Morning wrap (16.12.2025)

Asian-Pacific equity markets are following the declines seen in the U.S. markets. Chinese indices are down as much as 2.20%, Australia’s index is down 0.50%, South Korea’s index more than 2.00%, and Japan’s JP225 is down 1.35%. These moves reflect global weakness in the technology sector, valuation concerns, and persistent macro uncertainty — rather than any local factor.

CBA now expects a 25 bp RBA hike in February 2026, arguing that growth is running near potential, the labor market remains tight, and core inflation is too sticky to justify a prolonged pause.

NAB and Citi went even further, forecasting two hikes in 2026 (February and May) due to persistent cost pressures. Money markets still price just over 70% probability of no move in February and do not fully price in a hike until later in the year.

New Zealand food-price inflation fell on a monthly basis, though remains high y/y. Since food accounts for nearly 20% of the CPI basket, even small monthly declines can meaningfully pull down headline inflation.

Australia’s flash composite PMI fell in December to 51.1 from 52.6 — the lowest in seven months, but still above the expansion threshold, extending the growth streak to 15 consecutive months. Services weakened, with the services activity index falling to 51.0 from 52.8 amid softer exports and increased competition. Manufacturing looked more stable.

Australia’s Westpac–Melbourne Institute index fell 9% to 94.5, reversing much of November’s 12.8% surge and pushing sentiment clearly back below the neutral 100 level.

Japan’s flash composite PMI fell to 51.5 from 52.0, marking the ninth consecutive month of expansion but at a slower pace. Services remained the main driver, with the services activity index at 52.5 (down from 53.2). Manufacturing remained in contraction but improved to 49.7 from 48.7 — the smallest decline in roughly 18 months. New orders returned to growth.

The U.S. Senate Banking Committee confirmed it will not take up the long-awaited crypto-market structure bill this year, pushing progress into early 2026 at the earliest.

Washington has suspended the Tech Prosperity Deal with the United Kingdom — a flagship cooperation program for AI, quantum, and nuclear technologies — using it as leverage in negotiations over non-tariff trade barriers.