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Asian stocks fall as nervous markets await the Fed
Asian stocks fell on Tuesday and the dollar remained steady as investors braced themselves for a?cut in U.S. rates this week. The yen remained calm after an earthquake that rocked Japan’s northeast region, though the impact was minimal. Investor sentiment remains cautious as the markets await a number of central bank meetings. This includes a decision that is expected to be made by the Reserve Bank of Australia. All three banks, the RBA, SNB, and Bank of Canada, are expected to keep rates unchanged this week. The Federal Reserve, on the other hand, is expected to reduce borrowing costs Wednesday. Bond investors are preparing for a short-term easing cycle in the U.S., following the Fed's rate cut of December. Wall Street banks expect fewer Fed rate cuts in 2026 due to lingering concerns about inflation and the expectation of a more resilient U.S. economic. Stocks are now trading in a sideways fashion. MSCI's broadest Asia-Pacific share index outside Japan fell 0.28% after a weak session overnight on Wall Street. Japan's Nikkei fell by 0.08%, while South Korea’s Kospi dropped by 0.58%. Prashant Nnewnaha, senior Asia-Pacific rate strategist at TD Securities said: "The low-hanging fruits from risk management reductions are likely over. Chair (Jerome Powell)'s presser will likely convey a more conservative approach moving forward?regarding further policy recalibration." The dot plot will likely show one reduction in 2026. If the dot plot showed two cuts next year, this would be "dovish." Some strategists believe that the Fed's Policy Committee could be divided, even though a rate reduction is expected. The meeting is also being held in the context of a heightened interest from the market on who will replace Powell as Fed Chair when his current term ends next May. Kevin Hassett, White House Economic Advisor and leading contender for the Fed chair role, said in an exclusive interview that the Fed must continue to reduce interest rates. According to LSEG, traders are pricing 77 basis point of easing at the end of next. David Mericle is the chief U.S. economics at Goldman Sachs. He expects that the Fed will raise the bar on further rate cuts. Powell will also be cautious. "But the FOMC can't box itself in, especially at a time where we have two outdated employment reports, as a January reduction could be appropriate." Asian chip stocks shook after U.S. president Donald Trump announced that the United States would allow Nvidia H200 processors - its second best artificial intelligence chips - to be?exported to China, and collect a 25 percent fee on such sales. China's CSI Semiconductor Industry Index fell about 1% during early trading. The dollar remained mostly stable in Tuesday's currency market. The dollar was mostly steady on Tuesday. The dollar index (which measures the U.S. money against six other currencies) was 99.09. The index has fallen by nearly 9% in the past year and is on track to have its biggest annual decline since 2017. The Australian dollar was stable at $0.6625 before the RBA's policy announcement later that day. It is expected that the central bank will maintain its current rate, but markets are worried about any hawkish comments in the commentary. After a sharp decline immediately following the earthquake, the yen traded at 155.87 to the dollar during early Asian hours. The Japanese authorities lifted the tsunami warnings Tuesday, hours after a powerful 7.5-magnitude quake shook northeastern Japan, injuring 30 people at least and forcing 90,000 residents from their homes. Gold was 0.13% more expensive at $4194.11 an ounce, ahead of the Fed's meeting. Oil prices stabilized after a 2% drop in the previous session, as traders kept an eye on the peace talks that are expected to end Russia's conflict in Ukraine. Brent crude futures remained flat at $62.48 per barrel. U.S. West Texas Intermediate Crude was trading at $58.84 a barrel, down by 0.07%. (Reporting and editing by Shri Navaratnam in Singapore)
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EU strikes agreement to further weaken corporate Sustainability laws
After months of?pressure by companies and governments including the United States, Qatar and others, European Union Members and Parliament reached an agreement early on Tuesday in order to 'cut corporate sustainability laws. These changes will weaken the corporate sustainability requirements for most businesses that are currently subject to them. They were made in response to complaints from certain industries who claim that "EU red tape" and strict regulations hinder their ability compete with foreign competitors. The EU negotiators have agreed that the reporting of social and environmental issues will only apply to companies with more than 1,000 employees, and a net annual turnover exceeding 450 million euros. The threshold for reporting sustainability was set at 450 millions of euros in revenue generated within the EU. According to the agreement, only large EU corporations - those with more than 5,000 employees or an annual turnover of over 1.5 billion euros - are required to conduct due diligence to reduce harm to people and to the environment. Non-EU companies that have a turnover in the EU over?that amount will be subject to the same rules. Before the law can be passed, both the EU Parliament and EU countries must give their formal approval. This is a standard procedure that passes pre-agreed agreements. $1 = 0.8591 euro (Reporting and editing by Christopher Cushing, Michael Perry and Mrinmay Abnett)
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Oil prices rise, Ukraine peace talks and US interest rate decision are in the spotlight
