US equity futures rebound with RTY outperforming following Friday's tech-led selloff - Newsquawk US Market Open

The BoJ Tankan survey showed sentiment of Large Manufacturers was at the highest in four years, which supports the case for a rate hike.
European bourses are entirely in the green, with US equity futures also firmer; the RTY outperforms.
DXY is a touch lower, whilst the JPY outperforms amidst growing bets of a BoJ hike this week and the Tankan Survey; the Kiwi underperforms after the RBNZ Governor suggested that market conditions have tightened “beyond” what the RBNZ intended.
Global bonds are firmer across the board; USTs are currently firmer by c. 5 ticks.
Crude benchmarks were initially firmer, but are now mildly lower as traders digest President Zelensky’s potential concessions of Ukraine’s NATO membership goals; XAU gains.
Looking ahead, highlights include Canadian CPI (Nov), US Advance Goods Trade Balance (Sep), Australian PMI (Dec), Speakers including Fed’s Miran, Williams & RBA’s Jones.

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TARIFFS/TRADE

US and Mexico reportedly struck a deal on Friday to settle the Rio Grande water dispute, which eases the bilateral tensions which had been stoked after US President Trump’s threat of an additional 5% tariff on Mexico if it did not provide additional water to help US farmers.
China’s Central Financial and Economic Affairs Commission Deputy Director said they will expand exports and increase imports in 2026.
China's Customs allows dairy import products from Norway.
An Indian Trade Official said India is engaging with Mexico on higher tariffs to protect its own trade interests. Said Mexico's primary target is not to hit Indian exports.
India has proposed a "preferential trade agreement" with Mexico.
India's Trade Secretary said India and the US are close to a "framework" deal but won't give a timeline.
EU plans a crackdown on very dangerous Chinese products sold on online platforms, including Alibaba (9988 HK) and Shein, according to FT.
France said conditions for an EU vote on a Mercosur deal are not yet met, despite recent progress, while France calls for the EU-Mercosur December meeting to be pushed back to continue work on mirror clauses.

EQUITIES

European bourses (STOXX 600 +0.7%) opened on a stronger footing and traded at elevated levels throughout the morning. Upside, which comes despite a broadly lower APAC session, where Chinese stocks were subdued after the latest Chinese activity data disappointed.
European sectors are broadly in the green, with a cyclical bias as Autos leads whilst Healthcare underperforms; the latter has also been dragged down by losses in Sanofi (-4%) after the Co. flagged delays in an FDA decision for Tolebrutinib.
US equity futures are entirely in the green, following the positive sentiment seen across Europe. The RTY outperforms vs peers, potentially some rotation out of AI/Tech-related stocks and as yields dip across the curve.
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FX

G10s are mixed against the Dollar with clear outperformance in the JPY, whilst the Kiwi lags vs the USD after RBNZ’s Bremen said that the forward path for the official cash rate published in the November monetary policy statement indicates a slight probability of another rate cut in the near term.- DXY is a touch lower on the day, but likely a function of JPY strength (see below). No specific macro catalysts for the greenback as the week kicks off, but late on Friday, US President Trump said he was leaning towards Kevin Warsh or Hassett to lead the Fed. DXY trades within 98.29-98.48 parameters. The session is likely to focus on commentary from Fed's Miran, expected to explain his dissent in last week's FOMC meeting, while the influential Williams will speak on economic growth.
JPY is the clear outperformer in the G10 FX space, where the BoJ is set to raise rates for the first time since January 2025. Japan's Tankan survey overnight bolstered the case for a hike in Friday's meeting, where the reading suggested overall business sentiment improved in Q4 and inflation expectations stood pat at 2.4% for the 1, 3, and 5-year horizons. Markets currently assign a c. 80% probability that the BoJ lifts rates by 25bps on Friday. USD/JPY began trundling lower after hitting the psychological 166 level, and 21DMA at 155.96, to a session low of 154.96.
PBoC set USD/CNY mid-point at 7.0656 vs exp. 7.0569 (Prev. 7.0638)
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FIXED INCOME

