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Global Markets:

•  Asian Stock Markets : Nikkei up 0.15%, Shanghai Composite up 0.17%, Hang Seng up 0.16% ASX down -0.29%
• Commodities : Gold at $4,352.20 (0.56%), Silver at $66.360 (4.98%), Brent Oil at $59.61 (1.59%), WTI Oil at $55.85 (1.58%)
• Rates : US 10-year yield at 4.161, UK 10-year yield at 4.5200, Germany 10-year yield at 2.8460

News & Data:

• (USD) Core Retail Sales m/m  0.4%  to 0.2% expected
• (USD) Non-Farm Employment Change  0.1%  to 0.2% expected
• (USD) Unemployment Rate  4.6%  to 4.5% expected

Markets Update:

Asian stock markets traded mixed on Wednesday, taking subdued cues from Wall Street overnight after recent U.S. jobs data failed to strengthen expectations of additional interest rate cuts by the Federal Reserve. While job growth in November exceeded forecasts, it followed a sharp contraction in October, leaving investors cautious. Most Asian markets had ended lower in the previous session.

Australian equities continued to edge down, extending losses for a third straight day. The benchmark S&P/ASX 200 slipped below the 8,600 mark, weighed down by weakness in financial and energy stocks, although gains in mining and technology shares helped limit the downside. Gold miners stood out with solid advances, while oil stocks remained under pressure amid falling crude prices. Several individual stocks saw sharp moves following earnings updates, asset sales and management changes.

In Japan, the Nikkei 225 rebounded modestly, recovering part of the losses seen earlier in the week. Gains in technology and heavyweight stocks offset weakness among exporters. Economic data showed a stronger-than-expected rise in core machinery orders in October, pointing to resilient capital spending, while Japan also posted a surprise trade surplus for November.

Elsewhere in Asia, markets in Hong Kong, South Korea, Indonesia and Taiwan posted modest gains, while New Zealand, Singapore and Malaysia traded lower. Chinese markets were largely flat.

On Wall Street, trading remained choppy, with the Nasdaq edging higher while the S&P 500 and Dow closed lower. European markets also finished in the red, and crude oil prices extended recent declines on oversupply concerns.

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The post Wednesday 17th December 2025: Asian Markets Mixed; Japan Up, Australia Slips first appeared on IC Markets | Official Blog.

That figure is 10.4% higher year-on-year, with visitors from China even showing a marginal growth of 3% in November. For some context, the year-to-date visitor arrivals for Japan has breached 39 million in 2025 – well exceeding the total for 2024 already, which was 36.87 million.

As a reminder, China and Japan are engaged in a diplomatic altercation at the moment. That came about after Japan prime minister Takaichi made remarks about Japan intervening militarily if China does decide to engage to seize Taiwan.

Naturally, that didn’t go down well with Beijing as you would expect. And that resulted in China calling for a travel advisory warning for citizens to not to travel to Japan. So far, the impact seems rather muted in November. So, we’ll have to see how things go in December and January (best time for snow visits) to be more certain of any major impact.

As added context, mainland Chinese tourists have made up the largest group of visitors to Japan so far this year, accounting for almost a quarter of the total visitors.

And yesterday, China continues to reaffirm that they want Takaichi to retract her comments. The message from Beijing was that:

“On key issues, Japan is still ‘squeezing toothpaste’ and ‘burying nails,’ attempting to obfuscate and muddle through.”

That as China’s foreign ministry spokesperson, Guo Jiakun, reiterated that Beijing continues to “firmly oppose” to the remarks from Tokyo over the whole debacle thus far.

This article was written by Justin Low at investinglive.com.

• Prior +3.6%
• Core CPI +3.2% vs +3.4% y/y expected
• Prior +3.4%

That is an unexpected miss, especially on the core estimate which is the lowest since January. This will just solidify a rate cut by the BOE for this week but also put pressure on perhaps more rate cuts to come if the central bank can start to sell the narrative of a disinflation path going into next year. The pound has stumbled with GBP/USD falling by 0.6% to 1.3345 on the day from 1.3377 just before.

