ECB’s Surprise AT1 Proposal, Short on Detail, Sows Confusion

China's robust stockpiling of crude is expected to continue next year, helping to cushion global markets from a swelling surplus, but masking a broader trend of slowing oil demand growth.

Buying for commercial and strategic petroleum reserves propped up global oil prices in 2025, as the market grappled with the rapid return of idled output from OPEC+ and rising supply from other producers. Underpinned in part by energy security needs, Chinese stockpiling is expected to expand further next year, according to forecasts from Citigroup Inc. and FGE NexantECA.

China's SPR is a tightly held state secret, and absolute levels and the pace of crude buying can be difficult to gauge, but third-party providers often run the numbers to provide some insight. Energy Aspects estimates the nation's overall storage capacity — including commercial — is around 2 billion barrels, and is expected to expand by nearly 260 million barrels next year.

"Actual imports could be much higher than our forecasts," especially in the latter half of next year, if Beijing issues a fresh mandate to fill storage, said Jianan Sun, an analyst with Energy Aspects. The group currently expects inbound shipments of about 11.4 million barrels a day, roughly flat year-on-year.

Under a previous directive, China plans to buy as much as 140 million barrels for its SPR for delivery between October and March, as long as prices hold below $80 a barrel. Global benchmark Brent was briefly near that level in June, but is now trading around $62 due to concerns about the glut.

Citigroup forecasts China's stockpiling could continue at a rate of about 900,000 barrels a day next year, up from daily average builds since March of around 800,000 barrels. FGE predicts the country may add 600,000 barrels a day, compared with 480,000 barrels a day in 2025.

The country's network of coastal tanks and caverns are currently around half full, according to analytics firm OilX, providing plenty of room for additional barrels, especially with oil prices facing downward pressure into 2026.

China's buying for stockpiles has captured market attention, but it's distracted from the nation's continuing trend of slowing oil demand growth due to well-documented factors, such as the uptake of electric vehicles. Beijing is also seeking to consolidate its refining industry, partly due to green goals.

That consolidation means a huge refining and petrochemical venture between Saudi Aramco and its Chinese partners in Liaoning province will likely fill the void of some trimmed capacity, rather than significantly boost consumption. The complex is expected to be operational next year, according to JLC.

The nation's oil demand growth started to weaken in 2024 following a surge the previous year after Covid lockdowns were lifted, according to the International Energy Agency. The rate rose by 0.8% in 2024, well below the annual average prior to the pandemic, the IEA said.

China's oil demand growth is forecast to be 150,000 barrels a day next year, according to the median estimate in a Bloomberg survey of analysts. Energy Aspects was the most bullish, expecting daily growth at 320,000 barrels, mainly on rising petrochemical demand. Still, the prediction is a year-on-year drop.

"It's an irreversible path," said Ye Lin, vice president of oil markets at consultancy Rystad Energy, which also forecasts demand growth falling in 2026. "The market is now feeling the impact of China's fast-growing EV fleet."

Chile's bustling cherry industry has flourished from a niche crop into a multi billion-dollar export sensation, generating more revenue for the country last year than its coveted battery metal lithium. Most shipments go to China.

China and Japan's diplomatic spat shows no sign of an offramp even as the leadership of a Japanese political party that helped break the ice in a previous dispute continues to talk with officials from Beijing behind the scenes.

Chinese artificial intelligence startup DeepSeek has relied on Nvidia Corp. chips that are banned in the country to develop an upcoming AI model, according to a new report in The Information.

Source: Bloomberg Europe

China signaled on Thursday it will rely on fiscal stimulus to manage the economy in 2026, pledging to maintain a "necessary" budget deficit and debt levels to shore up growth while tackling local government financial strains.

The commitment, outlined after a key agenda-setting meeting, underscores Beijing's intent to keep spending high and deploy flexible monetary tools as it faces pressure to boost domestic demand and offset global trade tensions.

China will increase counter-cyclical and cross-cyclical adjustments next year, the official Xinhua news agency reported, citing the annual Central Economic Work Conference held December 10–11.

