chips in 2026, citing computing demand surging.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) -0.37%
• Hong
  Kong (Hang Seng) -0.85%
• Shanghai
  Composite +0.16%
• Australia
  (S&P/ASX 200) -0.1%

Have a safe and happy NY eve everyone!

This article was written by Eamonn Sheridan at investinglive.com.

China’s manufacturing sector showed tentative signs of stabilisation at the end of 2025, with business conditions edging back into expansion territory, according to the latest S&P Global/Rating Dog Purchasing Managers’ Index data. While the improvement was modest, the rebound marked a welcome shift after months of subdued momentum, driven primarily by stronger domestic demand rather than a recovery in exports.

The result echoed the earlier official PMIs:

• China official December 2025 PMIs: Manufacturing 50.1 (exp 49.2) Non-manu 50.2 (exp 49.8)

The headline seasonally adjusted PMI rose to 50.1 in December from 49.9 in November, moving just above the 50 threshold that separates contraction from expansion. The reading signalled a fractional improvement in operating conditions and marked the fourth month of improvement in the past five months, suggesting the sector may be bottoming out after a prolonged period of weakness.

Manufacturing output returned to growth in December after stagnating earlier in the fourth quarter. Producers cited stronger inflows of new work, supported by domestic new product launches and business development efforts, which helped lift overall sales. However, the recovery remained uneven. New export orders declined for the second time in three months, reflecting still-subdued external demand and highlighting the ongoing drag from weak global conditions.

Despite rising new orders, firms remained cautious in their purchasing behaviour. Overall purchasing activity stagnated as many manufacturers reported holding sufficient stocks of raw materials and semi-finished goods. Nevertheless, inventories of inputs increased after declining in November, partly reflecting improvements in supplier performance. Vendor delivery times shortened again in December, aided by better communication and service levels among suppliers.

Employment continued to contract, with staffing levels falling for a second consecutive month. Survey respondents pointed to a combination of resignations and redundancies, with job cuts frequently linked to restructuring efforts and cost-control measures. Reduced workforce capacity, combined with higher sales volumes, contributed to a faster accumulation of backlogs, with unfinished work rising at the quickest pace in three months. To meet demand, firms increasingly drew down existing stocks of finished goods, leading to another decline in post-production inventories.

Cost pressures intensified toward year-end, driven mainly by higher raw material prices, particularly metals. Input prices rose for a sixth consecutive month, with the pace of increase the fastest since September. Despite this, manufacturers continued to cut selling prices in an effort to support sales and clear inventories, extending a divergence that has weighed on profit margins. Exporters were an exception, with export prices rising for the first time in three months as firms sought to defend margins.

Business sentiment remained positive heading into 2026, although optimism softened from November and stayed below historical averages. Manufacturers expressed cautious confidence that new products, expansion plans and expected policy support would underpin a gradual recovery next year, even as uncertainty around the durability of the current upturn persists.

–

China publishes two main PMI surveys, each capturing different parts of the industrial landscape. The official PMI is compiled by the National Bureau of Statistics and focuses primarily on large, state-owned and government-linked enterprises. Alongside this, the private-sector PMI, produced by S&P Global / RatingDog, places greater emphasis on small and medium-sized enterprises, making it a closely watched gauge of conditions in China’s private economy.

The distinction matters. While the official PMI tends to reflect conditions among larger firms with better access to credit and policy support, the private-sector survey is often seen as more sensitive to shifts in domestic demand, pricing power and employment conditions. Methodological differences also play a role, with the Caixin/RatingDog survey drawing from a broader and more diverse sample of companies. Despite these contrasts, the two PMIs often move in the same direction, offering complementary signals on the health of China’s manufacturing sector.

This article was written by Eamonn Sheridan at investinglive.com.

Data released by China’s National Bureau of Statistics (NBS) for the official manufacturing and non-manufacturing PMIs in December 2025.

–

The screenshot adds in the priors, not mentioned in the text.

The screenshot does not show the ‘Composite’ which has come in at 50.7, up from 49.7 in November.

