Global Markets Begin December Unevenly as Japan’s Weak Factory Data Triggers Nikkei Slump, Oil Surges

Economic

Summary:

Asian markets opened December on mixed footing, with Japan’s Nikkei down nearly 2% amid weak corporate investment and factory activity, while oil prices jumped over $1 a barrel and U.S. futures declined....

Diverging Asian Market Sentiment Amid Weak Factory Reports

Asian stock markets entered December with no clear consensus, as investors absorbed new regional manufacturing data and shifting U.S. economic signals. Japan's Nikkei 225 plummeted by 1.9% to 49,285.66 after government data revealed disappointing corporate investment and ongoing manufacturing contraction. The S&P Global Japan Manufacturing PMI came in at 48.7 for November, slightly higher than October’s 48.2 but still firmly in contractionary territory. This marked the fifth consecutive month of decline, reinforcing the persistent weakness in Japan’s manufacturing base.

The subdued PMI data indicates that Japanese manufacturers are still struggling with fragile demand. According to S&P Global’s Annabel Fiddes, firms saw a “solid decline in new business,” revealing a strong relationship between faltering demand conditions and reduced factory output. This downward momentum aligns with the broader regional narrative of cooling production despite improving exports.

China’s Manufacturing and Trade Frictions Shape Sentiment

China’s own factory sector fared no better. Its official PMI data released over the weekend confirmed an eighth straight month of contraction in November, amplifying concerns about the country’s growth trajectory even as it continues a temporary trade truce with the U.S. The persistence of sub-50 readings across East Asia suggests that supply chain activity remains hindered, likely influenced by geopolitical pressures, weak internal consumption, and volatile global demand.

Despite this weakness, Hong Kong’s Hang Seng Index defied the trend and rose 0.8% to 26,068.05. In contrast, Shanghai’s Composite Index posted a smaller gain of 0.4%, while South Korea’s Kospi remained largely flat at 3,926.20. Australia’s ASX 200 declined 0.3%, and Taiwan’s Taiex lost 0.5%. India’s Sensex edged up by 0.3%, reflecting domestic optimism likely buoyed by retail trends.

Oil Prices Climb Sharply As Supply Concerns Resurface

Commodities offered a more bullish picture, with both U.S. benchmark crude and Brent crude rising $1.05 per barrel in early Monday trading. The price rise could be attributed to new supply constraints or geopolitical anxieties, although specifics were not detailed. This movement in oil markets may exert inflationary pressures if sustained, which would complicate central bank policy decisions heading into 2026.

U.S. futures were lower early Monday, with S&P 500 contracts down by nearly 0.7% and Dow futures falling 0.4%. This decline followed a Friday session marred by trading halts on major indices due to a data center outage at CME’s CyrusOne facility. Despite the glitch, the S&P 500 had closed 0.5% higher, the Dow rose 0.6%, and the Nasdaq gained 0.7% in the shortened post-Thanksgiving trading day.

Investors are still digesting signals from the Federal Reserve, which has already implemented two rate cuts in 2025 to counter a weakening job market. However, policymakers face a dilemma: while rate cuts could support economic activity, they also risk reigniting inflation, especially amid rising energy prices. According to the Fed’s October meeting minutes, internal divisions are deepening over the appropriate course of action.

Tech Sector Divergence Reflects Shifting Investor Sentiment

November saw wide variance in tech sector performance. While Nvidia dropped 1.8% on Friday and posted a double-digit monthly loss, other names like Oracle and Palantir fell 23% and 16% respectively during the month. On the other hand, Alphabet surged nearly 14% as enthusiasm grew over its Gemini AI release, showing how investor interest in artificial intelligence remains selective and volatile.

This dispersion indicates a correlation between tangible product rollouts and investor confidence, while companies without immediate breakthroughs may face stiffer selloffs. As AI-driven optimism remains a key theme, market momentum will likely continue to pivot around these announcements.