USTs are currently firmer today by a handful of ticks, and reside at the upper end of a 112-06 to 112-12 range. Overnight trade saw US paper saunter higher, but lacked a clear driver – no hints provided from a yield perspective either, with rates lower to a similar magnitude across the board. Markets now await Fed speak from Miran and Williams, and the former is expected to release an explanation of his dovish dissent last week. Then the focus will turn to key US data in the coming days, namely NFP and CPI.
Bunds are also in the green, albeit to a lesser extent than peers; currently within a 127.45 to 127.64 confine. Earlier, German Wholesale Sales M/M printed in-line with expectations, whilst Y/Y rose from the prior; the inner report pinned the rise to “higher prices of food, beverages and tobacco”. Elsewhere, focus has been on geopolitics whereby Zelensky suggested that Ukraine is willing to drop NATO membership ambitions, in favour of security guarantees. Negotiations between Ukrainian and US officials will continue in Germany later today.
Gilts also gain in today’s session, in line with peers. Nothing really much from a UK perspective this morning, aside from UK Rightmove House Prices, which continued to show contractions. An exec at the firm said, “with market conditions supporting higher levels of activity, and a hopefully more certain economic environment, we forecast a better year for price growth in 2026 with a strong rebound in activity to kickstart the year”. The docket is very thin from a UK perspective, but will pick up starting from tomorrow, where a slew of key data will precede a BoE rate decision on Thursday.

COMMODITIES

WTI and Brent initially started the week positively following better Chinese demand, but have failed to sustain a bid higher, as US envoys meet with European and Ukrainian officials in Berlin. Benchmarks dipped to a trough of USD 57.32/bbl and USD 61.07/bbl, respectively, at the start of the APAC session, before gradually bidding higher to a high of USD 57.62/bbl and USD 61.50/bbl. Despite the improved Chinese oil demand and reports of Iran seizing a foreign tanker, benchmarks have fallen into the European open and are currently trading near session lows.
Spot XAU has started the week on the front foot as ETF flows, central bank buying, and XAG short squeeze continue to support the yellow metal. After Friday's liquidation selloff to a trough of USD 4257/oz, XAU bounced in the latter part of last week. The yellow metal opened at USD 4304/oz and gradually trended higher throughout the APAC session and thus far, remains at session highs of USD 4350/oz with ATHs just c. USD 30/oz away.
3M LME Copper, among most markets, got caught up in the tech-led selloff on Friday but has rebounded as the European session gets underway. Despite the selloff on Friday, ANZ analysts note that "demand for the metal continues to beat expectations despite the fall in China's economic growth", adding that the bank is bullish with the expectation that the market will move further into a deficit in 2026.
India's November gold imports at USD 4.02bln (prev. USD 14.7bln); oil imports at USD 14.12bln (prev. USD 14.8bln).
Russia's Nornickel sees a global nickel surplus at more than 200KT in 2025 and 2026, sees the global Palladium market balanced in 2025, sees a deficit at 0.2 MoZ, including investments.
The US asks the EU to exempt US gas from methane law obligations until 2035.
Russia may extend gasoline export ban through February, via Russian press.

NOTABLE DATA RECAP

German Wholesale Price Index YY (Nov) 1.5% (Prev. 1.1%); Price Index MM (Nov) 0.3% (Prev. 0.3%)
Swiss Producer/Import Price YY (Nov) -1.6% (Prev. -1.7%); Producer/Import Price MM (Nov) -0.5% (Prev. -0.3%)
EU Industrial Production YY (Oct) 2.0% vs. Exp. 1.9% (Prev. 1.2%); Industrial Production MM (Oct) 0.8% vs. Exp. 0.8% (Prev. 0.2%)

NOTABLE EUROPEAN HEADLINES

Swiss SECO forecasts: US Tariff reduction has strengthened outlook 2025. Sees 2025 GDP (sports adj.) at +1.4% (prev. exp. +1.3%). Sees CPI +0.2% (prev. exp. +0.2%). 2026. Sees GDP (sports adj.) +1.1% (prev. exp. +0.9%). Sees CPI at +0.2% (prev. exp. +0.5%) 2027. Sees GDP (sports adj.) +1.7%. Sees CPI at +0.5%.
UK's OFCOM launches a probe into BT (BT/ LN) and Three, following UK-wide outages in the summer

NOTABLE US HEADLINES

US President Trump is reportedly not certain his economic policies will translate to midterm wins, while he said his US investments haven’t fully taken effect and stated that by the time they have to talk about the election, which is in another few months, he thinks their prices are in good shape.
White House economic adviser Hassett said he would consider US President Trump’s policy opinions, but added that the central bank would remain independent if he were to become the next Fed chair.
Apollo Management took bets against technology companies vulnerable to AI, in which it is betting against several large loans to software makers and cutting exposure to the sector, according to FT.

