- Asian shares rallied after softer U.S. PCE inflation data revived hopes for policy easing. MSCI Asia-Pacific ex-Japan rose 0.3%, with South Korea up 1.3% and Taiwan surging 2.6%. Japan's Nikkei gained 1.2%, boosted by reports of potential Honda-Nissan merger talks targeting completion by June 2025.
- Emerging markets faced significant outflows last week, with bond funds losing $1.5 billion and equity funds shedding $4.6 billion. Hard currency funds led bond outflows at $1 billion, while ETFs dominated equity outflows at $3.1 billion. Year-to-date outflows stand at $28.2 billion for bonds and $30.3 billion for equities.
- Singapore's core inflation eased to 1.9% in November, the lowest since November 2021 and below expectations of 2.1%. The softer inflation print creates room for monetary policy easing, though analysts suggest MAS might wait until later in 2025 given uncertainty around incoming President Trump's policies.
- Honda and Nissan are reportedly finalizing merger terms by June 2025, with Mitsubishi Motors considering joining the combination. The deal could create the world's third-largest automaker, as both companies seek to address declining overseas sales and EV market challenges.
- The dollar steadied near two-year highs after Friday's retreat on softer PCE data. Most Asian currencies remained under pressure, with USD/JPY at 156.59 and USD/CNY hitting one-year highs. The Indian rupee stabilized after hitting record lows above 85 last week, while the Singapore dollar held steady ahead of inflation data.
- Oil prices edged higher with Brent at $73.29 and WTI at $69.86, though gains were limited by supply surplus concerns. Sinopec forecasts China's consumption peaking in 2027, while Macquarie projects lower average Brent prices of $70.50 in 2025. The Druzhba pipeline resumed operations after technical issues, easing European supply concerns.
- Gold recovered slightly to $2,626 after last week's 1% decline, pressured by Fed's hawkish stance and dollar strength. Markets now expect two rate cuts in 2025, down from earlier projections, with the first cut anticipated in June. Silver rose 0.6% to $30.137, while platinum gained 0.8% to $940.15.
- Bitcoin faced its first weekly decline since Trump's election, dropping over 7% to $94,344 as Fed's hawkish outlook tempered crypto optimism. The wider crypto market fell about 10%, though analysts maintain a bullish outlook for Q1 2025 despite potential near-term volatility. Ethereum currently trades around $3288.
- President-elect Trump sparked diplomatic tension by threatening to reassert U.S. control over the Panama Canal, citing excessive usage rates. The comments drew sharp criticism from Panama's President Mulino and raised concerns about potential shifts in U.S. foreign policy under Trump's administration.
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