ASIA STOCKS: Tech Gains Continue, HK Higher, South Korea & Taiwan To Fresh Highs
The tone is mostly positive for those Asia Pac markets which are open today. Hong Kong gains are the strongest, the HSI up over 2% at this stage, while the Kospi has also risen strongly. Notably Japan and China markets remain closed for the new year period, returning next Monday. This is likely driving some lighter liquidity/interest in broader markets. US equity futures are tracking higher led by the tech side, with Emini's around 0.40% firmer, while Nasdaq futures are up close to 0.55%.
- The gains in US futures follow a modestly softer period in between Christmas and the new year. For Eminis near 6920, we remain short of recent cycle highs just above 7000.
- For the Hong Kong's HSI we are back above 26000, but still some distance to 2025 highs. The tech sub index is over 3.6%. This puts the index back to mid Nov levels. Sentiment is being aided by a 119% surge in Shanghai Biren Technology Co., after a successful IPO for the company. Baidu is also up strongly, after it submitted a proposal to spin-off its AI chip unit called Kunlunxin via a Hong Kong IPO, in which it currently holds around 60% (via BBG).
- Elsewhere, South Korea's Kospi is up over 1.3%, last around 4273. This puts the index at fresh record highs. Samsung has risen on reported positive customer feedback around one of its chips. The Taiex is up over 1.1% (also to fresh record highs).
- Trends are more muted elsewhere, the ASX 200 in Australia, a touch higher and holding above 8700.
- South East Asian markets are higher, except for Malaysia. Gains elsewhere are less than 1% at this stage.
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THAILAND: Price Pressures Remain Subdued, THB Stays Strong
Thai November CPI inflation improved slightly from prolonged very low rates and was marginally better than consensus expected. Headline printed at -0.5% y/y after -0.8% in October while core rose to +0.7% y/y from +0.6%. Both are holding below the Bank of Thailand’s 1-3% band and the Commerce Ministry is forecasting inflation to remain below target in 2026 at 0%-1%, which could drive further BoT easing.
Thailand CPI y/y%
Source: MNI - Market News/LSEG
- BoT expects headline inflation to rise to 0.5% in 2026 and return to the band early in 2027.
- In December to date, USDTHB is down 6.3% y/y and the BIS THB NEER up 3.2% y/y, which is adding to disinflationary pressures from soft domestic demand. The NEER has only fallen in 3 months in 2025. BoT is monitoring baht strength.
Thailand THB
- The next rate decision is 17 December and in late November the governor said that there is room to ease policy further as he wants a weaker currency, as it is not reflecting economic fundamentals. With rates at 1.5%, limited policy space has concerned some MPC members.
- November headline inflation was negative for the eighth consecutive month but the least negative since June. Government subsidies have put downward pressure on the series.
- Core only rose to 1% or above briefly in four months this year but BoT doesn’t believe that it will go negative and will gradually return to the bottom of its band.
- Recent severe weather events may cause some data volatility as they are likely to reduce demand but may also impact supply.
- Food inflation rose to +0.5% y/y in November from -0.2% driven by fresh food but rice & flour fell 1.8% y/y after +0.2%.
CHINA: Bond Futures Higher; 2-Yr Atop Key Tech Level
- China's bond futures are higher today, after yesterday's losses.
- The 10-YR is up +0.01 at 107.985, remaining below all major moving averages. The nearest above is the 50-day EMA of 108.045
- The 2-Yr is up +.01 at 102.404 and on its downside is near to the 20-day EMA of 102.40, with topside resistance at 102.422 via the 100-day EMA.
- Cash is steady with the 10-Yr -0.7bps lower at 1.83% and the 2-Yr at 1.416%
US TSYS: Yields Drop, TYH6 Tests Key Tech Level
US bond futures are all trending modestly higher with the 10-Yr best performer. TYH6 is up +03 at 112-31+ as it nears the 20-day EMA above of 113.
Cash is better across the curve with yields lower by up to 1.5bps with the short end outperforming.
- The 2-Yr is down -1.4bps to 3.498%
- The 5-Yr is down -1.4bps to 3.645%
- The 10-Yr is down 1bps at 4.078%
- The 30-Yr is down -0.9bpsbps at 4.739%
President Donald Trump said he plans to announce his selection to lead the Federal Reserve in early 2026 and teased National Economic Council Director Kevin Hassett as his possible choice on Tuesday, fueling further speculation about the next leader of the US central bank.