Looking at the breakdown, the big drop stems from food price inflation which fell from 4.9% in October to 4.2% in November. Besides that, goods inflation also eased lower from 2.6% to 2.1% with Black Friday discounts resulting in a decline in clothing and footwear prices of 0.3% on the month and 0.6% year-on-year. Compared to the same month last year, November 2024 saw a rise of 0.6% in clothing and footwear prices on a monthly basis. So, there is perhaps some greater influence in Black Friday discounts this time around in dragging prices lower.

As for services inflation, it is seen declining marginally from 4.6% to 4.5% in November. So, that is still one key sticking point for the BOE in trying to convince of a strong disinflation narrative in the UK economy.

At the balance, there is some good news in the sense that price pressures are easing and starting to show further signs of softening. That especially after months of not showing much progress.

However, unless services inflation also starts moderating more meaningfully, the BOE might still find it tough to push a strong narrative for further rate cuts next year. For now at least, they can comfortably stick to the one this week. But looking out to next year, it will require months of a similar trend in inflation data to support their case.

This article was written by Justin Low at investinglive.com.

Morgan Stanley estimates that UK headline annual CPI will come in at 3.4% in November, with the core annual reading being at 3.3%. That’s slightly under the consensus estimate from analysts of 3.5% for the former and 3.4% for the latter. But with both numbers set to keep above 3%, the firm notes that it reflects ongoing stickiness in UK prices despite easing pressures elsewhere.

Their more detailed breakdown estimates core goods inflation at 1.2% while services inflation is to remain high at 4.5%. As such, it will continue to pose a challenge for the BOE in wanting to convince of a more decisive disinflation narrative in the UK.

Overall, they see the risks to price pressures as being balanced. There is potential for downside risk to come from food prices but aggressive Black Friday discounts and sales could lead to upside pressures on core goods inflation. Meanwhile, Morgan Stanley expects services inflation to continue to reflect more evenly distributed risks towards the overall inflation picture.

As a reminder, the BOE will meet for one final time tomorrow. And market players are well expecting another 25 bps rate cut even with potentially stickier price pressures today. Going into the report later, traders are pricing in ~92% odds of a rate cut for this week with the next rate cut only fully priced in for July next year.

This article was written by Justin Low at investinglive.com.

A lot of anticipation is riding on the BOJ this week with the Japanese central bank set to deliver one of, if not the last major key risk event for the year. A rate hike is well anticipated at this point as the BOJ looks to have won the battle in the first round against Japan prime minister Takaichi.

That being said, she hasn’t backed down from her stance in wanting the BOJ to play ball to fit with her more proactive fiscal policy. Earlier today, she also came out to say that now isn’t the time for fiscal tightening for Japan. So, you can see that she is definitely standing her ground and will want the BOJ to follow suit next year.

But for the last meeting to round off the 2025 year, it looks like Ueda & co. have definitely grown a pair and will deliver another rate hike in bringing the short-term policy rate to 0.75%.

As concerns grow on Takaichi’s fiscal policy stance, Japanese bonds have been sold off heavily in the past few months. And adding to the BOJ’s more hawkish stance in recent weeks, that’s a double whammy resulting in a surge higher in yields. And looking this week, we’re seeing 10-year JGB yields jump up to their highest since June 2009.

And the selloff in the bond market is also exacerbating the declines in the Japanese yen currency. It’s a tough situation for those holding Japanese assets.

The government and BOJ will have to find ways to not prevent over-speculation on the part of market players. However, it doesn’t seem like the line is being drawn on either front just yet.

USD/JPY is trading back above 155.00 today after a daily break under that overnight. And if the BOJ is adamant to want to keep doing battle with the government next year, it’s going to be tough for Japan to find much stability in both the currency and bond markets.

I wouldn’t expect the BOJ communique this week to be explicit about that of course. However, the message a rate hike in itself sends is a rather strong one. That especially if the spring wage negotiations in March also delivers a more upbeat result in increasing the pressure for the BOJ to move again.

This article was written by Justin Low at investinglive.com.

• Japan must raise neutral rate of interest via fiscal policy, growth strategy
• If Japan’s neutral rate rises as a result of fiscal policy, it would be natural for BOJ to hike rates
• But for now BOJ should avoid premature rate hike, excessive monetary tightening
• Sanaenomics carries over elements of Abenomics but focuses more on strengthening supply side of the economy

Well, take his comments here with a pinch of salt as he is part of the government panel recruited by Japan prime minister Takaichi. So, the bias in his remarks and narrative is to side with the government and to try and speak against the intentions by the BOJ to hike rates later this week.

