Asia Market Quick Take – December 11, 2025

Key points:

• Macro: Fed cuts rates by 25bps in a 9-3 dovish split
• Equities: Oracle fell 10% after market, disappointing cloud revenue, higher AI spending
• FX: USD drops post-Fed cut, CAD and CHF gain on interest rate decisions
• Commodities: Silver extends gains, hitting a fresh record high of $62.38
• Fixed income: Treasuries bull‑steepened; 2‑year led yields lower

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• The Federal Reserve cut the rate by 25 bps to 3.5%–3.75% in December 2025, in a dovish 9-3 vote split. Three members opposed the cut, the first time since 2019. The Fed kept its rate projections steady, planning a 25bps cut in 2026, while revising GDP growth forecasts higher and slightly lowering PCE inflation estimates. Unemployment forecasts stayed at 4.5% for 2025 and 4.4% for 2026.
• Powell suggested the possibility of additional cuts beyond the single one planned for next year. This led traders to increase the odds of two or more cuts in 2026 to about 68%. The statement indicated a potential pause to evaluate data, making the pace of cuts conditional. Policymakers also raised growth expectations and slightly lowered inflation forecasts for 2025 and 2026.
• The Bank of Canada kept the target rate at 2.25% in December 2025, seeing it as appropriate. GDP grew 2.6% in Q3, unemployment dropped to 6.5%, and CPI inflation slowed to 2.2%. Policymakers noted global uncertainty impacting GDP. They find the current rate suitable for maintaining 2% inflation but are prepared to adjust if needed.
• The Swiss Government announced that 15% US tariffs on Swiss goods will be applied retroactively starting from November 14th.
• NEC Director Hassett indicated the Fed has room to cut rates further, possibly by 50bps, while noting that a 25bps cut would be beneficial. He added that President Trump will decide on the Fed Chair within two weeks.

Equities:

• US - Dow Jones climbed 1.1%, the S&P 500 increased 0.7%, and the Nasdaq overcame early losses to finish 0.4% higher on Wednesday, responding to the FOMC's rate cut and Chair Powell’s comments. The Fed reduced the fed funds rate by 25 basis points as anticipated and indicated one more cut next year, consistent with September projections. Powell's press conference revealed discussions on whether further rate reductions should be slight or more substantial, effectively ruling out hikes. Traders adjusted expectations, now seeing a 68% probability of two or more cuts next year. Industrials led gains. Amazon rose 1.7% after announcing a $35 billion investment in India over five years, while JPMorgan jumped 3.2%. Conversely, Microsoft fell 2.8% following its $17.5 billion India investment plan over four years. After hour, Oracle shares dropped over 10% in extended trading following disappointing cloud revenue figures and increased spending on AI data centers. Fiscal Q2 cloud sales missed expectations, prompting concerns about its debt-fueled infrastructure expansion and aggressive AI spending commitments.
• EU - European stocks dipped on Wednesday as investors treaded cautiously ahead of the Federal Reserve's rate decision, impacting regional market risk appetite. The STOXX 50 dropped 0.3%, while the STOXX 600 remained largely stable amid US interest rate uncertainty. Aegon plunged nearly 10% following its announcement to shift headquarters to the US and rebrand as Transamerica. Vinci fell 3% and Rheinmetall by 2.7%, pressuring benchmarks. Conversely, Siemens Energy rose 4.2% boosted by positive US GE Vernova guidance, and Ocado soared 17%. Gains in HSBC, Novo Nordisk, and Roche Holding helped counterbalance market caution, rising 3.3%, 3.3%, and 2.4%, respectively.
• HK – Hang Seng dropped 137 points, or 0.5%, to 25,295 in Wednesday's early trading, marking a third consecutive loss and reaching a two-week low. Downward pressure stemmed from Wall Street weakness after the S&P 500 and Dow Jones receded, with traders anticipating a 25bps Fed rate cut alongside hawkish guidance, reducing prospects for further cuts in January. Mainland markets added strain as recent data revealed a deeper decline in China's producer prices and a first-time decrease in consumer prices this month. Fiscal support signals from China's Politburo helped cushion losses. Early notable decliners included Akeso (-2.7%), Tencent Music (-2.1%), Nongfu Spring (-1.8%), and SMIC (-1.7%).

Earnings this week:

• Thursday: Costco, Broadcom, RH (Restoration Hardware), Lululemon
• Friday: Quanex Building Products, Johnson Outdoors

FX:

• USD fell after the Fed cut rates to 3.50-3.75%, with an unexpected dovish vote split accentuating dollar weakness. Powell noted job growth overestimation and lack of economic overheating. DXY hit lows of 98.59.
• CAD strengthened to near 1.38 after BoC maintained rates at 2.25%, aligning with inflation targets, and further gained on USD weakness post-Fed cut. Governor Macklem downplayed job data concerns.
• USDCHF and EURCHF fell, driven by CHF strength as markets expect SNB to hold rates at 0.00%, though NIRP remains an option post-inflation report.
• USDCNH held steady as China’s CPI rose 0.7% in November, the highest in 21 months, due to food price hikes.

Commodities:

• Gold held gains around $4,232 as Treasury yields and the dollar fell after the Fed’s third consecutive rate cut, which kept guidance for only one more reduction in 2026 while signalling greater uncertainty; silver hit a fresh record high $62.38, and platinum and palladium rose.
• Oil extended gains, with WTI near $59 and Brent above $62, after the US seized a sanctioned tanker off Venezuela, heightening geopolitical risks and likely deterring shipments of Venezuelan crude.

Fixed income:

• Treasuries bull‑steepened and Fed signalled possible further easing in 2026; the start of $40bn/month Treasury bill purchases from 12 December spurred SOFR–fed funds basis activity, supported front‑end swap spreads, and—after initial volatility—front‑end yields fell during the Chair’s press conference as labour market comments were absorbed. Yields declined across the curve, led by the Fed‑sensitive two‑year note, which tumbled almost 8bp to 3.54%, its biggest one‑day fall in two months.

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