The oil prices were stable on Tuesday, after falling 2% the previous session. Market participants remained focused on the upcoming decision by the U.S. Federal Reserve on interest rates and on peace talks that could end Russia's conflict in Ukraine. Brent crude futures were down?2 Cents, or 0.03 %, at $62.47 per barrel as of 0101 GMT. U.S. West Texas Intermediate Crude was trading at $58.84 - down 4 cents or 0.07%. The prices of both contracts dropped by over $1 after Iraq re-started production at Lukoil’s West Qurna 2 Oilfield, which is one of the largest in the world. After talks in London between the President Volodymyr Zelenskiy and leaders from France, Germany, and Britain Tim Waterer, chief market analyst at KCM Trade, said that oil is "keeping to a narrow trading range" until we know more about the outcome of the peace talks. If the talks fail, we expect oil prices to rise. However, if there is progress and there is the possibility of Russian energy supply returning to the global market, then the prices are expected to fall," he said. Sources familiar with the issue claim that the Group of Seven and the European Union have been in talks to replace the price cap on Russian crude oil exports by a complete maritime service ban, as a way to reduce Russia's oil revenues. The Federal Reserve policy decision is also due on Wednesday, and the markets have priced in a 87% chance of a rate cut by a quarter point. Analysts at BMI predict that the market will be oversupplied with energy in 2026, causing prices to remain under pressure. BMI said that, "although much depends on OPEC+'s response to lower prices during the first quarter of 2026," we should still see crude prices recovering through the rest of 2026 due to the lower production from U.S. shale activities and steady growth of consumption bringing markets closer into equilibrium. Ashitha Shivprasad, reporting from Bengaluru; and Thomas Derpinghaus.
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Investors eye Fed rate cut next week; US yields and dollar rise.
U.S. Treasury Yields and the Dollar gained on Monday, as investors prepared for this week's Federal Reserve Meeting, where investors are widely expecting a rate cut. Major stock indexes, however, were lower. Investors also assessed the potential impact of an earthquake with a magnitude of 7.6 that struck Japan's northeast. About 90,000 residents were ordered to evacuate and tsunami warnings which were later downgraded. The iShares MSCI Japan ETF fell by 0.6%. The dollar gained 0.3% versus the yen. The Fed's Wednesday announcement will be key this week. Some strategists believe that the Fed's policy group could be divided, despite the rate cut expected. Investors speculated that this meeting might be the most contentious of recent times. Since 2019, the Federal Open Market Committee had not seen three or more dissents in a single meeting. It has only happened nine times since 1990. Investors awaited signs of a "milder easing than expected". According to CME Group’s FedWatch Tool, 87.4% of investors expect the Fed to cut its policy rate 25 basis points. The markets had priced in a chance of less than 30% until recent comments by Fed officials sparked a change in expectations. Peter Cardillo is the chief market economist of Spartan Capital Securities, a New York-based brokerage. He said that the market may be anticipating that the Fed will indicate that there could be a pause after this rate reduction in the first quarter 2026. JAPAN DELAYS RATE DECISION? After the news of the earthquake in Japan, the dollar rose against yen. Analysts said that depending on the extent of damage caused by the earthquake, the Bank of Japan may delay its expected rate increase next week. The U.S. Dollar Index was also higher. The next BOJ meeting on monetary policy is scheduled for December 18-19 2025. A policy statement and decision are expected to be made the second day. Cabinet Office announced on Monday that Japan's economy contracted more than originally estimated during the three-month period through September. This was mainly due to new data which lowered capital expenditure figures. However, economists say the change in numbers is not sufficient to influence the central bank. The news of the earthquake also boosted U.S. Treasury rates. The yield on U.S. Treasury notes benchmarked at 10 years. Last up 3.1 basis point at 4.17%, after reaching 4,192%. This was its highest level since the 26th of September. It was on course for a third consecutive session of gains. Wall Street saw all major S&P sectors lower, except for technology. Tim Ghriskey is a senior portfolio strategist with Ingalls and Snyder in New York. He said, "The market sold off in the second half November. Since then, we have seen a strong rally." "Today, we've taken a small dip but I do not see anything that will really derail the market." The Dow Jones Industrial Average dropped 215.67 points or 0.45% to 47,739.32. The S&P 500 declined 23.89 points or 0.35% to 6,846.51 while the Nasdaq Composite fell 32.22 or 0.14% to 23,545.90. The S&P 500 is still up 16% so far this year. Investors were interested in Paramount Skydance’s hostile bid for Warner Bros Discovery, as they hoped to outbid Netflix. Netflix shares are down 3.4%. MSCI's global index of stocks fell by 2.69 points or 0.27 percent to 1,008.04. The pan-European STOXX 600 fell by 0.07%. The central banks of?Canada and Australia will also be meeting this week, and are all expected to keep rates unchanged. Swiss National Bank would like to ease rates again to counter the strength of their franc but is already at zero percent and hesitant to go negative. Investors have given up on the Reserve Bank of Australia easing again and are even pricing in a rate increase for late 2026. Energy prices fell by $1.20, with U.S. crude oil settling at $58.88 per barrel after Iraq restored oil production in one of its fields, which accounts for 0.5% world oil supply. Brent futures dropped $1.26 and settled at $62.49 Caroline Valetkevitch reported from New York. Additional reporting was provided by Iain Withers and Wayne Cole, both in Sydney and London, and Alun. John, also in London. Joe Bavier, Aide Lewis and Nick Zieminski edited the story.
