US stocks began the week mostly lower amid cautiousness ahead of key events but with downside cushioned as the US allows NVIDIA to sell H200 chips to China - Newsquawk Asia-Pac Market Open

• US stocks were mostly lower to start the week with all sectors but Technology in the red, while Communications and Consumer Discretionary were the worst performers, with the former weighed by downside in Alphabet (GOOGL, -2.3%) and Netflix (NFLX, -3.4%) due to an attractive all-cash Paramount (PSKY, +9.0%) bid for Warner Bros (WBD, +4.4%). Tesla (TSLA, -3.4%) was weighed on Consumer Discretionary after receiving a downgrade at Morgan Stanley due to its high valuation, a more cautious EV outlook, and non-auto growth being priced in. A blip of reprieve was seen for US indices following a Semafor report that the US is to allow NVIDIA (NVDA, +1.7%) H200 chip exports to China, although the move swiftly pared for US indices, and mostly did for NVIDIA as well.
• USD dollar saw slight gains on Monday, albeit in thin newsflow, as participants largely awaited the FOMC on Wednesday, whereby they were widely expected to cut by 25bps, while today saw the latest NY Fed SCE for November in which 1yr, 3yr, and 5yr inflation expectations were all left unchanged at 3.2%, 3%, and 3%, respectively.
• US President Trump said he informed Chinese President Xi that the US will allow NVIDIA (NVDA) to ship its H200 products to approved customers in China and other countries, while he added the same approach will apply to AMD (AMD), Intel (INTC) and other great US companies.
• Looking ahead, highlights include Japanese Money Supply & Machine Tool Orders, Australian NAB Business Confidence, RBA Rate Decision & Press Conference, Supply from Japan.

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LOOKING AHEAD

• Highlights include Japanese Money Supply & Machine Tool Orders, Australian NAB Business Confidence, RBA Rate Decision & Press Conference, Supply from Japan.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were mostly lower to start the week with all sectors but Technology in the red, while Communications and Consumer Discretionary were the worst performers, with the former weighed by downside in Alphabet (GOOGL, -2.3%) and Netflix (NFLX, -3.4%) due to an attractive all-cash Paramount (PSKY, +9.0%) bid for Warner Bros (WBD, +4.4%). Tesla (TSLA, -3.4%) was weighed on Consumer Discretionary after receiving a downgrade at Morgan Stanley due to its high valuation, a more cautious EV outlook, and non-auto growth being priced in. A blip of reprieve was seen for US indices following a Semafor report that the US is to allow NVIDIA (NVDA, +1.7%) H200 chip exports to China, although the move swiftly pared for US indices, and mostly did for NVIDIA as well.
• SPX -0.35% at 6,847, NDX -0.25% at 25,628, DJI -0.45% at 47,739, RUT -0.02% at 2,251.
• Click here for a detailed summary.

TARIFFS/TRADE

• US President Trump said he spoke with Chinese President Xi very recently and thinks that China will buy even more soybeans than promised.
• US President Trump said he informed Chinese President Xi that the US will allow NVIDIA (NVDA) to ship its H200 products to approved customers in China and other countries, while he added the same approach will apply to AMD (AMD), Intel (INTC) and other great US companies.
• US Ambassador to Canada said President Trump doesn't want to terminate USMCA, according to the National Post.
• China’s Commerce Minister said he hopes the German government creates a fair and open environment for Chinese firms, while he added that China attaches importance to Germany's concerns regarding export controls and Nexperia. Furthermore, he said China is gradually applying a general licensing system in areas such as rare earths and has already implemented export license exemptions for Nexperia chips.
• German Foreign Minister Wadephul said Chinese partners say they want to give priority to resolving bottlenecks in Germany and Europe, while he added it is good to hear from the Chinese side that European material needs will be given priority in export trade. Furthermore, he said China has offered general licenses and asked businesses to submit requests, as well as commented that EU tariffs would be a measure of last resort.
• US Treasury Secretary Bessent said they are working on an India trade deal.
• Indian Foreign Ministry said India and the US remain engaged with a view to concluding a mutually beneficial bilateral trade agreement.

NOTABLE HEADLINES

• US President Trump said he is taking action to protect farmers and confirmed the US will provide USD 12bln aid to farmers. Trump said farming equipment has gotten too expensive, while he added that they will take those rules off and want a reduction in prices on farming equipment.
• US President Trump posted on Truth "There must be only One Rulebook if we are going to continue to lead in AI... I will be doing a ONE RULE Executive Order this week. You can’t expect a company to get 50 Approvals every time they want to do something."
• White House Economic Adviser Hasset said regarding the Fed that they should continue to get the rate down and must watch data on how low to cut rates, while he added that it would be irresponsible to lay out a 6-month rate pledge.
• NY Fed SCE (Nov) 1yr-ahead expected inflation rate was unchanged at 3.2%, 3yr-ahead was unchanged at 3%, and 5yr-ahead was unchanged at 3%, while households were more pessimistic on current and future financial situations in November.
• BLS said it will not publish the October PPI report, while the November PPI is to be published on 14th January 2026.

