Source: MNI - Market News/Bloomberg
UK
POLITICS (POLITICO): “Britain’s under-pressure Starmer vows ‘fight for change’ in 2025. The prime minister has seen a dramatic tumble in public support — as Nigel Farage snaps at his heels.”
ENERGY (TIMES/BBG): “Gas prices have risen after Russian supplies stopped flowing to Europe via Ukraine, causing fears of another spike in energy bills in the UK.”
EU
ENERGY (BBC): “Russian gas has stopped flowing to EU states via Ukraine after a five-year deal expired, marking the end of a decades-long arrangement.”
ENERGY (BBC): “Moldova faces energy crisis as flow of Russian gas ends.”
FRANCE (FRANCE24): “In a traditional New Year's Eve presidential address, French President Emmanuel Macron admitted on Tuesday that his June decision to call snap elections "brought more division to the National Assembly rather than solutions for the French people", acknowledging that the high-stakes move led to months of political deadlock.”
POLAND (EURONEWS): “Under the slogan "Security, Europe!", Poland is taking over the presidency of the Council of the European Union, marking the start of a six-month rotation for the second time in Poland's history.”
EU (EURONEWS): “Bulgaria's and Romania's full membership in the Schengen Area was celebrated on Wednesday, concluding years of negotiations for the Eastern European countries to join the ID-check-free travel zone.”
EU (DW): “Hungary has lost its right to a billion euros of funding after Budapest failed to tackle corruption, according to the EU authorities in Brussels. This is the first time in history that Brussels has enforced such a move.”
US
US (BBG): “Elon Musk said that the explosion of a Tesla Inc. Cybertruck outside the Trump Las Vegas hotel on Wednesday was likely an act of terror and suggested that it could be linked to a truck rampage in New Orleans that killed at least 15 people.”
POLITICS (BBG): “President-elect Donald Trump said he would lobby House Republicans to help elect Mike Johnson as speaker if needed, acknowledging that some lawmakers in the party had reservations about allowing him to retain the gavel.”
POLITICS (RTRS): “The United States on Tuesday imposed sanctions on entities in Iran and Russia, accusing them of attempting to interfere in the 2024 U.S. election.”
POLITICS (ST): “The US Treasury Department’s sanctions office was hacked by the Chinese government, the Washington Post reported on Jan 1, citing unnamed officials.”
BUSINESS (BBG): “Nippon Steel Corp. offered to give the US government a veto over any reduction in US Steel Corp.’s production capacity in a proposal that marks a last-ditch effort to win President Joe Biden’s approval for its takeover of the iconic American company, according to a person familiar with the matter. Shares of US Steel surged by the most in a year.”
OTHER
SOUTH KOREA (BBG): “South Korea’s exports maintained growth momentum in December as demand from China increased while semiconductor sales stayed resilient.”
SOUTH KOREA (BBG): “South Korea’s Acting President Choi Sang-mok on Wednesday rejected an attempt by his advisers to resign en masse in the latest twist to the nation’s ongoing political turmoil.”
AUSTRALIA (BBG): “Australian house prices declined for the first time in 22 months in December as buyers increasingly found themselves priced out of the market, while the supply of properties increased.”
ASIA (BBG): “Factory activity across Asia expanded in December as domestic orders and output improved, but weaker confidence and a sustained drop in export orders point to global risks ahead.”
SINGAPORE (BBG): “Singapore’s economy grew at a solid clip last quarter, providing momentum for full-year growth to surpass expectations.”
INDONESIA (BBG): “Indonesia scaled back its planned increase in the value-added tax rate just hours before it was set to take effect on January 1 amid escalating public outcry.”
THAILAND (BBG): “Bank of Thailand’s Monetary Policy Committee deemed it appropriate to maintain the key rate at a “broadly neutral stance” as inflation moves toward the target range, according to the panel’s edited minutes of its December meetings.”
ENERGY (BBG): “The end of Russian natural gas flows to Europe via Ukraine is likely to boost competition with Asia and prices for alternatives.”
MEXICO (BBG): “Mexico delayed applying a tax on cruise ship passengers at its ports for six months while exempting wheat and a fertilizer from tariffs for all of 2025.”