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Investors expect Fed rate cut next week; US yields and dollar rise after Japan earthquake
Investors weighed the possible impact of an earthquake in Japan on the U.S. Treasury yields and the Japanese yen, while the major stock indexes fell. The northeastern region of Japan was shook by a powerful earthquake measuring 7.6 on the Richter scale, prompting tsunami alerts and evacuation orders. The iShares MSCI Japan ETF fell 0.7%. Dollar was up 0.3% last against the yen. This week, the Federal Reserve will make an announcement on Wednesday. A rate cut is expected by many, but some analysts believe the Fed's Policy Committee could be divided. Investors speculated that this meeting might be the most contentious of recent times. Since 2019, the Federal Open Market Committee had not seen three or more dissenters at a single meeting. It has only happened nine times since 1990. Investors waited for signs of a milder cycle of easing than expected. According to CME Group’s FedWatch Tool, the expectation that the Fed would cut its policy rate 25 basis points is at 87.4%. The markets had priced in less than 30% of a chance until recent comments by Fed officials sparked a change in expectations. Peter Cardillo is the chief market economist of Spartan Capital Securities, a New York-based brokerage. JAPAN DELAY IN RATE DECISION? After the news of the Japanese earthquake, the dollar increased against the yen. Analysts said that depending on the extent of damage caused by the earthquake, the Bank of Japan may delay its expected rate increase next week. The next BOJ monetary meeting is scheduled to take place on December 18-19, 2020, with the statement and policy decision expected the second day. The yield on benchmark U.S. Treasury notes. Last up 2.7 basis point at 4.166% after reaching 4.19% its highest level since 26 September, and on track to a third consecutive session of gains. All major S&P sectors except technology were down on Wall Street. The Dow Jones Industrial Average dropped 297.28, or 0.62 %, to 47 658.70. The S&P 500 declined 35.60, or 0.52 %, to 6,834.83 while the Nasdaq Composite lost 86.67, or 0.37 %, to 23,491.46. Paramount Skydance’s hostile bid for Warner Bros Discovery attracted some investor interest as it sought to outbid Netflix. Netflix shares fell 3.6%. MSCI's global index of stocks fell 3.67 points or 0.36% to 1,007.06. The pan-European STOXX 600 fell by 0.07%. Nikkei soared 90.07 points or 0.18% to 50.581.94. Beijing's diplomatic spat between Tokyo and Beijing worsened after a Chinese carrier-strike group conducted intense air operations in the vicinity of Japan at the weekend. All three central banks will meet this week, and are expected to maintain their current stance. Swiss National Bank would like to ease further to counter the strength of their franc but is already at zero percent and does not want to go below that. The markets have given up on the Reserve Bank of Australia easing again after a string of strong economic data. They even priced in a rate increase for late 2026. Energy U.S. crude fell $1.20, to settle at $58,88 per barrel, after Iraq restored its production at an oilfield that accounts for 0.5% world oil supply. Caroline Valetkevitch reported from New York. Additional reporting was provided by Iain Withers and Wayne Cole, both in Sydney and London, as well as Alun John, in London. Joe Bavier, Aide Lewis, and Nick Zieminski edited the story.
