Asia Market Quick Take – January 07, 2026

Asia Market Quick Take – January 7, 2026

Key points:

• Macro: German inflation cools further to 1.8%, below expectations
• Equities: S&P 500 and Dow closed at record highs; Micron and Moderna gained 10%
• FX: Dollar Index strengthened on rising U.S. Treasury yields; EUR slipped below 1.17
• Commodities: Gold and silver extend gains towards previous record level
• Fixed income: Yield curve between 10y and 2y steepens to 72bps, highest in nine months

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Disclaimer: Past performance does not indicate future performance.

Macro: 

• Germany's inflation rate dropped to 1.8% in December 2025, below November’s 2.3% and forecasts of 2.0%. Goods inflation fell to 0.4%, while services stayed high at 3.5%. Core inflation hit its lowest since June 2021 at 2.4%. The EU-harmonized CPI was at 2.0%, its lowest since July.
• UK new car sales rose 3.9% year-on-year to 146,249 units in December 2025, driven by private and business buyers despite a fleet decline. Diesel and petrol sales fell, while new energy vehicles exceeded half the market. PHEVs surged 32.9%, BEVs up 8.0%, and hybrids grew 3.0%.
• China's central bank plans to cut the reserve requirement ratio and interest rates in 2026 to maintain liquidity and loose monetary policy. The PBOC aims to expand domestic demand, manage financial risks, boost credit in services, provide liquidity for non-banking institutions, and stabilize the yuan.
• The S&P Global Canada Services PMI rose to 46.5 in December 2025 from 44.3 in November, still contracting. Business activity and new orders fell, with employment cuts ongoing. Despite weak demand, high wage costs prompted price hikes. Inflation increased slightly, and firms remained cautiously optimistic amid tariff and policy concerns.
• Fed Minutes noted a 25bps cut in the primary credit rate to 3.75% in December. Fed's Miran advocates for more cuts, while Barkin anticipates stimulus from tax changes, stressing the importance of precise future decisions. 
• President Trump warned of impeachment if midterms are lost and plans to meet with 14 insurers about high premiums.

Equities:

• US - US stocks extended gains, with Dow +1.1%, the S&P 500 +0.8% to new records, and Nasdaq 100 +1.1%. Semiconductors rebounded strongly, with Micron, Texas Instruments, Analog Devices, and NXP jumping 5.6%–10% as investors rotated back into chip suppliers. Healthcare also strengthened, led by Eli Lilly (+2.2%) and UnitedHealth (+2%). Markets largely shruggedoff the U.S. capture of Venezuela’s leader, though energy stocks lagged after Trump said Venezuela will ship 50M barrels of oil: Chevron fell 4.5%, while Gulf Coast refiners—Phillips 66, Valero, and Marathon—slipped over 1%. Moderna gained 10% after BOFA upgraded its price target.
• EU - DAX edged up to a record 24,897, marking a sixth day of gains as investors tracked developments in Venezuela. German inflation slowed to 1.8% in December, below expectations and under the ECB’s 2% target for the first time since September 2024, while final PMI data showed further private‑sector weakness. Daimler Truck led advancers, jumping 5.3% on supportive U.S. industry signals. Infineon rose 4.8%, and Merck, Qiagen, and Siemens Healthineers gained 2–3%. Adidas tumbled 4.2% to the bottom of the index after a Bank of America downgrade to “underperform.”HK - Hang Seng rose 363 points (1.4%) to 26,710 on Tuesday, its highest since mid‑November, supported by broad gains and strength in mainland markets ahead of Lunar New Year. Financials and property stocks climbed about 2% on expectations of fresh Beijing support. The tech index gained 1.5% as optimism over China’s AI momentum extended a three‑day rally, with Baidu up 2% to its highest since August 2023. Zijin Gold jumped 3.6% as copper prices hit records. Insurers Ping An and AIA advanced 2.7% and 2.3%. Still, upside was limited by caution ahead of China’s CPI/PPI data and softer December PMI.

Earnings this week:

• Wednesday: Constellation Brands, Jefferies, Albertsons, PriceSmart, Azenta. 
• Thursday:TD SYNNEX, Helen of Troy, Acuity Brands, and RPM International, Fast Retailing, Seven & I

FX:

• The Dollar Index strengthened on rising U.S. Treasury yields despite lower U.S. S&P Global Services PMI revisions and dovish Fed commentary. Key data releases like ADP and ISM Services PMI are expected soon, with DXY trading below 98.6.
• In G10 FX, PMIs weighed on Europe's currencies, causing EUR, GBP, and CHF to slip. The EURfaced pressure from revised PMI data across France, Germany, and the eurozone, alongside softer German state CPIs, confining EURUSDbelow the 1.1700level.
• AUD outperformed, lifted by strong metal prices and RBA rate expectations, pushing AUDUSD to 0.6741, likely sustaining gains even with softer inflation data.

Commodities:

• Oil extended losses after President Donald Trump said Venezuela would transfer 30–50 million barrels of “high‑quality, sanctioned” crude to the US to be sold at market prices, with WTI falling toward $56 after Tuesday’s 2% drop and Brent settling below $61.
• Gold steadied after three days of gains as traders looked beyond geopolitical tensions to US data, hovering near $4,500 an ounce after a 4% rise, with uncertainty following Nicolás Maduro’s capture, the White House saying President Donald Trump wouldn’t rule out military force to acquire Greenland, China tightening exports to Japan, and prices showing gold up 0.1% to $4,499.10, silver up 0.8% to $81.91, and platinum and palladium also higher.

Fixed income:

• Treasuries softened with heavy corporate supply—19 borrowers after Monday’s 20—adding duration pressure and a record 200,000‑contract block sale in January fed funds futures standing out; the 10‑year closed near 4.17%, bunds and gilts outperformed by roughly 4bp, and the 10‑year briefly topped the two‑year by more than 72bp, the widest since April.

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