US stocks were subdued amid ongoing tech woes, while markets brace for NFPs - Newsquawk Asia-Pac Market Open

• US stocks ultimately closed in the red with the Russell and Nasdaq lagging, although sectors were predominantly firmer with Health Care, Utilities and Consumer Discretionary outperforming, but Tech, Energy and Communication underperformed with Tech still pressured after the ORCL and AVGO reports last week. Energy stocks were hit as oil prices declined on Russia/Ukraine peace progress, as talks took place between Ukraine, the EU and the US, in which all sides were seemingly optimistic, and President Trump suggested they were closer than ever to peace. The pressure in crude prices gave a helping hand to T-Notes, with the curve bull steepening and T-Notes hitting a peak after a weak NY Fed Manufacturing survey, before paring off highs into the settlement. There were also several Fed speakers including Miran who explained his dissent, while Williams remarked that Fed policy has moved toward neutral from modestly restrictive, and Collins said she wants more evidence of inflation returning to target before easing again.
• USD slightly softened in a mixed performance against its peers with little headline-driven catalysts, although there were planty of comments from Fed officials, including Collins, Williams and Miran, while focus was also on Ukraine/Russia updates, and the attention now turns to the delayed US November payrolls report on Tuesday, which will also see the headline October NFP number released alongside it.
• Looking ahead, highlights include Australian Flash PMIs & Westpac Consumer Sentiment, New Zealand Budget Balance & Credit Card Spending, Japanese Flash PMIs, Supply from Japan.

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LOOKING AHEAD

• Highlights include Australian Flash PMIs & Westpac Consumer Sentiment, New Zealand Budget Balance & Credit Card Spending, Japanese Flash PMIs, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks ultimately closed in the red with the Russell and Nasdaq lagging, although sectors were predominantly firmer with Health Care, Utilities and Consumer Discretionary outperforming, but Tech, Energy and Communication underperformed with Tech still pressured after the ORCL and AVGO reports last week. Energy stocks were hit as oil prices declined on Russia/Ukraine peace progress, as talks took place between Ukraine, the EU and the US, in which all sides were seemingly optimistic, and President Trump suggested they were closer than ever to peace. The pressure in crude prices gave a helping hand to T-Notes, with the curve bull steepening and T-Notes hitting a peak after a weak NY Fed Manufacturing survey, before paring off highs into the settlement. There were also several Fed speakers including Miran who explained his dissent, while Williams remarked that Fed policy has moved toward neutral from modestly restrictive, and Collins said she wants more evidence of inflation returning to target before easing again.
• SPX -0.16% at 6,816, NDX -0.51% at 25,067, DJI -0.09% at 48,417, RUT -0.79% at 2,531.
• Click here for a detailed summary.

TARIFFS/TRADE

• Mexico's Economy Ministry announced the start of an anti-dumping investigation and an anti-subsidy investigation into US pork imports. It was separately reported that the US and Mexico signed a new agreement on the Tijuana River sewage crisis.
• EU Trade Commissioner Sefcovic said China started issuing EU general licenses for minerals, and the EU is waiting for further details on licenses for further evaluation.
• EU Commission spokesperson said the Commission still expects to sign an EU-Mercosur agreement by the end of 2025.

NOTABLE HEADLINES

• Fed's Miran (voter, dove) said Fed policy is too tight, and he sees no material impact from tariffs on inflation, as well as noted that the labour market shows no signs of severe stress currently. Miran said the President is entitled to have his opinion about rates and that Trump has not talked to him about plans for the Fed seat, while Miran anticipates continuing in the current seat until someone is confirmed for it.
• Fed's Williams (voter, neutral) said the Fed's baseline forecast is a 'pretty good outcome' with recent rate cuts positioning the Fed to balance both mandates, while he added that inflation is still too high and the gradual cooling in the job market points to a modestly restrictive monetary policy. Fed's Williams said he was 'very supportive' of the Fed's decision to cut interest rates last week and expects the coming jobs data will show gradual cooling, as well as noted it is too early to say what the Fed will need to do in January.
• Fed's Collins (2025 voter) said she supported the Fed rate cut amid shifting balance of risks, but it was a "close call" and she sees future inflation risks as lower than they were. Collins said scenarios with a notable further rise in inflation seem somewhat less likely, and she remains concerned about potential inflation persistence, while she stated it was important to her that the forward guidance in the Committee’s statement now echoes language in the December 2024 statement, which preceded a pause in cutting rates, but added that policy is not on a pre-set path.
• Some people are concerned that Hassett is too close to the President, which has resulted in some pushback by people close to President Trump, according to CNBC citing sources.
• Atlanta Fed starts search to replace Atlanta Fed President Bostic, while it plans an expansive process run by an executive search firm and wants a large pool of candidates with meaningful ties to the sixth Federal Reserve district.