CHINA
ECONOMY (BBG): “China’s manufacturing activity slowed its pace of expansion in December, as investors wait for more economic stimulus as Donald Trump returns to the White House threatening tariffs on Chinese exports.”
ECONOMY (BBG): "China’s economy is likely to continue to expand around 5% in 2025, with investment and consumption growth slightly exceeding 2024 levels, the Securities Daily reported on Thursday, citing Zhao Wei, chief economist at Shenwan Hongyuan Securities."
PROPERTY (RTRS): “Prices of new homes in China rose at a slightly faster pace in December, a private survey showed on Wednesday, as the crisis-hit property sector struggles to find a bottom on the heels of a slew of supportive government policies.”
CHINA MARKETS
MNI: PBOC Net Drains CNY273.8 Bln via OMO Thursday
MNI (BEIJING) - The People's Bank of China (PBOC) conducted CNY24.8 billion via 7-day reverse repos, with the rate unchanged at 1.50%. The operation led to a net drain of CNY273.8 billion after offsetting the maturity of CNY298.6 billion today, according to Wind Information.
- The seven-day weighted average interbank repo rate for depository institutions (DR007) fell to 1.5647% at 09:44 am local time from the close of 1.9812% on last trading day in 2024.
- The CFETS-NEX money-market sentiment index, measuring interbank money-market liquidity, closed at 44 on the last trading day, compared with the close of 48 on the previous day. A higher reading points to tighter liquidity condition, with 50 representing an equilibrium.
MNI: PBOC Sets Yuan Parity Lower At 7.1879 Thurs; -2.83% Y/Y
MNI (BEIJING) - The People's Bank of China (PBOC) set the dollar-yuan central parity rate lower at 7.1879 on Jan 2, compared with 7.1884 set on last trading day in 2024. The fixing was estimated at 7.3202 by Bloomberg survey today.
MARKET DATA
AUSTRALIA CORELOGIC HOME VALUES DEC. -0.2% M/M; PRIOR +0.1%
AUSTRALIA S&P GLOBAL DEC. MFG PMI 47.8; PRE. 48.2; NOV. 49.4
CHINA CAIXIN MFG PMI DEC. 50.5; EST. 51.7; NOV. 51.5
SOUTH KOREA S&P GLOBAL DEC. MFG PMI 49.0; NOV. 50.6
MARKETS
US TSYS: Tsys Futures Pare Earlier Losses, Cash Trading Closed
- Tsys futures opened the session lower, with all contracts trading below Dec 31 lows, we have however seen a reversal over the past few hours and now trade little changed, volumes are below average, although this isn't surprising as cash trading is closed with Japan out. TU is -00⅜ at 102-25⅜, while TY is trading -00+ at 108-23+
- The trend condition in Treasury futures remains bearish despite the intraday rally into the Monday close. The gains made heading into year-end are considered corrective below the 109-12 20-day EMA. The 10yr contract has traded through key short-term support and the bear trigger at 109-02+, the Nov 15 low. The breach confirms a resumption of the downtrend and opens 108+12+, a Fibonacci projection.
- Cash tsys yields closed December 31 higher, with the 10yr trading to 4.569% just off the monthly highs of 4.635%. The 2s10s curve is at its steepest levels for the past year at 32.5bps, while the 2s30s closed the year at 54bps, just shy of its steepest levels set back in September of 60bps.
AUSSIE BONDS: Heavy Session On A Newsflow Light Day, AUD At 2022 Lows
ACGBs (YM -6.0 & XM -7.5) are holding weaker and hovering near Sydney session lows on the first trading day of 2025.
- With the local calendar fairly light (House Prices and Manufacturing PMI), current weakness may be influenced by light holiday trading volumes and movements in US tsy futures. TYH5 is currently dealing -0-01+ at 108-22+ after trading as low at 108-18 in the As-a-Pac session. There has been no cash US tsy dealing in today’s Asia-Pac session with Japan out for an extended New Year’s break.
- The AUD has approached its 2022 low of 0.6170 against the USD today, trading as low as 0.6183 before recovering slightly to around 0.6215. Analysts attribute this weakness to several factors, including economic challenges in China, a strengthening US dollar, and potential trade policies from the incoming US administration.