FX

• USD dollar saw slight gains on Monday, albeit in thin newsflow, as participants largely awaited the FOMC on Wednesday, whereby they were widely expected to cut by 25bps, while today saw the latest NY Fed SCE for November in which 1yr, 3yr, and 5yr inflation expectations were all left unchanged at 3.2%, 3%, and 3%, respectively.
• EUR was flat with early losses pared after hawkish comments from ECB's Schnabel, who said she is comfortable with expectations of the next move being a rate hike and that a first rate hike in June 2026 remains very uncertain.
• GBP traded little changed amid a lack of major catalysts and after comments from BoE's Taylor provided little to shift the dial.
• JPY weakened after a 7.6-magnitude earthquake hit Japan, which initially triggered a tsunami warning but was later downgraded to a tsunami advisory.

FIXED INCOME

• T-notes settled lower after US yields rose in tandem with global counterparts amid a hawkish ECB Schnabel and a 7.6 earthquake striking Japan.

COMMODITIES

• Oil prices started the week on the back foot with benchmarks settling at lows, as focus resides around Ukraine/Russia updates including Ukrainian President Zelensky’s meeting with key European allies as he faces US pressure to reach a swift peace deal with Russia, and while little new was reported, the UK government stated leaders all agreed that "now is a critical moment and must continue to ramp up support to Ukraine and economic pressure on Putin".
• Iraqi energy officials said Iraq shut down the entire west Qurna 2 production of ~460kbpd due to an export pipeline leak.
• Hungarian PM Orban said he agreed with Turkish President Erdogan that Turkey will guarantee the transport of Russian gas to Hungary.
• Russia's Kremlin said India buys energy where it is profitable to and as far as Russia understands, India will "continue to do that".
• Russia's Deputy PM Novak said Russia will limit the export of gold bullion from 2026.

GEOPOLITICAL

MIDDLE EAST

• Israeli Prime Minister Netanyahu will meet US President Trump on December 29th, according to an Israeli government spokesperson.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said there is no accord so far on Ukraine's Donbas in US talks, while he said he needs clarity from US on security guarantees and that several sensitive issues still need discussion.
• Ukrainian President Zelensky said talks in London were productive and there is small progress towards peace, while he added that Ukraine-Europe plan proposals should be ready by Tuesday to share with the US. Zelensky said Ukraine cannot give up land and that the US is trying to find a compromise on the issue, as well as noted that Ukraine lacks USD 800mln for the US weapons purchase programme this year. Furthermore, he said a Coalition of the Willing meeting is to take place this week and that China is not interested in forcing Russia to end its war in Ukraine.
• US official said the US is pushing Ukraine to agree "faster" to the peace plan, according to AFP.
• UK government said leaders all agreed that now is a critical moment and must continue to ramp up support to Ukraine and economic pressure on Russian President Putin.
• German Chancellor Merz said he is sceptical about some of the details in documents coming from the US regarding Russia-Ukraine peace proposals.
• The Times' Swinford said "Britain and the EU are getting closer to releasing GBP 200bln worth of frozen Russian assets to fund Ukraine's reconstruction - announcement could come within days".

ASIA-PAC

NOTABLE HEADLINES

• Chinese President Xi held a meeting with non-party members on the economy and said China is to stabilise jobs and markets, as well as noted that 2025 has been unusual and they will smoothly meet the main targets. Xi said China is to reinforce economic growth momentum and that economic goals will be achieved this year, while they are to drive reasonable economic growth.
• Chinese Foreign Minister Wang said he hopes Germany will view China more objectively and rationally, and adhere to the positioning of the China-German partnership. Wang said they should aim for cooperation and not quarrels, while he added the One-China principle is an important political foundation for China and German relations, and there is no room for ambiguity.
• A 7.6-magnitude earthquake hit off Northern Japan, and a tsunami advisory was issued with a maximum three-metre high Tsunami expected after the earthquake. It was later reported that the IAEA said it was informed by Japan that there were no abnormalities so far at the Fukushima NPP site following the earthquake and tsunami advisory in Japan, while Japan’s government later downgraded the tsunami warning to a tsunami advisory, which was eventually lifted.
• Japanese Finance Minister Katayama said she held an online meeting with G7 finance ministers, while supply chains for critical minerals and support for Ukraine were discussed. Furthermore, it was stated that the G7 should establish a panel to discuss market rules on critical mineral supply chains and another meeting is expected by year-end.

EU/UK

NOTABLE HEADLINES

• BoE's Taylor said the foot is on the brake a little bit still, while he added that wage inflation and services inflation are coming down.
• ECB's Kazimir said FX pass-through to prices may not be as strong as expected and over-engineering policy around small inflation deviations would introduce unnecessary policy uncertainty, while he added that remaining vigilant to upside risks has become more important and there is no reason to change rates in the coming months, definitely not in December.
• ECB's Rehn said the ECB is concerned about central bank independence in the US, while he added that Fed independence is an important issue for "all of us globally" and regarding an insurance cut, he said "we are not in the insurance business, not in December, March or June", according to Econostream.
• ECB's Schnabel said the euro area economy is on course to grow above potential despite the headwinds, while she stated that interest rates are in a good place. Furthermore, she is comfortable with expectations of the next move being a rate hike and said a first rate hike in June 2026 remains very uncertain.
• ECB Cipollone spoke on "The transformation of money: technological disruption and the future of financial services".

DATA RECAP

• German Industrial Output MM (Oct) 1.8% vs. Exp. 0.4% (Prev. 1.3%, Rev. 1.1%)
• EU Sentix Index (Dec) -6.2 vs. Exp. -7.0 (Prev. -7.4)