GEOPOLITICS

MIDDLE EAST

Israel’s military conducted a strike on Gaza, which killed senior Hamas commander Raed Saed, while the Israeli military said it put a planned strike on a southern Lebanon site on hold after the Lebanese Army requested access.
Two US Army soldiers and a civilian US interpreter were killed in Syria, while the Syrian government said the attacker was a member of Syrian security forces with extremist views. It was later reported that US President Trump said they will retaliate against ISIS and that there will be a lot of damage done to the people who attacked the troops in Syria.

RUSSIA-UKRAINE

US President Trump said a lot of progress is being made on Russia and Ukraine, while he responded that they don’t want it now, and it would be complex when asked about the idea of a free economic zone in the Donbas region.
Ukrainian President Zelensky said services have been working to restore electricity, heating and water supply to regions following Russian strikes on energy infrastructure. Zelensky also commented that there won’t be a peace plan that everyone will like and there will be compromises, while he also stated that US and European security guarantees, instead of NATO membership, are a compromise from Ukraine’s side and that security guarantees should be legally binding.
Ukrainian presidential adviser said Ukraine and US teams meeting on peace proposals in Berlin lasted more than five hours on Sunday and will continue on Monday, while US special envoy Witkoff said a lot of progress was made during the talks.
Ukrainian military said it struck a Russian oil refinery in the Krasnodar region and a Russian oil depot in the Volgograd region, while Ukraine’s Navy said a Russian drone attack hit a Turkish civilian vessel carrying sunflower oil to Egypt on Saturday.
Russian Defence Ministry said Russian forces captured Varvarivka in Ukraine’s Zaporizhzhia region, according to RIA.
EU's Kallas said new sanctions on Russia's shadow fleet will be decided today. Adds that the EU has delivered 2mln artillery rounds to Ukraine this year. Will not leave the EU summit without a decision on funding for Ukraine.
Lithuania's Foreign Minister said he expects the EU to widen the Belarus sanctions regime to include hybrid activity. Ukraine needs something like Article 5 in terms of security guarantees, with a nuclear deterrent.
Russia's Kremlin said Ukraine not joining NATO is a key question but subject to special discussion. Expects the US to update Russian officials on the proposals from the Berlin talks.
Washington reportedly still wants Ukraine to cede the Donbas region to Russia, via Sky News Arabia citing official familiar with the negotiations.

OTHER

US envoy John Coale said Belarusian President Lukashenko agreed to do all he can to stop weather balloons flying into Lithuania, while Coale also stated that the US will remove sanctions on Belarusian potash and that around 1,000 remaining political prisoners in Belarus could be released in the coming months.
US President Trump said land strikes against Venezuela will start happening and don’t necessarily have to be in Venezuela.
US President Trump said on Friday that he had a very good conversation with the Thai and Cambodian PMs, while he added that they agreed to cease all shooting effective that evening and go back to the original peace accord. However, it was reported over the weekend that Thailand’s PM Charnvirakul said his country has not reached a ceasefire agreement with Cambodia and the Thai military will continue fighting on the disputed border.
Philippine Coast Guard said three Filipino fishermen were wounded and two fishing boats suffered significant damage from high-pressure water cannon blasts by Chinese Coast Guard ships in the South China Sea, while it called on China’s Coast Guard to adhere to internationally recognised standards of conduct.
China sanctioned the former chief of staff of the Japan Self-Defense Forces, in which it froze properties, prohibiting transactions with, and barring visas for former Japanese official Iwasaki.

CRYPTO

Bitcoin is a little lower and trades just shy of the USD 90k mark, whilst Ethereum gains attempting to top USD 3.2k.