–

China publishes two main PMI surveys, each capturing different parts of the industrial landscape. The official PMI is compiled by the National Bureau of Statistics and focuses primarily on large, state-owned and government-linked enterprises. Alongside this, the private-sector PMI, produced by S&P Global / RatingDog, places greater emphasis on small and medium-sized enterprises, making it a closely watched gauge of conditions in China’s private economy. The RatingDog PMI is due at 0145 GMT.

The distinction matters. While the official PMI tends to reflect conditions among larger firms with better access to credit and policy support, the private-sector survey is often seen as more sensitive to shifts in domestic demand, pricing power and employment conditions. Methodological differences also play a role, with the Caixin/RatingDog survey drawing from a broader and more diverse sample of companies. Despite these contrasts, the two PMIs often move in the same direction, offering complementary signals on the health of China’s manufacturing sector.

This release includes the official manufacturing and non-manufacturing PMIs, alongside the private-sector manufacturing PMI.

Taken together, today’s PMI readings are likely to reinforce expectations for further policy support in 2026, as Chinese authorities seek to stabilise growth, shore up confidence and arrest the slide in industrial activity heading into the new year.

Markets are likely to view the PMI prints as encouraging, but as still reinforcing the narrative of persistent slack in China’s industrial cycle, with limited immediate upside for risk assets. Chinese equities and broader Asia-Pacific markets may struggle to find traction, while base metals could remain capped on concerns around weak end-demand. In FX, the data should keep the yuan biased to the downside at the margin, particularly if the private-sector PMI confirms ongoing stress among smaller firms. From a policy perspective, soft PMIs strengthen expectations for additional targeted stimulus in early 2026, including fiscal support and incremental monetary easing, which may limit downside risk over the medium term. For global markets, weak China data is likely to reinforce disinflationary impulses, supporting bonds and keeping a lid on global yields, while offering modest support to the US dollar against cyclical and commodity-linked currencies.

This article was written by Eamonn Sheridan at investinglive.com.

TL;DR summary:

China is extending a value-added tax (VAT) exemption on certain residential property sales, adding another incremental policy measure aimed at stabilising its long-running real estate downturn. While the move lowers transaction costs for homeowners, it underscores Beijing’s preference for targeted relief rather than more forceful intervention.

—

China will extend a policy waiving value-added tax on selected home sales, as authorities continue to search for ways to ease the country’s persistent property slump without deploying more aggressive stimulus measures.

Under the policy, individuals selling residential properties they have owned for at least two years will remain exempt from paying VAT, according to a statement from the Ministry of Finance issued on Tuesday. The exemption will take effect from Friday, 2 January 2026. Homes sold within two years of purchase will continue to attract a VAT charge of 3%.

The extension marks a modest but symbolically important easing compared with previous rules in some major cities. In markets such as Shanghai, sellers of homes held for less than two years were previously subject to VAT rates as high as 5%. Many of China’s largest cities had already rolled out VAT exemptions in late 2024, but the latest move formalises and extends the policy at a national level.

The measure comes against the backdrop of a prolonged real estate crisis that has weighed heavily on economic growth, local government finances and household confidence. China’s once-dominant property sector has been hit by falling home sales, weak buyer sentiment and tightening developer liquidity, leading to the collapse or restructuring of several major firms, including China Evergrande Group. Even China Vanke Co, long viewed as one of the sector’s most resilient players, has come under mounting pressure amid rising debt concerns and declining home prices.

Official data showed that home prices in China recorded their steepest year-on-year decline in more than a year, underscoring the depth of the downturn. The property sector’s weakness continues to drag on consumer sentiment and investment, complicating Beijing’s efforts to stabilise growth as the economy slows.

Chinese leaders have pledged to increase policy support for the housing market following a key economic meeting this month. Measures under discussion include encouraging government purchases of existing housing stock, particularly for conversion into affordable housing. However, policymakers have so far stopped short of adopting the more forceful steps some economists argue are necessary, such as direct cash subsidies for homebuyers or large-scale government investment to clear excess inventory.

As a result, the VAT exemption extension is likely to be seen as another incremental step rather than a decisive turning point. While it reduces transaction costs and may help unlock some pent-up supply, analysts caution that restoring confidence in the housing market will require broader measures to address weak demand, developer balance sheets and expectations around falling prices.

This article was written by Eamonn Sheridan at investinglive.com.