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Investors show caution as gold prices drop ahead of FOMC meeting
Gold prices fell slightly on Monday as investors were cautious in advance of the U.S. Federal Reserve’s two-day meeting to discuss policy and Chairman Jerome Powell’s remarks. Investors are looking for clues about future monetary policies. By 01:50 pm, spot gold had fallen 0.2% to $4,189.49 an ounce. ET (1850 GMT). U.S. Gold Futures for February Delivery settled 0.6% lower, at $4,217.7 an ounce. Peter Grant, senior metals analyst at Zaner Metals and vice president of the company, said that "the market is waiting on the Fed's decision and more policy guidance." Grant stated that gold remains attractive, as fundamentals are strong and central banks continue to buy. He added that a move towards $5,000 per ounce is achievable in the first quarter 2026. The markets are expecting a rate cut of 25 basis points, and traders see a 90% chance, up from 66% in November. Powell will hold a presser after the Fed's Open Market Committee concludes its meeting Wednesday. The FOMC will announce its final policy of the year. Gold that doesn't yield is more attractive when interest rates are lower. The leaders of France and Germany, as well as the British Prime Minister, showed their support in London for Ukrainian President Volodymyr Zelenskiy, at what they called a "crucial moment" for Kyiv. This was due to U.S. demands that Kyiv agree a peace agreement with Russia. Gold is a safe haven asset that tends to perform well in times of economic and geopolitical instability. Morgan Stanley believes that gold will continue to rise, due to a declining U.S. Dollar, the strong ETF purchases, central bank purchases and demand for safe havens. Silver fell 0.5%, to 57.98 dollars per ounce after reaching a record-high of $59.32 an ounce on Friday. Jim Wyckoff said that silver is normally a close follower to gold. However, in the last few weeks, the price of silver has outpaced gold. He added that the prices would rise above $60 per ounce, and might even reach $70 by the end of the year. Palladium rose 0.2% to 1,460.75, while platinum fell by 0.1%. (Reporting by Sarah Qureshi in Bengaluru; Additional reporting by Arunima Kumar; Editing by Joe Bavier, Shailesh Kuber and Krishna Chandra Eluri)
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Investors eye Fed rate reduction this week; US yields and dollar increase after Japan earthquake
Investors weighed the possible impact of an earthquake in Japan on the U.S. Treasury yields and the Japanese yen, while the major stock indexes dipped slightly. The northeastern region of Japan was shook by a powerful earthquake measuring 7.6 on the Richter scale, prompting tsunami alerts and evacuation orders. The iShares MSCI Japan ETF fell 0.7%. Dollar was up 0.4% last against yen. This week, the Federal Reserve will make an announcement on Wednesday. A rate cut is expected by many, but some analysts believe the Fed's Policy Committee could be divided. Investors speculated that this meeting might be the most contentious of recent times. Since 2019, the Federal Open Market Committee had not seen three or more dissenters at a single meeting. It has only happened nine times since 1990. Investors awaited signs of a milder cycle of easing than expected. According to CME Group’s FedWatch Tool, the expectation that the Fed would cut its policy rate 25 basis points is at 87.4%. The markets were only pricing in a 30 percent chance of a rate cut, until recent comments by Fed officials sparked a change in expectations. The market may be expecting the Fed to indicate that there will be a pause after this rate reduction in the first quarter 2026. However, I do not subscribe to that," Peter Cardillo said, chief market analyst at Spartan Capital Securities, New York. JAPAN DELAY IN RATE DECISION? After the news of the Japanese earthquake, the dollar increased against the yen. Analysts said that depending on the extent of damage caused by the earthquake, the Bank of Japan may delay its expected rate increase next week. The next BOJ monetary meeting is scheduled to take place on December 18-19, 2020, with the statement and policy decision expected the second day. The yield on benchmark U.S. Treasury notes. The rate rose by 4.9 basis points, to 4.188%. It had previously reached 4.19%. This was its highest level since 26 September. The Dow Jones Industrial Average dropped 159.43, or 0.33 percent, to 47.796.26. The S&P 500 declined 21.37, or 0.30 percent, to 6,849.53, and the Nasdaq Composite lost 40.44, or 0.17% to 23,537.69. The MSCI index of global stocks fell 2.64 points or 0.26% to 1,008.09. The pan-European STOXX 600 fell by 0.11%. Nikkei soared 90.07 points or 0.18% to 50.581.94. Beijing's diplomatic spat between Tokyo and Beijing worsened after a Chinese carrier-strike group conducted intense air operations in the vicinity of Japan at the weekend. All three central banks will meet this week, and are expected to maintain their current stance. Swiss National Bank would like to ease further to counter the strength of their franc but is already at zero percent and does not want to go below that. The markets have given up on the Reserve Bank of Australia easing again after a string of strong economic data. They even priced in a rate increase for late 2026. Energy prices fell by 1.47% to $62.81 per barrel for U.S. crude and 1.53% for Brent. Caroline Valetkevitch reported from New York. Additional reporting was provided by Iain Withers and Wayne Cole, both in Sydney and London, and Alun Johnson in London. Joe Bavier and Aiden Lewis edited the story.