- Cash ACGBs are 5-7bps cheaper, with the 3/10 curve steeper.
- Swap rates are 5bps higher.
- The bills strip is slightly cheaper, with pricing -1 to -3.
- RBA-dated OIS pricing is flat to 2bps firmer across meetings. A 25bps rate cut is more than fully priced by April (124%), with the chances of a February cut at 59%.
- Tomorrow, the local calendar is empty. The next release is the S&P Global Composite & Services PMIs on Monday.
EQUITIES: China & Hong Kong Equities Struggle, Macau Gaming Revenue Drops
- Chinese stocks opened 2025 on a weak note, with the CSI 300 Index struggling to gain momentum despite December's liquidity support from the PBOC. Investor sentiment remains muted as concerns persist over Macau's underwhelming recovery and a lack of enthusiasm for the economic outlook. With the Lunar New Year approaching, a PBOC-driven positive surprise may be needed to reignite market interest.
- Macau casino stocks dropped as December gaming revenue fell 2%, missing estimates amid increased scrutiny during President Xi Jinping’s visit. Annual gaming revenue for 2024 rose 24% to 226.8b patacas but remains below pre-pandemic levels. Shares of Galaxy Entertainment, Sands China, and Melco International fell 1.8%-2.7%
- China's manufacturing activity slowed in December, with the Caixin PMI falling to 50.5 from 51.5, below expectations of 51.7, reflecting a slower expansion amid external challenges. President Xi Jinping highlighted the economy's stability and the 2024 growth target of about 5%, while concerns grow over potential tariffs under Donald Trump's return to office.
EQUITIES: Asian Equities Mixed To Kick The Year, Japan Remains Out
- Asian equities started 2025 on a weak note, with the MSCI Asia Pacific Index dropping 0.6% as concerns over slowing Chinese manufacturing activity and Donald Trump’s tariff threats weighed on sentiment. Stocks fell in mainland China, Hong Kong, Taiwan, and South Korea, while Australia saw gains. Investors remain cautious about China's recovery and regional economic risks, with many strategists expecting Asian equities to lag US markets in early 2025. Political uncertainty in South Korea also added to the bearish tone, while Japanese markets remained closed for the holiday.
- Major benchmarks in the region: Taiwan's Taiex is 1.25% lower as TSMC trades 1.40% lower, South Korea's KOSPI is 0.45% lower with major tech stocks including Samsung down 1.15% and SK Hynix down 2%, while Australia's ASX200 is trading 0.45% higher today.
OIL: Oil Price Rise Tempered By Disappointing China PMI
Oil prices are up today buoyed by data showing a US crude drawdown, but they are off their intraday highs weighed by another disappointing China manufacturing PMI. WTI rose above $72 today to reach a peak of $72.29/bbl and is currently 0.5% higher at $72.05. Brent exceeded $75 earlier to make a high of $75.22/bbl but is now around $74.96 to be up 0.4% today. The USD index is 0.2% lower providing support to dollar-denominated crude.
- The Caixin manufacturing PMI for December disappointed, just as the China Federation one did earlier in the week. It printed at 50.5 down from 51.5 in November, and below consensus at 51.7.
- Bloomberg reported that US inventories fell 1.4mn barrels last week but gasoline rose 2.2mn and distillate 5.7mn, according to people familiar with the API data. The official EIA data print later today.
- The impact of stimulus on the China economy, global growth, sanction adjustments by the new US administration and its support of the domestic oil sector, the likelihood of OPEC beginning to normalise output and geopolitical developments are likely to be the key factors monitored by the oil market for now.
- Later US jobless claims, November construction spending and S&P Global final December manufacturing PMI, European December manufacturing PMIs and euro area November M3 data print.
GOLD: Extends Rally Seen On The Last Day Of 2024
Gold is 0.3% higher in today’s Asia-Pac session, after closing 0.7 higher at $2624.50 on the last day of 2024.
- Bullion notched up a 27% annual gain in 2024, it largest since 2010, despite traders re-assessing the pace of monetary easing by the Federal Reserve in 2025. Lower rates are typically positive for gold, which doesn’t pay interest.
- In addition to the Fed’s cutting cycle, the yellow metal was buoyed by sustained haven demand and a wave of purchases by central banks.
