China Inflation And AI Shifts Reshape Markets As The FED Navigates Uncertainty

Economic

Summary:

China's Weak Demand and Its Ripple Effect on Global Markets.

China's latest inflation data sent mixed signals through global markets. Consumer prices rose 0.7% year-on-year, the fastest pace in nearly two years. Yet producer prices fell 2.2%, extending a deflation trend that has lasted four years. This split shows how uneven China's recovery remains. Moreover, higher food costs lifted headline inflation, while weak demand still pushed factory prices lower. As a result, markets worry that China's domestic demand remains fragile. Analysts note that oversupply in sectors such as coal and energy continues to weigh on prices. And although Beijing supports consumption through targeted stimulus, it avoids broad measures. Therefore, China's growth path still looks uncertain. Investors now wait for the Central Economic Work Conference to see whether policymakers shift toward stronger support in 2026.

China's Weak Demand and Its Ripple Effect on Global Markets

Markets reacted quickly to China's inflation data. The Hang Seng and CSI 300 both fell as investors reassessed the country's economic momentum. Japan's Nikkei and South Korea's Kospi also slipped, highlighting how sensitive Asia-Pacific markets are to China's signals. Lower factory-gate prices show that manufacturers still struggle with excess supply. This weakness limits China's ability to drive regional growth. And while exports remain strong, domestic spending lags behind. That imbalance pressures companies across Asia. At the same time, global traders are watching the FED. With a widely expected rate cut of 0.25%, investors hope for a softer U.S. dollar, which could lift emerging markets. Still, uncertainty remains high as inflation and growth trends diverge across regions.

China's AI Talent Surge is Redefining Global Competition

The race for AI talent is heating up, and China is gaining ground fast. The country produced 3.57 million STEM graduates in 2020—more than four times the U.S. total. This surge is reshaping how tech companies recruit and innovate. Chinese firms are also securing more U.S. patents, with Huawei ranking among the top global players. Universities and industry are working closer together to push AI development and reduce reliance on foreign technology. As a result, China is developing competitive AI models at a fraction of the cost of U.S. systems. This shift signals a major change in tech leadership. Talent and data scale give China an edge even as the U.S. maintains a lead in high-end chips. Yet both markets depend on stable geopolitical conditions, and rising tensions will shape the next phase of AI innovation.

Why AI, Energy, and Talent Matter for Markets and the FED

The global AI race also affects financial markets and monetary policy. Companies require massive computing and electrical power to train advanced models. Analysts warn that the U.S. could face energy shortages before it runs out of GPUs. Meanwhile, China appears better positioned on the power front, giving it another strategic advantage. These shifts matter because AI drives productivity, investment flows, and corporate earnings. Markets respond to every new breakthrough. Furthermore, the FED follows these trends closely as they influence long-term inflation and growth. As AI spreads across industries, it could lift productivity but also disrupt jobs. Policymakers must balance innovation with economic stability. Therefore, the FED's decisions on rates and future guidance will shape how quickly AI investments accelerate.

What Investors Should Watch Next

Investors now stand at a crossroads. China's inflation shows early signs of stabilization, but deflation risks remain. Its AI momentum is strong, yet global competition is fierce. Markets are waiting for the FED to deliver clarity on its rate path. A softer stance could lift risk assets worldwide. However, persistent inflation in the U.S. may limit how far the FED can go. Meanwhile, Asia-Pacific markets remain highly sensitive to China's economic signals. As a result, traders must track both macro data and technology developments. The combination of China's domestic challenges, the AI talent race, and the FED's policy moves will set the tone for markets in 2025.

Source: CryptoSlate

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Adam

Economic

Chinese rare earth producer Ningbo Jintian Copper (601609.SS) said on Wednesday it had secured streamlined licences for ‌magnet product exports.

The new "general licences" are designed to allow more ‌exports under year-long permits for individual customers following an agreement after a meeting between China's President Xi Jinping and his U.S. counterpart Donald ⁠Trump in late ‌October.