"We will continue to implement a more proactive fiscal policy: maintain necessary fiscal deficit, total debt scale, and total expenditure, strengthen scientific fiscal management, optimize fiscal expenditure structure," it said.

China is widely expected to roll out stronger fiscal stimulus next year, keeping its budget deficit target near current levels - or raising it slightly - alongside increased debt issuance, analysts said.

China set a record budget deficit target of around 4% of GDP this year to support its growth goal.

Policymakers will flexibly deploy tools including cuts to banks' reserve requirement ratios and interest rates, the Xinhua report said.

China will also take steps to boost household consumption while adhering to an innovation-driven strategy and accelerating the cultivation and expansion of new growth drivers, it said.

China's economy has shown remarkable resilience this year in the face of higher trade tariffs imposed by Washington, having diversified its export markets away from the United States even though it ultimately benefits from the U.S. role as the main source of demand in the global economy.

Its trillion-dollar-a-year trade surplus, however, is stirring tensions with Europe and other trade partners, and drawing criticism from the International Monetary Fund and other observers who say its production-focused economic growth model is unsustainable.

Pressure is rising on Beijing to take bigger steps to increase domestic consumption and contribute more to global demand for goods and services.

Source: TradingView

Thailand's rice prices rose to their highest in more than six months on flood-driven supply worries and expectations of stronger demand after China pledged to buy rice, while rates in India and Vietnam remained unchanged.

Thailand's 5% broken rice (RI-THBKN5-P1) was quoted at $400 per tonne, up from $375 last week. Prices were at their highest level since May 29.

Traders expect demand to rise as China moves to finalize a rice deal later this month, following its pledge to buy 500,000 tonnes of rice from Thailand.

"The deal with China and the prospect of more purchase from the Philippines makes the market livelier," a Bangkok-based rice trader said.

There has also been a decrease in supply because of recent flooding in many parts of the country, the trader added.

Indian rice export prices held steady this week, as the rupee's slide toward a record low helped traders offset rising paddy prices in the local market.

India's 5% broken parboiled variety was quoted this week at $347-$354 per metric ton, unchanged from last week. Indian 5% broken white rice was priced at $340 to $345 per metric ton this week.

Paddy prices are staying high because the government is buying at the increased minimum support price, which is also pushing traders to offer higher rates, said a Kolkata-based exporter.

The Indian rupee slid near a record low against the dollar on Thursday, lifting traders' rupee returns from overseas sales.

Vietnam's 5% broken rice (RI-VNBKN5-P1) was offered at $365-$370 per metric ton on Thursday, unchanged from a week ago, according to traders.

"Sales are slow amid weak demand," a trader based in Ho Chi Minh City said.

Vietnam's rice exports in November fell 49.1% from a year earlier to 358,000 tons, according to government data.

Meanwhile, Bangladesh approved the purchase of 50,000 tonnes of rice through an international open tender. The government continues to struggle to keep rice prices in check despite good stocks and yields.

Source: TradingView

The local rebel army says 10 patients in the hospital died

At least 31 people were killed and dozens of others injured in Myanmar after an airstrike by the ruling junta hit a major hospital in the western state of Rakhine, according to witness, aid workers and the Arakan Army rebel group.

The hospital was struck by bombs dropped by a military aircraft late on Wednesday, a spokesperson for the Arakan Army said Thursday. The rebel group largely controls the state but is still battling the military junta in parts.

"The Mrauk U General Hospital was completely destroyed," Arakan Army's Khine Thu Kha told Reuters. "The high number of casualties occurred because the hospital took a direct hit."

Several of those killed were patients. Around 70 others were injured, the ethnic minority separatist group said.

The local rebel group says the hospital was overflowing with patients at the time of the strikeImage: AFP

"The terrorist military council's air force dropped two bombs using a jet fighter," the rebel group said in a post on Telegram.

Aid worker Wai Hun Aung said the hospital was in complete ruins and bodies of victims lay on the ground, sharing unverified images of the scene with news agency Reuters. "The remaining patients have been moved to a safe location," he said.

The strike comes weeks before the military's set polling date for elections, December 28.

The junta is now fighting to take back territory lost to resistance groups, while the rebels have pledged to block elections in territories they control.