This article was written by Justin Low at investinglive.com.

CIBC notes that the non-farm payrolls release yesterday reflected further softness in US labour market conditions. Adding that while payrolls gained by 64k in November, it comes after a sharp decline of 105k in October which effectively erases the gains from September.

Besides that, the three-month average job growth has cooled further to 22k and the unemployment rate also edged a little higher to 4.6%. So, all of that points to suggestions that the labour market is continuing to soften as a whole.

And when coupled with a more resilient consumer as the October retail sales control group showed a 0.8% jump, it suggests that demand conditions are still holding up rather favourably.

At the balance, it could prompt Fed policymakers who dissented at the last meeting to reassess their stance. And that could raise the probability of earlier easing in 2026.

That being said, I must point out that Goolsbee and Schmid were the two main dissenters last week in wanting rates to be kept unchanged. Come next year, they will not be on the voting board rotation. So, there’s that to keep in mind.

Instead, we will be getting these Fed members on the voting board:

• Beth Hammack (Cleveland Fed)
• Anna Paulson (Philadelphia Fed)
• Lorie Logan (Dallas Fed)
• Neel Kashkari (Minneapolis Fed)

The ones rotating out will be:

• Susan Collins (Boston Fed)
• Austan Goolsbee (Chicago Fed)
• Alberto Musalem (St Louis Fed)
• Jeffrey Schmid (Kansas City Fed)

Looking at the change above, Hammack and Logan should be like-for-like replacements to Goolsbee and Schmid on the central bank dove versus hawk scale. And if anything, they might even be more hawkish. So, it will be a tough task to want to change their minds in pushing for stronger conviction on rate cuts.

However, CIBC argues that a cooling labour market will continue to chip away at their resolve as the balance of evidence weakens the case for the Fed to keep rates unchanged. As such, the firm sees an increasing likelihood of earlier easing by the Fed in 2026.

This article was written by Justin Low at investinglive.com.

• Reserve Bank of India FX intervention to support the rupee
• Singapore central bank (MAS) survey shows stronger 2025 growth, policy seen on hold
• Singapore exports beat expectations as electronics and pharma lift NODX
• China slowdown raises downside risks for AUD and Australian assets
• Strong exports lift BoJ hike odds as Japan recovery gathers pace – recap
• Weak yen clears path for December BoJ hike, if yen fails afterwards another hike to come
• India’s central bank governor says US trade deal impact about 0.5% on GDP growth rate
• Pot shots – Trump set to fast-track cannabis reclassification under executive order
• Silver hits record ~US$65 per ounce on tight supply and strong demand
• PBOC sets USD/ CNY central rate at 7.0573 (vs. estimate at 7.0386)
• Trump orders blockade of sanctioned Venezuelan oil tankers, crude oil price jumps
• California judge backs up to 30-day Tesla cars sales suspension over Autopilot marketing
• Trump orders total blockade of sanctioned oil tankers entering or leaving Venezuela
• Japan: Nov exports +6.1%y/y (expected +4.8%) Oct Machine orders +12.5%y/y (expected +3.6%)
• Goldman Sachs says Fed more willing to cut rates again next year, citing job market risk
• Port of Los Angeles sees sharp import drop as trade uncertainty bites
• Alphabet (Google)-backed Waymo explores $15bn-plus funding round at near $100bn valuation
• Reports that the White House is divided over Hassett as possible Fed chair
• Oil: Private survey of inventory shows a headline crude oil draw much larger than expected
• Westpac pushes back on RBA hike calls, sees rates on hold through 2026
• New Zealand Q3 current account deficit widens sharply, annual gap improves
• Tesla hits record high as robotaxi optimism outweighs EV sales headwinds
• U.S. Stocks close mostly lower amid cautious sentiment

Oil prices rebounded during the session after sliding to their lowest levels since February 2021 in U.S. trade on Tuesday. The catalyst was President Donald Trump’s announcement that he had ordered a “complete blockade” of sanctioned oil tankers entering and leaving Venezuela, escalating pressure on Caracas amid an expanded U.S. military presence in the region and renewed threats of land strikes. The move injected fresh geopolitical risk into energy markets and helped lift crude from deeply oversold levels.