Retail and Consumer Spending Show Resilience Amid Uncertainty

The holiday shopping season added another layer to market dynamics. Early signals suggested stronger-than-expected consumer activity during Black Friday and Cyber Monday. This optimism, however, is counterbalanced by concerns over long-term U.S. economic health, employment softness, and monetary tightening.

Retail stocks reacted cautiously. Macy’s dipped 0.3%, Kohl’s rose 1.4%, and Dick’s Sporting Goods dropped 0.5%. Meanwhile, Abercrombie & Fitch climbed 2.9%, and American Eagle Outfitters gained 0.7%, hinting at mixed performance among specialty retailers.

Currency And Crypto Markets Reflect Cautious Mood

Currency markets were relatively subdued. The dollar slipped to 155.57 yen from 156.14, while the euro inched up to $1.1602. Bitcoin, however, experienced notable volatility, dropping 5.3% to $86,225. This sharp decline reflects speculative concerns amid broader risk-off sentiment in global markets.

The first trading day of December highlighted growing divergences across global markets. Asia’s manufacturing weakness, a lack of broad-based recovery in China, and uncertainties in Fed policy continue to constrain bullish momentum. Oil price gains and resilient retail spending offer short-term optimism, but the overall landscape remains fragile. Investors are likely to remain cautious ahead of key policy meetings and year-end economic data, with risk appetite sensitive to both geopolitical developments and macroeconomic signals.

Source: AP

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Gerik

Economic

Widening Manufacturing Contraction Signals Uneven Recovery

China’s manufacturing sector showed unexpected weakness in November 2025, with the private RatingDog China General Manufacturing PMI sliding to 49.9, below the expected 50.5 mark and down from 50.6 in October. A PMI below 50 indicates a contraction in industrial activity. This marks the second consecutive month of deceleration and suggests that industrial momentum is losing steam in the world’s second-largest economy. The decline is particularly notable because the RatingDog-S&P Global survey generally portrays a more optimistic outlook than the official PMI, which already recorded an eighth straight month of contraction, coming in at 49.2.

The contraction is closely linked to sluggish domestic demand, as new business orders stagnated. Despite a mild surge in export orders the strongest in eight months the growth in production halted. This reveals a relationship where external demand offers short-term support, but internal market weakness overrides the broader recovery trend. Manufacturers responded by cutting staff and scaling back procurement, reflecting uncertainty in future orders.

Dampened Non-Manufacturing Performance Adds to Headwinds

In parallel, the official non-manufacturing PMI also slipped to 49.5 in November, marking its first contraction since December 2022. This suggests the economic malaise is not limited to factories but has spilled over into services and construction, notably weakened by ongoing distress in the property sector. Real estate and residential services continued to underperform, undermining one of the most significant pillars of China's domestic economy.

The persistent drag from real estate was evident in fixed-asset investment data. Investment fell by 1.7% in the first ten months of 2025, while October alone witnessed a steep year-on-year drop of 11.4%. Property-specific investment shrank by 14.7% for the same ten-month period, up from a 13.9% decline in the third quarter. This data shows a strongly correlated trend between falling fixed-asset investment and broader economic deceleration. The causal link appears to be the lack of policy stimulus translating into real investment growth.

Retail and Industrial Indicators Show Mixed Signals

While industrial output grew 4.9% year-on-year in October, the slowest pace since August, retail sales only climbed 2.9%, marking the fifth straight month of decline. The weakening of retail activity confirms that domestic consumption remains under significant strain. These figures suggest that the recovery is skewed toward supply-side resilience rather than broad-based demand revival.

Adding to the concerns, China’s exports in October fell 1.1% year-on-year the first decline in nearly two years despite previous front-loading of overseas shipments. This drop signifies more than a seasonal effect; it reflects declining global demand and the fading of short-term stockpiling efforts by foreign buyers.