APAC TRADE

APAC stocks were mostly pressured at the start of a risk-packed week and following on from the tech-led declines stateside amid a rotation out of AI, while participants digested economic releases, including the BoJ Tankan and Chinese activity data.
ASX 200 retreated with the declines led by mining, materials, resources and tech sectors, with the mood in Australia also sombre following a terror attack on Bondi Beach targeting a Jewish celebration.
Nikkei 225 underperformed ahead of a widely anticipated BoJ rate hike later this week, while the quarterly BoJ Tankan survey showed sentiment of Large Manufacturers was at the highest in four years, which supports the case for a rate hike.
Hang Seng and Shanghai Comp were subdued after the latest Chinese activity data disappointed and house prices continued to contract, with tech and biotech leading the declines in Hong Kong, while losses in the mainland were contained after reports that China is to issue ultra-long-term special government bonds in 2026 to fund major national strategies and security initiatives, as well as large-scale equipment upgrades and consumer goods trade-in programs.

NOTABLE ASIA-PAC HEADLINES

China is to issue ultra-long-term special government bonds in 2026 to fund major national strategies and security initiatives, as well as large-scale equipment upgrades and consumer goods trade-in programs.
China stats bureau spokesperson said China’s economy stabilised and improved in November, but the impact of changes in the external environment has deepened, and the conflict between strong domestic supply and weak demand is prominent. The spokesperson also noted that some industries and firms face difficulties, while authorities will step up counter-cyclical and cross-cyclical adjustments. Furthermore, it was stated that household consumption capability and confidence need to be further improved, with efforts to be made to stabilise jobs, boost income growth, and release consumption potential.
China Vanke’s (2202 HK) proposal for a one-year delay of repayment for a bond due December 15th was rejected by bondholders, which leaves a five-day grace period to make the CNY 2bln bond payment and avoid a potential default.
Hong Kong’s Democratic Party voted on Sunday to dissolve amid pressure from Beijing and previous alleged threats of severe consequences, including possible arrest if they did not disband, according to The Guardian.
BoJ is likely to begin selling its ETF holdings as soon as January, according to Bloomberg.
RBNZ Governor Breman said the economic outlook has evolved broadly in line with expectations, and the forward path for the Official Cash Rate published in the November monetary policy statement indicates a slight probability of another rate cut in the near term. However, she added that if economic conditions evolve as expected, the official cash rate is likely to remain at its current level of 2.25% for some time. Breman also commented that there continues to be signs that growth is recovering and financial market conditions have tightened since the November decision, beyond what is implied by the central projection for the OCR.
BoK said NPS agrees to extend its currency swap agreement for another year, with Bloomberg reporting that the NPS is to take a flexible approach to strategic FX hedging.
China NPC Standing Committee to hold a meeting between December 22-27. NPC Standing Committee to review draft revision to foreign trade law.

DATA RECAP

Chinese Industrial Output YY (Nov) 4.8% vs. Exp. 5.0% (Prev. 4.9%)
Chinese Retail Sales YY (Nov) 1.3% vs. Exp. 2.8% (Prev. 2.9%)
Chinese Urban Investment (YTD)YY (Nov) -2.6% vs. Exp. -2.3% (Prev. -1.7%)
Chinese Unemployment Rate Urban Area (Nov) 5.10% (Prev. 5.10%)
Chinese China House Prices MM (Nov) -0.40% (Prev. -0.50%)
Chinese China House Prices YY (Nov) -2.4% (Prev. -2.2%)
Japanese Tankan Large Manufacturing Index (Q4) 15.0 vs. Exp. 15.0 (Prev. 14.0)
Japanese Tankan Large Manufacturing Outlook (Q4) 15.0 vs. Exp. 13.0 (Prev. 12.0)
Japanese Tankan Large Non-Manufacturing Index (Q4) 34.0 vs. Exp. 35.0 (Prev. 34.0)
Japanese Tankan Large Non-Manufacturing Outlook DI (Q4) 28.0 vs. Exp. 28.0 (Prev. 28.0)
Japanese Tankan Large All Industry Capex Estimate (Q4) 12.6% vs. Exp. 12.0% (Prev. 12.5%)
Indian Wholesale Price Index (Nov) -0.3% vs Exp. -0.6% (Prev. -1.2%)