The yen was another key mover. Higher oil prices added to the currency’s headwinds, while renewed concerns around financial stability were reinforced by another sell-off in Japanese Government Bonds. The benchmark 10-year JGB yield climbed to its highest level since June 2007. USD/JPY rose from early-session lows below 154.55 to trade back above 155.10 at the time of writing.

The renewed yen weakness comes at an awkward moment for the Bank of Japan. The central bank is widely expected to raise its short-term policy rate from 0.5% to 0.75% at its meeting on Thursday and Friday, with the decision due Friday. If yen depreciation persists through and beyond the meeting, pressure will likely build for further tightening early next year.

Data out of Japan were supportive, with trade figures and machinery orders beating expectations, reinforcing the view that underlying growth momentum is improving.

More broadly, the U.S. dollar recovered modestly after Tuesday’s pullback, with FX markets otherwise relatively contained.

In U.S. equity news, Waymo, Alphabet’s autonomous driving unit, is reported to be in early discussions to raise more than $15bn at a valuation approaching $100bn, highlighting renewed investor confidence in the long-term potential of robotaxi technology. Separately, a U.S. judge ruled Tesla’s Autopilot marketing was deceptive, recommending a temporary 30-day suspension of its sales licence, though regulators have granted the company time to amend its language.

Gold also moved higher, but once again lagged silver, which pushed to a fresh record high just shy of US$66.

In Asia FX, the South Korean won slid to its weakest level in over eight months amid sustained foreign equity outflows and steady dollar demand. The Indian rupee edged lower as well, before the Reserve Bank of India stepped in to support the currency via selling USD/INR intervention.

Asia-Pac
stocks:

• Japan
  (Nikkei 225) -0.16%
• Hong
  Kong (Hang Seng) +0.22%
• Shanghai
  Composite +0.17%
• Australia
  (S&P/ASX 200) -0.28%

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

Singapore’s non-oil domestic exports (NODX) delivered a stronger-than-expected performance in November, reinforcing signs that the city-state’s trade cycle remains firmly in recovery mode as global demand stabilises. Official data released by Enterprise Singapore showed NODX rose 11.6% year on year, comfortably beating market expectations for a 7.0% increase.

The headline gain was supported by both electronics and non-electronics exports, though volatile pharmaceutical shipments again played a prominent role. Electronics exports grew 13.1%, extending October’s outsized surge, as demand for integrated circuits, personal computers and printed circuit boards remained robust. The data point to ongoing strength in the global semiconductor cycle, which continues to underpin regional trade momentum.

Non-electronics exports also posted solid growth, rising 11.1% year on year. Pharmaceutical exports surged sharply, reflecting shipment timing and contract volatility rather than a structural step-up, but nevertheless contributed materially to the overall result. Other categories, including pumps and industrial engines, also recorded strong gains, highlighting broader-based resilience beyond electronics.

Taken together, the November outcome helped lift cumulative NODX growth to 4.8% in the first 11 months of 2025, signalling a meaningful turnaround from last year’s trade downturn. Total trade expanded 8.8% year on year, moderating from October’s exceptionally strong pace but remaining consistent with an improving external environment.

By destination, export performance was mixed. Shipments to the United States, the European Union and Taiwan rose strongly, reflecting firm demand from advanced economies and semiconductor-linked supply chains. In contrast, exports to several regional markets, including Indonesia, Hong Kong, Japan and Thailand, declined from a year earlier, underscoring uneven recovery dynamics across Asia.

Looking ahead, Singapore’s trade outlook remains constructive but subject to volatility. While electronics demand and pharmaceuticals are providing powerful tailwinds, the reliance on lumpy shipments suggests month-to-month swings are likely. Even so, the November data reinforce expectations that external trade will continue to support growth into year-end, providing a firmer footing for the broader economy.

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

Today’s Japanese trade and investment data are reinforcing expectations that the Bank of Japan is poised to deliver a 25 basis point rate hike this week, as signs of economic recovery continue to build following last quarter’s contraction.