Growth Forecast Faces Downward Pressure Despite Trade Truce

The broader implication is that China’s economic growth will likely dip below 4.5% in Q4, down from 4.8% in Q3, according to OCBC’s Tommy Xie. The decline appears to stem from a convergence of soft consumption, delayed infrastructure impact, and persisting property woes. The government’s efforts to stabilize growth, including anticipated policy directions from the upcoming Central Economic Work Conference, may be crucial to reversing the downtrend.

Meanwhile, geopolitical dynamics show signs of temporary easing. A trade détente was reached in late October between President Trump and Xi Jinping, with the U.S. agreeing to roll back certain tariffs and pause regulatory measures in exchange for China’s cooperation on fentanyl and rare earths. While this move reduces short-term policy uncertainty and may support export sentiment, it is unlikely to revive domestic demand in the near term.

Persistent Deflation Risk Despite Market Stability

Bank of America analysts noted that demand-side weaknesses could prolong deflationary pressures into 2026. Although equity markets reacted mildly positively with the CSI 300 up 0.36% and Hang Seng Index rising 0.74% these gains may be driven more by speculative sentiment than by fundamental economic improvements. The offshore yuan stabilized at 7.0711 against the dollar, indicating limited currency pressure but also no strong capital inflows to reinvigorate domestic sectors.

In sum, the data from November paints a cautious picture for China’s economic trajectory. While exports briefly buoyed optimism, the structural issues within domestic demand and investment remain deeply entrenched. Without a more forceful fiscal or monetary push, China may struggle to meet its 5% growth target in the coming year.

Source: CNBC

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Swissquote

Forex

Economic

Commodity

December is finally here. Last month ended on a positive note – with a solid reversal of the early-November losses on one single bet: that the Federal Reserve (Fed) would cut interest rates in December. US traders came back from their Thanksgiving break to a market paralysed by a tech issue on Friday, but the problem was quickly resolved, trading resumed and the S&P 500 closed both the week – and the month – just a few points below an ATH.

The November dip only shaved about 5% off the index, and those losses have almost been fully recovered. European stocks outperformed thanks to their lower exposure to tech – the major driver of the recent rallies, but also a potential major driver of any future meltdown. Gold, Bitcoin, US Treasuries – everything rallied last week.

But worries persist that the Fed may be rushing toward a rate cut without solid data in hand, and that valuations have run ahead of themselves. Those concerns will only grow if the Fed cuts and the rally continues into year-end. The Q ratio, which measures the market value of a company or the overall stock market relative to the replacement cost of its assets, hit an ATH last month, as well. In plain English: we are living incredibly exciting times with AI – but also facing very expensive stock prices compared with the real, physical value of companies' assets.

This week starts on a rather miserable note – perhaps the return from Thanksgiving is less cheerful than expected. Shoppers in the US spent almost $12bn during the shopping festival, up around 4%, but once you strip out the roughly 3% inflation rate, the real growth is modest – which is actually good news. It suggests that consumers are spending more carefully, price pressures may ease and the Fed could cut rates more confidently.

But risk appetite – judging from the price action in the Nikkei and Bitcoin – doesn't look great. And one man is largely responsible for that: Kazuo Ueda, the head of the Bank of Japan (BoJ), who said today that the bank "will consider the pros and cons of raising the policy interest rate and make decisions as appropriate" and that "any hike would merely be an adjustment in the degree of easing." In other words, they remain far behind the curve, and normalization is calling – even more loudly as Takaichi's policy measures risk pushing Japan's inflation even higher.

The result is a bloodbath in Japanese assets. The Nikkei is down nearly 2% this morning on rising bets that the BoJ will hike at the next meeting – despite soft PMI data. The Japanese 10-year yield is at a fresh multi-decade high near 1.87% this morning, which is very high relative to the 1.71% level often referenced as the point at which Japan's era of "free liquidity" effectively ends. Around $3.4 trillion circulates in global markets from Japanese investors seeking higher returns abroad – capital that could simply be repatriated as domestic yields rise.