- According to MNI’s technicals team, a bear threat remains present. The yellow metal traded sharply lower on Dec 18 and the move undermines a recent bull theme. A resumption of weakness would open key support at $2536.9, the Nov 14 low.
LNG: Sharp Rise In European Gas Prices Ahead Of End To Russian Flows
European natural gas prices rose sharply on the last day of 2024 with the agreement allowing the transit of Russian gas through Ukraine due to expire the next day. An alternative has yet to be sorted and Gazprom announced that flows halted on Wednesday. There are also concerns that a shift to colder weather in January will also increase the rate of inventory drawdown with storage levels currently under 75%.
- European gas rose 5.6% on Tuesday to EUR 50.23 to be up 5.7% in December and the highest level in 2024 to be 32.1% higher on the year.
- Slovakia, Austria and Moldova will be particularly impacted by the end of Russian pipeline flows through Ukraine, but there are concerns that energy bills will also rise in the UK.
- Russian supplies on this route are estimated to account for around 5% of European consumption, according to Bloomberg. Europe aims to replace this gas with increased LNG imports and flows from Norway, but this makes them more vulnerable to global supply disruptions. One Russian pipeline that supplies Serbia and Hungary remains in operation. The one into Poland is shut.
- European Commission President von der Leyen aims to end EU use of Russian fuels by 2027. The EC said that the group knew the deal would end on January 1 and is prepared.
- In contrast, US gas fell 7.7% to $3.63 after soaring 15.8% on Monday on forecasts for colder weather. It ended the month 22.2% higher. Snow and ice are still expected for the eastern and central US, according to AccuWeather.
FOREX: A$ & NZ$ Outperform As Greenback Moderates
After underperforming on Tuesday, Aussie and Kiwi are outperforming the rest of the G10 against the greenback during today’s APAC trading. The BBDXY USD index is close to its intraday low to be down 0.2% after it finished 2024 strongly.
- AUDUSD rose back above 62c to be up 0.5% at 0.6217 after a high of 0.6223. It is trading back above resistance at 0.6199. A notional A$620mn of options expired today with a strike of 0.6175. The S&P Global December manufacturing PMI was revised down to 47.8 and CoreLogic December home values fell 0.2% m/m.
- NZDUSD is 0.4% higher at 0.5618, close to the intraday high, leaving AUDNZD little changed at 1.1065. NZ markets have been closed today.
- USDJPY is 0.1% lower at 157.08, close to the intraday low, after a high of 157.78 early in the session. AUDJPY has trended lower after reaching 97.93 and is currently up 0.3% to 97.66. Japan has also been shut today.
- European currencies are stronger against the greenback with EURUSD up 0.2% to 1.0373, GBPUSD +0.2% to 1.2539 and USDNOK -0.2% to 11.36. EURGBP is down slightly to 0.8273.
- Later US jobless claims, November construction spending and S&P Global final December manufacturing PMI, European December manufacturing PMIs and euro area November M3 data print.
UP TODAY (TIMES GMT/LOCAL)
| Date | GMT/Local | Impact | Country | Event |
| 02/01/2025 | 0815/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 02/01/2025 | 0845/0945 | ** |  IT | S&P Global Manufacturing PMI (f) |
| 02/01/2025 | 0850/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 02/01/2025 | 0855/0955 | ** |  DE | S&P Global Manufacturing PMI (f) |
| 02/01/2025 | 0900/1000 | ** |  EU | M3 |
| 02/01/2025 | 0900/1000 | ** | EU | S&P Global Manufacturing PMI (f) |
| 02/01/2025 | 0930/0930 | ** |  GB | S&P Global Manufacturing PMI (Final) |
| 02/01/2025 | 1200/0700 | ** |  US | MBA Weekly Applications Index |
| 02/01/2025 | 1330/0830 | *** | US | Jobless Claims |
| 02/01/2025 | 1330/0830 | ** | US | WASDE Weekly Import/Export |
| 02/01/2025 | 1445/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 02/01/2025 | 1500/1000 | * | US | Construction Spending |
| 02/01/2025 | 1530/1030 | ** | US | Natural Gas Stocks |
| 02/01/2025 | 1600/1100 | ** | US | DOE Weekly Crude Oil Stocks |