What you need to know about the conflict in Myanmar

The Arakan Army has been fighting the Myanmar government long before the junta overthrew Aung San Suu Kyi's democratically-elected government in 2021.

Source: DW

A barometer of South African business confidence surged in November, but the organisation that compiles the data cautioned against reading too much into it, pointing out that some indicators of tangible economic activity were still lagging.

The South African Chamber of Commerce and Industry's Business Confidence Index jumped to 132.3 in November from 123.8 in October.

The business chamber releases the index every two months and said the increase was mainly driven by greater overseas tourist numbers.

Other drivers were mostly linked to "global economic and financial market assessments (rather) than local real economic activity," it said in a statement.

The real economy refers to the production and use of physical goods and services, encompassing sectors like manufacturing and agriculture, rather than financial transactions.

"It (is) essential that real economic activity matches up with financial expediency for business confidence to steady up and be sustainable," the business chamber said.

South Africa's economic growth slowed in the third quarter, to 0.5% from the previous quarter's 0.9% expansion.

For 2025 as a whole the National Treasury predicts modest growth of 1.2%.

Source: Investing

The dollar found support on Thursday from a broad risk-off mood in markets, but failed to recoup its overnight losses against peers such as the euro, yen and sterling after the Federal Reserve delivered a less hawkish outlook than some had expected.

Investors in Asia dumped risk assets such as stocks and cryptocurrencies after disappointing earnings from U.S. cloud computing giant Oraclereignited fears that surging AI infrastructure costs could outpace profitability.

That helped stem the safe-haven dollar's slide, which initially faced selling pressure after remarks from Fed Chair Jerome Powell surprised some who had been positioned for a more hawkish tone.

The risk selloff petered out somewhat in Europe, however, to leave the euro at $1.1704, steady on the day at a near two-month high, after a 0.6% gain on Wednesday. Sterling was at $1.13374, also steady after a 0.65% rise on Wednesday.,

The dollar also dipped versus the yen. It was down 0.14% at 155.8 yen after a 0.56% drop the previous day.

The Fed lowered rates on Wednesday by 25 basis points but, as the move was widely expected, the reaction reflected much more the broader messaging, projections and the voting split.

"Investors were bracing for a hawkish rate cut. In the end, there were only two dissenters to the cut and the Fed kept a rate cut in their median forecast for 2026," said Chris Turner, global head of markets at ING.

"Equally, it seems that Chair Powell was reluctant to be boxed into the view that the Fed was now on a pause," he said.

Heading into the Fed meeting, traders had been wondering whether they would get a similar message to those received from the Australian central bank chief and from an influential European Central Bank policymaker suggesting that their next moves would be rate hikes.

Also weighing on the dollar, U.S. Treasuries attracted bids after the Fed announced it would start buying short-dated government bonds from December 12 to help manage market liquidity levels, with an initial round totalling around $40 billion in Treasury bills.

AUSSIE AND CRYPTO HIT

However, while the largest currencies were still focused on the Fed, the most risk-sensitive parts of the market were still being swayed by the weakness in tech stocks.

Bitcoin, often viewed as a barometer of risk appetite, briefly slid back below the $90,000 level, and was last hovering at that point, down 2.4%. Etherwas down more than 4% at $3,200.

"Even with a softer Fed outlook, the market is still working through the excess leverage from October, so reactions to macro signals are slower than usual," Gracie Lin, OKX's Singapore CEO, said of the fall in crypto prices.

"The 25-basis-point cut was already priced in... and the wider macro and geopolitical backdrop is still uncertain. All of that keeps the immediate response muted."

The Australian dollaralso got caught in the flight from risk and fell 0.5% to $0.6644.

Also hurting the Aussie was data showing that Australian employment in November fell by the most in nine months.

The Swiss franc firmed slightly after the Swiss National Bank left its policy rate unchanged at 0%, and said a recent agreement to reduce U.S. tariffs on Swiss goods had improved the economic outlook, even as inflation has somewhat undershot expectations.

The franc last traded at 0.7992 per dollarafter hitting its strongest level in nearly a month. It was at 0.9348 to the euro.

Source: TradingView