From an economist's perspective, hiking interest rates – and counterbalancing Takaichi's fiscal push – is exactly what the BoJ should be doing. This is why central banks exist: to offset politically motivated, growth-at-all-costs fiscal impulses. BUT if the BoJ hikes, Japanese yields will rise, and Japanese capital could leave a significant hole in the global financial system at a time when everyone is wondering whether we haven't pushed the AI-driven rally too far.

This is why US 10-year yields jumped at the weekly open – that, and of course the ballooning US debt, which should theoretically push the Fed toward the same kind of thinking as their Japanese counterparts.

So, December could prove more challenging than many expected – especially for those who thought last month's 5% dip was the long-awaited correction. With Fed funds futures pricing nearly a 90% chance of a 25bp cut, there isn't much room left for additional dovish fuel.

On the contrary, incoming data could warn that a premature Fed rate cut that ignores inflation risks won't be the answer. So pray: pray for this week's PCE and inflation-expectations data to look soft enough to keep dovish expectations alive. Traders are also watching gold and the Swiss franc – both potential beneficiaries if the selloff deepens.

Potentially not helping sentiment: US crude is up more than 2% this morning as OPEC reiterated yesterday that they want to stabilise oil prices into next year, implying tighter control of output to address the supply glut that has weighed on prices – except during brief periods of geopolitical tension. And even those tensions haven't been enough lately to bring buyers back, which shows how much oil is currently sloshing around the planet. As discussed in previous reports, OPEC alone can't reverse the broader negative price dynamic, but it can help put a floor under the latest selloff. WTI is testing $60pb this morning, but prices need to climb above $65pb for the technicals to confirm an end to the bearish trend.

Source: Swissquote Bank SA

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Daniel Carter

Economic

Third-quarter annual growth came in at 3.7%, against the 4.2% expected by economists surveyed by Bloomberg. Still, the economy performed better than anticipated on a quarterly basis, growing 1.1% in the three months through September, compared with 1.6% in the previous quarter, according to data announced by the national statistics agency on Monday. Analysts were expecting the economy to grow 0.5% quarter-on-quarter, per a separate Bloomberg poll.

The central bank resumed interest-rate cuts in July, after a two-month pause. In September, the bank slowed the pace of easing in response to higher inflation, though some analysts expect it to return to more sizable reductions based on price data for November scheduled for release on Wednesday.

Annual inflation slowed to 32.9% in October and is seen ending the year at between 31% and 33% — above the central bank's target — according to the monetary policymakers.

Central bank Governor Fatih Karahan said last week he expects an improvement in inflation readings from prior months. The monetary policy committee last lowered official borrowing costs in October to 39.5%.

The International Monetary Fund said in a statement after an official staff visit last month that falling policy rates and a less contractionary fiscal stance will support demand in 2026.

Still, it said "an economy operating close to full capacity" will prolong slowing prices and "unfavorable recent inflation readings could indicate that policies may not be tight enough to support further disinflation".

Source: Bloomberg Europe

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Gerik

Economic

A Tale of Two Economies: India Soars as China Stalls

China’s factory activity edged up slightly in November, with the official manufacturing PMI ticking up to 49.2, from 49.0 in October. While this slight improvement met expectations, it marked the eighth straight month of contraction, reinforcing a narrative of sluggish industrial recovery weighed down by soft domestic demand and persistent deflationary forces. The reading remains below the expansion threshold of 50, signaling that China’s manufacturing sector still lacks strong forward momentum.

In stark contrast, India's GDP grew 8.2% year-on-year in Q3 2025, surpassing forecasts. The acceleration was driven by a surge in manufacturing, construction, and domestic consumption clear indicators of internal economic strength and structural resilience. India’s outperformance reinforces its role as a bright spot among emerging markets and suggests a decoupling from China’s industrial drag.

Markets Anticipate Fed Rate Cut to Spark ‘Santa Claus Rally’

Investor optimism is building as the U.S. Federal Reserve prepares to meet on December 10, with traders pricing in an 87.4% chance of a 25-basis-point rate cut. This anticipated policy easing is expected to catalyze a year-end ‘Santa Claus rally’, a seasonal trend where markets rise in the final trading days of the year.