DATA RECAP

• US NY Fed Manufacturing (Dec) -3.9 vs. Exp. 10.0 (Prev. 18.7)
• Employment 7.3 (prev. 6.6).
• New orders 0.0 (prev. 15.9)
• Prices paid 37.6 (prev. 49.0)
• Prices received 19.8 (prev. 24.0)

FX

• USD slightly softened in a mixed performance against its peers with little headline-driven catalysts, although there were planty of comments from Fed officials including Collins, Williams and Miran, while focus was also on Ukraine/Russia updates, and the attention now turns to the delayed US November payrolls report on Tuesday, which will also see the headline October NFP number released alongside it.
• EUR eked slight gains but with the single currency confined to within a very tight range around the 1.1750 level.
• GBP was flat on the day amid a lack of pertinent newsflow and heading into UK jobs and average earnings data releases.
• JPY outperformed amid the wide expectations for the BoJ to resume its rate normalisation with a 25bps hike later in the week.
• Canadian CPI Inflation YY (Nov) 2.2% vs. Exp. 2.3% (Prev. 2.2%)

FIXED INCOME

• T-notes were marginally higher with the curve bull-steepening ahead of the NFP report.

COMMODITIES

• Oil prices reversed the initial strength in the APAC session with downward pressure alongside positive Ukraine/Russia developments.
• Russia extended the ban on selling oil under the price cap until July, while it was also reported that Russia may extend the diesel-export ban for non-producers, according to Interfax.

GEOPOLITICAL

MIDDLE EAST

• US sent a stern message to Israeli PM Netanyahu following the killing of a top Hamas commander over the weekend, according to Axios citing US officials.

RUSSIA-UKRAINE

• Ukraine's SBU said it hit a Russian submarine in Novorossiysk, while the submarine suffered critical damage and is out of operation.
• Ukrainian President Zelensky said Ukrainian negotiators will continue talks with the US delegation and have different positions on the territory, while he added that Ukraine is ready for fair work for a strong peace deal, and he doesn’t think the US was demanding anything on territories. Furthermore, Zelensky said the US passed on Russian demands and said Ukraine needs a clear understanding on security guarantees before taking any decisions regarding frontlines.
• Ukraine's top negotiator said real progress was achieved in talks with the US and that talks have been constructive and productive, while he added that the US team works constructively to help produce a lasting peace deal. It was separately reported that the meeting on Monday between US President Trump's advisers and Ukrainian President Zelensky was productive, according to Axios citing a US official.
• Russia's Kremlin said Ukraine not joining NATO is a key question, but subject to a special discussion, and they expect the US to update Russian officials on the proposals from the Berlin talks.
• US negotiators insisted during Sunday's talks in Berlin that Ukraine should agree to withdraw troops from the Donetsk region, according to an official. Furthermore, they see territory as the central issue for Russians, while Ukraine told the US that more discussion is needed and territorial questions are still unresolved.
• US official said Ukraine talks in Berlin have been really positive and noted that there is a consensus on a number of issues, while there are still some things to discuss, and they have delegated to working groups. The official said European representatives have been outstanding and President Trump is pleased with where they are, while they are hopefully on a path to peace, and Trump is focused on stopping the Russians moving west. Furthermore, it was stated that Zelensky talks will take place on Sunday and Monday.
• German Chancellor Merz said there is a chance of a real peace process, the biggest chance since the start of the war and without US President Trump, they would not have achieved the past hours' positive dynamic. Merz said the US offered a remarkable material contribution to security guarantees, while he added that the territorial question is key and only Ukraine can decide on territorial concessions. Furthermore, he said using frozen Russian assets is the only solution the EU can reach with a qualified majority, and all alternatives need unanimity which they don't have.

OTHER

• Turkey said it downed a drone flying over the Black Sea using F-16s.

ASIA-PAC

NOTABLE HEADLINES

• China NPC Standing Committee is to hold a meeting between December 22nd-27th and will review a draft revision to the foreign trade law.
• BoK said the NPS agreed to extend its currency swap agreement for another year and is to take a flexible approach to strategic FX hedging.

EU/UK

NOTABLE HEADLINES

• ECB said Italy's budget measures weighing on domestic banks could have "negative implications" on their credit liquidity, while it added that Italy should check whether budget measures on banks risk impairing the banking sector's resilience and cause market distortion.

DATA RECAP

• EU Industrial Production MM (Oct) 0.8% vs. Exp. 0.8% (Prev. 0.2%)
• EU Industrial Production YY (Oct) 2.0% vs. Exp. 1.9% (Prev. 1.2%)
• German Wholesale Price Index MM (Nov) 0.3% (Prev. 0.3%)
• German Wholesale Price Index YY (Nov) 1.5% (Prev. 1.1%)