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German Foreign Minister in China urges to end supply chain uncertainty
German Foreign Minister Johann Wadephul called on Monday to end the uncertainty surrounding vital Chinese semiconductors and rare Earths deliveries to European manufacturers. Wadephul’s first trip to China took place at a time of turmoil for the European industry. The dependence on Chinese suppliers, particularly in strategic chips and rare Earths, has been exposed by Beijing’s export restrictions as global trade tensions have escalated. Wadephul stated that "in all of these fields there was uncertainty and this needs to be removed." Hildegard Müller, the head of Germany's VDA automobile industry association, was part of a small delegation that accompanied Wadephul in China. Wadephul was forced to Postponement A planned visit last week was cancelled after Beijing only agreed to one of his office's requests. He said that the talks were open and intensive, and that his trip would pave the way for a visit from Chancellor Friedrich Merz in early 2013. He said that "quite some work" is still required to convince Beijing to grant new licences for rare earths to German firms. This indicates that German companies were not among the first batch of licenses announced last Thursday. The U.S.-China Trade War has caused months of disruptions since April when China introduced export controls on minerals that are used in autos, consumer electronics, and defence. Beijing also placed restrictions on certain semiconductors used by the automotive industry following the Dutch government’s decision to ban them. seize control Nexperia, a Chinese-owned chipmaker. China's Minister for Commerce Wang Wentao China said it "valued German concerns" on issues such as export controls and chip but that the Dutch government's "most urgent task" is to stop "improper administration interference and stabilize semiconductor supply chain". The growing surplus of China's trade, as described by French President Emmanuel Macron during his visit to China last week, had already strained relations between Europe and China. Unsustainable TAIWAN Wadephul also met with the Chinese Foreign Minister during his visit. Wang Yi He reiterated China's position regarding Taiwan, and stated that its "One China policy" was a key political foundation in relations. Taiwan's government denies that China considers democratically-governed Taiwan to be its territory. It also rejects the "One China" principle, which states that both sides of Taiwan Strait are part of one country. Wadephul, according to the German Foreign Ministry, will discuss European security concerns, including Russia's invasion in Ukraine, in his meeting Wang. However, there is no indication that China has changed its position. According to a foreign ministry statement, Wang stated that "China will continue to play an active role in promoting peace." Berlin tried to strike a balance between imposing a tougher stance on Beijing in relation to trade disputes and geopolitical conflict, as per European partners, but also trying to maintain its relationship with the top trading partner. The German government established a committee to advise the parliament on "security relevant trade relations" with China. This was part of an effort to reduce Germany's reliance on China for key materials as well as customers of its industrial exports. (Reporting and writing by Alexander Ratz of Beijing Newsroom, Sarah Marsh, James Mackenzie, and Christoph Steitz Additional reporting by Toby Chopra and Gareth Jones; Editing and rewriting by Toby Chopra and Andrew Heavens.
German Finance Minister in China: EU will protect its markets if necessary
German Finance Minister Lars Klingbeil spoke about overcapacity on China during his Tuesday visit to Beijing. He also stressed that if no solution is found, the European Union will act.
Klingbeil stated: "I made it very clear that, in the event of a need, decisions would be taken at the European level, to better protect our market." "I would like to avoid this, but at the end of the day, Europeans - and we Germans - must not be left behind."
Klingbeil's second day in China saw him attend the Party Dialogue, where he discussed the war in Ukraine, German-Chinese co-operation in multilateral organisations, and overcapacity.
Klingbeil, when asked about EU divisions regarding relations with China said that coordination among European countries was crucial, and he had coordinated with his colleagues before his trip.
Klingbeil stated that it was important for Europe to not present different voices or positions in China, as we share a lot in common.
The relationship between these two industrial giants has been strained in recent years, mainly due to Chinese export restrictions on rare earths and chips that have led to major disruptions for German companies.
He said that Germany should diversify its supply chain to prevent disruptions in the sourcing for rare earth minerals. However, the Chinese side had given him clear assurances regarding reliable access.
Monday
Klingbeil said, "I want to emphasize that we need to do our homework here in Germany." Reporting by Maria Martinez Editing Madeline Chambers
(source: Reuters)