U.S. equities ended the previous week on a high note:

Nasdaq Composite rose 0.65%, marking its fifth consecutive gain

S&P 500 climbed 0.54%

Dow Jones advanced 0.61%

However, the bullish tone may face resistance from mounting macro risks that threaten to counteract dovish monetary policy tailwinds.

Venezuela and AI Hype: Two Headwinds for December

President Donald Trump’s escalating rhetoric on Venezuela has raised the possibility of U.S. military involvement, adding geopolitical risk to an already cautious market backdrop. Coupled with ongoing volatility in AI-related stocks, which some analysts now fear may resemble a speculative bubble, investor sentiment could easily swing toward defensiveness.

These two factors represent non-economic triggers with real implications for capital flows, risk appetite, and market volatility. While not directly causal in current asset pricing, they introduce headline risk that may suppress upside momentum.

Wingtech-Nexperia Dispute Underscores Global Supply Chain Fragility

Another unexpected development comes from the semiconductor sector. Dutch chipmaker Nexperia’s public clash with its China-based parent company Wingtech over operational control has escalated, with Nexperia warning of "imminent production outages" due to unresolved internal tensions. This internal conflict adds fresh uncertainty to a chip market already grappling with geopolitical stress, export controls, and fluctuating demand.

In a rare and sweeping safety directive, Airbus grounded 6,000 A320-series jets worldwide after identifying software malfunctions linked to solar flare interference. The issue, which caused an uncommanded pitch-down event on a JetBlue flight in October, triggered emergency software patches and disrupted one of the busiest travel weekends globally.

This unexpected disruption underscores the vulnerability of modern aviation to environmental anomalies and will likely lead to logistical challenges for airlines and increased scrutiny from regulators in the weeks ahead.

Silver’s Silent Surge Signals Investor Hedging

While gold remains in the spotlight, silver has reached new record highs, gaining traction as a dual-purpose asset both a precious metal and an industrial input. Analysts suggest silver could double in value over the coming years as green energy investments and risk-averse investors converge around its utility and safe-haven status.

As December unfolds, markets sit at a delicate intersection of rate-cut anticipation, economic divergence, and external shocks. While optimism over Fed easing and India’s growth provide fuel for a potential rally, persistent headwinds from China’s manufacturing malaise, Venezuela tensions, AI sector instability, and aviation disruptions may limit enthusiasm.

The month’s opening reflects 2025’s broader theme: accelerated change with layered volatility. Whether markets end the year with cheer or caution will depend not only on policy moves but on how investors navigate the mounting noise that’s closing out a turbulent year.

Source: CNBC

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Gerik

Economic

Stocks

Weaker China Manufacturing Data Dampens Sentiment

Markets across the Asia-Pacific region began December mostly in decline as investors reacted to disappointing economic signals from China. The private-sector RatingDog China General Manufacturing PMI, compiled by S&P Global, fell to 49.9 in November unexpectedly slipping into contraction territory and missing the 50.5 forecast in a Reuters poll.

This marks a continued struggle for China's manufacturing sector, despite recent hopes for stabilization. It follows official PMI data released a day earlier showing the manufacturing gauge rising slightly to 49.2, still below the 50 benchmark for the eighth straight month, signaling ongoing economic fragility.

The subdued data has raised fresh doubts about the sustainability of China's recovery amid tepid domestic demand and fading consumption momentum post-holidays. A contraction in services activity added to the concern, reinforcing a correlation between weak consumer confidence and slow industrial recovery.

Hong Kong Crypto-Exposed Stocks Plunge on PBoC Warning

Further weighing on sentiment in Hong Kong were new warnings from the People’s Bank of China (PBoC) about illegal activities tied to digital currencies and the re-emergence of speculative trading behaviors. The announcement, released over the weekend, prompted sharp declines in several crypto-linked financial firms:

Yunfeng Financial, backed by Jack Ma, fell more than 7%

Bright Smart Securities & Commodities Group also dropped over 7%

Guotai Junan lost up to 3%

This regulatory pushback highlights Beijing’s renewed focus on clamping down on crypto activity and introduces a direct cause for investor retreat from fintech and digital-asset-linked equities.