Japan’s exports rose for a third consecutive month in November, climbing 6.1% year on year and comfortably beating market expectations. The rebound was driven by solid demand from the United States and Europe, as well as a recovery in global semiconductor demand following the finalisation of the U.S. trade deal. Exports to the U.S. rose 8.8%, while shipments to the EU jumped nearly 20%, highlighting improving external momentum.

By sector, machinery and electrical machinery exports showed broad-based strength, with semiconductor shipments up 13%, mirroring trends across Asia’s major chip exporters. Motor vehicle exports declined overall, though shipments to the U.S. edged higher and exports to Europe remained robust. Regional demand was mixed, with exports to several Asian economies rising sharply, while shipments to China fell modestly, reflecting lingering uncertainty around bilateral tensions and weak pricing in certain commodity-linked categories.

Imports grew more slowly than exports, allowing Japan’s trade balance to swing back into surplus in November. On a seasonally adjusted basis, the trade balance has now recorded small surpluses for two consecutive months, providing a positive contribution to fourth-quarter growth.

The recovery narrative was reinforced by a sharp rise in core machinery orders, which rose 7.0% month on month in October, following a strong increase in September. Overseas demand continues to outpace domestic demand, suggesting export momentum may remain supportive in coming months, even as non-manufacturing investment lags.

Taken together, the data strengthen the case for a near-term BoJ rate hike, even as policymakers are expected to keep forward guidance neutral. As flagged in my earlier post on yen weakness and policy normalisation, improving growth dynamics are now aligning with currency and inflation considerations to push rate hike odds higher.

–

ps. You’ll see in the attached USD/JPY chart pic the yen is having trouble holding gains despite expectations of a BoJ rate hie.

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

U.S. President Donald Trump is expected to sign an executive order as soon as this week that would accelerate the reclassification of cannabis under federal law and formally recognise its medical value for the first time, according to people familiar with the plans. The move would mark a significant shift in U.S. drug policy, though it would stop short of full federal legalisation.

Cannabis is currently classified as a Schedule I drug under the Controlled Substances Act, placing it alongside heroin and LSD and deeming it to have no accepted medical use. Reclassifying it to Schedule III would ease regulatory barriers, allow broader Food and Drug Administration research and potentially enable cannabis-derived products to be prescribed as pharmaceuticals, regardless of state-level legal frameworks.

Trump confirmed earlier this week that the administration is actively considering the change, citing the need to unlock medical research that is currently restricted by cannabis’s classification. The executive order is expected to instruct either the Drug Enforcement Administration or Attorney General Pam Bondi to complete the long-running rescheduling process and publish a final rule moving cannabis to Schedule III. That formal review began under the Biden administration in 2024 but has been stalled for administrative reasons this year.

While the order would not legalise cannabis federally, it could include additional directives with material implications for the industry. One option under consideration is a call for Congress to pass the bipartisan SAFER Banking Act, which would allow licensed cannabis businesses access to the U.S. banking system. Another potential provision would direct federal health agencies to permit Medicare reimbursement for CBD-based products.

The policy push follows a series of high-level meetings between Trump and cannabis industry executives, as well as discussions involving senior health officials including FDA Commissioner Marty Makary, Health and Human Services Secretary Robert F. Kennedy Jr., and CMS administrator Mehmet Oz.

Politically, the move aligns with Trump’s 2024 campaign pledge to expand access to medical marijuana and highlights his willingness to break with parts of the Republican establishment. While recreational legalisation remains off the table at the federal level, a Schedule III designation would represent the most consequential shift in U.S. cannabis policy in decades.

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

Japanese trade and capex-indicative data:

more to come

—

As I said earlier, the Bank of Japan will begin its two day meeting tomorrow, Thursday, December 18, 2025. On Friday we’ll get the statement followed by Bank of Japan Governor Ueda’s press conference:

• the statement is expected some time in the 0230 to 0330 GMT time window (this is 2230 – 2330 US Eastern time). The BoJ do not have a set scheduled time for the release;
• Bank of Japan Governor Ueda’s press conference will follow at 0630 GMT (this is 0130 US Eastern time).

A 25bp interest rate rise is widely expected, from 0.5% to 0.75%.

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