Ningbo Jintian Copper's rare earth magnet products are used in electric vehicles, ‍wind turbines, robots, consumer electronics and medical equipment, it said on an investor interactive platform.

Reuters reported last week that at least three Chinese rare earth ‌magnet makers including JL Mag Rare Earth, Ningbo Yunsheng and Beijing Zhongke San Huan High-Tech had secured the licences enabling them to accelerate exports to some customers.

Beijing added several rare earth ⁠elements and magnets to its export control list in early April, requiring a dual-use licence for exports. China's exports of rare earth ‍magnets slumped ⁠in April and May, forcing some global automakers to shutter parts of production.

The new ⁠streamlined licence will not replace the existing dual-use licensing ‌regime.

Source: Reuters

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Adam

Commodity

On Tuesday, US natural gas price extended losses from the previous session in reaction to forecasts of warmer weather in most parts of the country. Near-record output and ample inventories have further fueled the pullback, even as the bulls remain in control. Meanwhile, European prices are under selling pressure as investors weigh the prospects of a peace deal and subsequent easing of Russian sanctions.

Europe Vs US natural gas prices: The paradox that lies within

This time of the year is usually marked by higher natural gas prices as investors price in increased warming demand during the Northern Hemisphere’s winter season. In fact, weather forecast is one of the bullish factors that bolstered US natural gas prices to a three-year high late last week. Besides, record LNG exports to Europe have fueled the months-long rally.

While the short-term outlook remains positive, investors appear to weigh on whether the recent surge is the onset of a larger bullish trend or just a weather-driven spike that will soon fade. Indeed, this dilemma, coupled with the expected profit-booking, explains the pullback recorded since the start of the week.

According to the updated weather forecast, most parts of the US are expected to experience warmer temperatures in the near term. Atmospheric G2 has indicated that the eastern and southern US will be colder for the period between 18th and 22nd December, while other regions remain warmer.

In its latest weekly report, EIA highlighted a draw of 12 Bcf compared to the expected 15 Bcf. Subsequently, the surplus surged from 160 Bcf to 191 Bcf. In addition to the ample amount of natural gas in storage, the near-record output is weighing on the prices.

Nonetheless, steady LNG exports continue to offer support to US natural gas prices while exerting selling pressure in the European market. In the current month, the natural gas flows to the eight major LNG export plants within the US are averaging at 18.9 Bcf/per day compared to the monthly record high hit in November at 18.2 Bcf/per day.

Meanwhile, prospects of a peace deal that could see the return of Russian gas have pushed the benchmark for European prices, Dutch TTF, to the lowest level since April 2024.

US natural gas price technical analysis

Late last week, the Henry Hub natural gas futures rallied to a three-year high at $5.50 per MMBtu as it marked seven consecutive weeks of gains. Since late September, it has recorded higher highs and higher lows as a positive demand outlook fuels the bullish sentiment.

On Tuesday, it extended losses from the previous session, having pulled back below the psychologically crucial zone of $5.00. At the time of writing, the US natural gas was trading at $4.81.

Despite the pullback, the bulls are still in control as the asset continues to trade above the 25 and 50-day EMAs. Indeed, the decline can be perceived as a cool-off rather than trend reversal.

In the immediate term, the range between Monday’s intraday high of $5.20 and the resistance-turn-support zone of $4.70 will be worth watching. Below that zone, the bulls will be keen on defending the crucial support at $4.50 as they gather enough momentum for a rebound. On the flip side, a bounceback past the range’s upper limit will give buyers a chance to retest the 3-year high at $5.50.

Source: invezz

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Adam

Economic

Amazon on Wednesday committed to investing over $35 billion in India’s cloud and artificial intelligence space by 2030, as hyperscalers race to get a foothold in the market.

