Morning wrap (06.01.2025)

Markets across the Asia-Pacific region are posting modest gains in the 0.60–0.80% range, with the exception of Australia’s AU200.cash index, which is down 0.90%.

The US dollar continued to weaken following Monday’s ISM data, with EURUSD up 0.15%.

Australia’s Services PMI fell to 51.1 in December from 52.8 in November, indicating continued expansion but at the slowest pace since May. Despite the softer headline figure, new orders and export demand increased, employment accelerated, and backlogs declined — suggesting resilient demand heading into 2026.

Cost pressures intensified on both input and output prices, with firms reporting higher material, energy, and labor costs and a faster pace of price increases, reinforcing the risk of persistent services-led inflation.

At CES 2026, NVIDIA unveiled its next-generation Rubin platform based on the Vera Rubin superchip, which integrates a CPU with dual GPUs in a single package. Jensen Huang emphasized that the new AI server systems — expected to reach the market in the second half of 2026 — are designed for agentic AI and advanced inference models, and could deliver roughly a tenfold reduction in costs versus the Blackwell generation.

Bank of Japan data showed that the monetary base contracted in 2025 for the first time in 18 years, reflecting a shift away from ultra-loose policy and strengthening expectations of further tapering and additional rate hikes.

The headline PMI in Hong Kong fell to 51.9 in December from 52.9 in November — the fifth straight month of expansion but signaling a slight loss of momentum. Output and new orders continued to grow at a solid but slower pace, while backlogs of work increased for the first time in a year, which typically signals stronger demand and potential for further output growth.

The Trump administration laid out clear conditions for Delcy Rodríguez’s interim leadership, signaling that cooperation with the United States is essential for political survival.

The US is demanding tougher action against narcotics trafficking, the expulsion of Iranian, Cuban and other foreign advisers deemed hostile to US interests, and an end to oil sales to countries viewed as adversaries.

The White House confirmed it is in talks with several US oil companies regarding potential multibillion-dollar investments in rebuilding Venezuela’s energy sector, though it did not specify company names or timelines.

Major Australian banks — including CBA and NAB — now expect the RBA to resume rate hikes in February 2026, with some forecasts also projecting another increase in May.