Diverging Performances Across Regional Markets

In Japan, the Nikkei 225 slumped 1.68% to 49,407.31, with Fujikura, Sumitomo Pharma, and Advantest among the steepest decliners, down over 4–8%. The Topix index also lost 0.72%, reflecting broader weakness across sectors.

Australia’s S&P/ASX 200 index declined 0.47% as cautious sentiment spread, while South Korea's Kospi fell 0.19%. However, the Kosdaq which typically features smaller tech and growth firms rose 1.29%, signaling investor appetite for speculative plays amid expectations of rate cuts.

U.S. Rate Cut Bets Lend Underlying Support

Despite weak Asian market openings, U.S. equity futures remained steady, buoyed by growing conviction that the Federal Reserve may cut rates at its December 10 meeting. According to CME FedWatch, markets are pricing in an 87.4% probability of a 25 basis point cut.

U.S. indices closed last week with gains in a holiday-shortened session. The Nasdaq Composite extended its winning streak to five days, closing up 0.65% at 23,365.69. The S&P 500 gained 0.54% to 6,849.09, while the Dow Jones added 289.30 points to settle at 47,716.42.

Mixed Macro Signals Set Uncertain Tone for Asia

The opening day of December has revealed a bifurcated regional performance. While China's disappointing PMI data and crypto clampdown in Hong Kong pulled down risk sentiment, U.S. rate-cut hopes and selective tech gains in South Korea provided some cushioning.

The divergence illustrates a market landscape where geopolitical risk, domestic policy shifts, and macroeconomic indicators are creating fragmented outcomes across Asia. Investors will be closely monitoring whether China rolls out further stimulus or regulatory adjustments to stabilize sentiment in the weeks ahead.

Source: CNBC

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Samantha Luan

Forex

Economic

Vietnam's manufacturing sector maintained growth in November despite severe storms disrupting supply chains, according to the latest S&P Global Vietnam Manufacturing PMI data.

The PMI posted 53.8 in November, slightly down from 54.5 in October, but still indicating solid improvement in business conditions. This marks the fifth consecutive month of strengthening operating conditions.

New orders increased for the third straight month, helping drive production growth, though both metrics expanded at a slower pace than in October. New export orders grew at a faster rate, reaching a 15-month high, with manufacturers noting improved demand from mainland China and India.

Severe weather conditions in November significantly impacted supply chains, with suppliers' delivery times lengthening markedly to the largest extent since May 2022. The storms also hampered manufacturers' ability to complete work on time, leading to the sharpest accumulation of backlogs since March 2022.

Despite these challenges, employment increased for the second consecutive month as firms responded to higher output requirements. The modest rise in staffing levels was the largest in almost a year-and-a-half, with respondents indicating new staff were often hired on a full-time basis.

Manufacturers increased purchasing activity for the fifth straight month, with the rate of expansion quickening to a four-month high. Stocks of inputs also rose slightly for the second month in a row.

The storms contributed to higher raw material costs as supply was restricted. Input prices increased sharply, marking the second-fastest pace since July 2024, though inflation eased from October. Output price inflation also softened but remained solid as firms passed higher costs to customers.

Looking ahead, manufacturers expressed optimism about the year-ahead outlook for output, with sentiment reaching a 17-month high. Nearly half of respondents predicted increased production, citing expected improvements in new orders and hopes for calmer weather conditions.

Andrew Harker, Economics Director at S&P Global Market Intelligence, noted: "The pick-up in growth seen in October was largely sustained through to November as the Vietnamese manufacturing sector looks to be enjoying a positive end to the year. While rates of expansion in output and new orders eased, firms took on extra staff at a stronger pace in order to deal with workloads."