The commitment, unveiled at the Amazon Smbhav Summit in New Delhi, builds on nearly $40 billion already invested in the country.

In a press release, Amazon said the new funds will target AI-driven digitization, export growth and job creation, aligning with India’s national priorities to build up its local AI environment.

By 2030, Amazon said the plan is expected to generate an additional 1 million direct, indirect, induced and seasonal jobs in India, quadruple exports to $80 billion and deliver AI benefits to 15 million small businesses.

India is one of the fastest‑growing regions for AI spending within Asia Pacific, Deepika Giri, IDC’s regional head of research for big data & AI, told CNBC.

“A major gap, and therefore a significant opportunity, lies in the shortage of suitable compute infrastructure for running AI models,” Giri said.

She added that countries across Asia are accelerating efforts to build sovereign AI capabilities as the technology becomes more regionalized due to trade tensions and tariffs, with infrastructure as a central pillar of those strategies.

The investment highlights Amazon’s bet on India’s booming digital economy, where it has been building fulfillment centers, as well as data centers and payments infrastructure under its Amazon Web Services subsidiary.

It also comes soon after Microsoft announced plans to invest $17.5 billion in India’s AI infrastructure as Big Tech players accelerate their push into the market.

“We are humbled to have been a part of India’s digital transformation journey over the past 15 years,” said Amit Agarwal, senior vice president for emerging markets at Amazon.

“Looking ahead, we’re excited to continue being a catalyst for India’s growth, as we democratize access to AI for millions of Indians.”

Source: cnbc

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Devin

Central Bank

The Bank of Canada held its key policy rate steady at 2.25% on Wednesday as widely expected, and Governor Tiff Macklem said the economy was proving resilient overall to the effect of U.S. trade measures.

Despite tariffs between 25% and 50% on some critical sectors such as cars, lumber, aluminum and steel, Canada's economy has shown signs of strength.

Third quarter annualized GDP grew by 2.6%, much more than expected, while employment data showed the economy added 181,000 new jobs between September and November.

"So far, the economy is proving resilient," Macklem said in opening remarks to reporters, adding that inflationary pressures continue to be contained. Overall inflation is just above the bank's 2% target.

"Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy," said Macklem.

Uncertainty remains high and if the outlook changes, the bank is ready to respond, Macklem said, reiterating comments he made when the bank cut rates in October to their current level.

The U.S. Federal Reserve will also announce a rate decision on Wednesday and a majority of economists expect it will cut rates by 25 basis points.

Macklem said even though the economy had shown some resilience, he expected GDP growth to be weak in the fourth quarter and hiring intentions to be muted.

While the economy is adjusting to tariffs, volatility in trade and quarterly GDP numbers are making it more difficult to assess the underlying momentum of the economy, Macklem noted.

The recent data has "not changed our view that GDP will expand at a moderate pace in 2026 and inflation will remain close to target."

Andrew Kelvin, Head of Canadian and Global Rates Strategy at TD Securities called the bank's commentary a fairly cautious tone.

"It leads me to be very comfortable with the idea that the bank will be on hold for quite some time," he said.

CHOPPINESS IN INFLATION

The consumer price index eased to 2.2% in October but economists have regularly flagged that measures of core inflation, which strips out volatile components, have stayed around 3%, the top end of the BoC's inflation target.

In the months ahead, the BoC expects some choppiness in headline inflation which would push inflation temporarily higher in the near term.

But Macklem said the ongoing economic slack would roughly offset these cost pressures. He said the bank expects the growth in final domestic demand to resume after registering a flat growth in the third quarter.

The Canadian dollar weakened after the announcement and was trading down 0.13% to 1.3865 to the U.S. dollar, or 72.12 U.S. cents. Yields on the two-year government bonds fell 3.3 basis points to 2.556%.

Source: Reuters

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Justin

Political

Economic

An overview of Caracas amid rising tensions between the administration of U.S. President Donald Trump and Venezuela's President Nicolas Maduro's government, in Caracas, Venezuela, November 27, 2025. REUTERS/Gaby Oraa

· Lawmakers want more information after briefing by top Trump aides

· Trump would consider extending anti-drug operations to Mexico, Colombia

· Trump criticizes Europe's political leaders as 'weak'

· President declines to rule in or rule out land operations in Venezuela

President Donald Trump's top national security advisers briefed members of Congress about the administration's campaign against suspected Venezuelan drug traffickers on Tuesday, as the president suggested he could extend U.S. military operations to Mexico and Colombia.

Secretary of State Marco Rubio, Secretary of Defense Pete Hegseth, Chairman of the Joint Chiefs of Staff Dan Caine and CIA Director John Ratcliffe held a classified briefing for Congress' "Gang of Eight" representing intelligence committee and Senate and House of Representatives leaders from both parties after members of Congress clamored for more information.

Democrats emerged from the meeting dissatisfied. "I asked them what their strategy is, and what they were doing, and again, did not get satisfying answers at all," Senate Democratic Majority Leader Chuck Schumer of New York told reporters after the briefing.

Republicans mostly declined to comment beyond saying they were still studying the issues.

Trump said in a wide-ranging interview with Politico conducted on Monday that he could extend anti-drug military operations to Mexico and Colombia and hinted at land operations in Venezuela. He also took aim at Europe, including another call for Ukrainian elections and support for Hungary's leader.

Trump repeatedly declined to rule out sending troops into Venezuela as part of an effort to bring down President Nicolas Maduro. Asked if he would consider using force against targets in other countries where the drug trade is highly active, including Mexico and Colombia, Trump said: "I would."

MONROE DOCTRINE 2.0

The U.S. military has massed much of its naval strength in the southern Caribbean since early September, conducting at least 22 strikes on boats in waters around Venezuela that have killed nearly 90 people.

The campaign has come under heightened scrutiny in recent days as details emerged of a September 2 decision to launch a second strike on a suspected drug boat that killed survivors of the first attack.

Trump's comments in the Politico interview reiterated much of his world view outlined in the sweeping national security strategy released last week that seeks to reframe the country's global role.

That strategy, which aides called the Trump Corollary to the 19th-century Monroe Doctrine asserting U.S. dominance in the Americas, focused on the U.S. reasserting itself in the Western Hemisphere while warning Europe that it must change course or face "erasure."

"They're weak," Trump told Politico, referring to Europe's political leaders. "They want to be so politically correct."

A spokesperson for the European Commission, asked about Trump's comments, defended the bloc's leaders and said the region remained committed to their union despite challenges such as Russia's war in Ukraine and Trump's tariff policies.

In the interview, Trump again said he thought it was time for Ukraine to hold elections as the war nears its four-year mark. Ukraine is expected to share a revised peace plan with the U.S. later on Tuesday, one day after hastily arranged talks with European leaders.

He also said he did not offer a financial lifeline to the government of ally Hungarian Prime Minister Viktor Orban, who met with Trump last month at the White House.

"No, I didn't promise him, but he certainly asked for it," he said.

Source: Reuters

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James Whitman

Political

Russia-Ukraine Conflict

President Donald Trump held talks with British Prime Minister Keir Starmer, French President Emmanuel Macron and German Chancellor Friedrich Merz as the US pushes for a deal to end Russia's war in Ukraine.

The leaders spoke by phone Wednesday, people familiar with the matter told Bloomberg. The White House didn't immediately respond to a request for comment.

The call came as Ukraine and its European allies prepared to send the Trump administration revised proposals for a possible peace agreement with Russia.

Three documents are being discussed between the countries. One is an overall framework to end the war, the second concerns security guarantees for Kyiv and the third focuses on Ukraine's reconstruction.

On Monday, Ukrainian President Volodymyr Zelenskiy said the main sticking points remained over territory and security guarantees.