Weekend News Round Up - Newsquawk Asia-Pac Market Open

• US stocks were notably lower on Friday with selling seen throughout the session amid distinct underperformance in the tech-heavy Nasdaq 100 (-2.4%) owing to broad-based losses in mega-cap names and as the focus was on hot US data in which headline retail sales surpassed expectations and NY Fed Manufacturing surged above all analyst expectations. As such, there was a broad-based hawkish reaction seen with selling in US equity futures and Treasuries, while the dollar was bid and market pricing for a December Fed rate cut marginally eased.
• US President Biden’s administration lifted restrictions on Ukraine using US-made weapons to strike deep inside Russia, according to sources familiar with the decision cited by Reuters.
• Ukrainian President Zelensky said Russia launched around 120 missiles and 90 drones in a massive combined air strike on Ukraine’s energy infrastructure early on Sunday morning.
• Looking ahead, highlights include Japanese Machinery Orders, UK Rightmove House Prices, Singapore Non-Oil Exports, Thailand GDP, Comments from RBA Assistant Governor Kent, Supply from Australia.

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LOOKING AHEAD

• Highlights include Japanese Machinery Orders, UK Rightmove House Prices, Singapore Non-Oil Exports, Thailand GDP, Comments from RBA Assistant Governor Kent, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks were notably lower on Friday with selling seen throughout the session amid distinct underperformance in the tech-heavy Nasdaq 100 (-2.4%) owing to broad-based losses in mega-cap names and as the focus was on hot US data in which headline retail sales surpassed expectations and NY Fed Manufacturing surged above all analyst expectations. As such, there was a broad-based hawkish reaction seen with selling in US equity futures and Treasuries, while the dollar was bid and market pricing for a December Fed rate cut marginally eased.
• SPX -1.32% at 5,871, NDX -2.40% at 20,394, DJIA -0.70% at 43,445, RUT -1.42% at 2,304.
• Click here for a detailed summary.

NOTABLE HEADLINES

• Fed's Barkin (2024 voter) said on Friday that he always expected core PCE would stay in the ‘high twos’ in H2 and is still seeing progress on inflation, while he added that pricing power is getting more limited, according to a Yahoo Finance interview. Furthermore, Barkin said he hopes and expects that inflation numbers will come down in Q1, as well as noted that they are a long way from knowing what will happen with tariffs and it is hard to know the impact.
• Fed’s Collins (2025 voter) said on Friday that there is not a moment where policy forward guidance is a good idea and Fed policy is well positioned for what lies ahead in the economy, while she added it is too soon to say the impact of the election on the economic policy and the Fed needs to see data before deciding on the December FOMC. Furthermore, Collins said they do not need the labour market to soften further and they are not seeing signs of fresh inflation pressures, while she added the data suggests more room to run on the balance sheet rundown, as well as noted that monetary policy is restrictive and will need to ease over time.
• Fed's Goolsbee (2025 voter) said on Friday that he does not like tying the Fed's hands and there is still more data to come when asked about a December rate cut or pause, while he added that markets react immediately and in most extreme terms. Goolsbee also said the Fed needs to focus on longer trends and he will be looking at rate cuts along the lines of the September Fed policymaker projections.
• US President-elect Trump picked Chris Wright to be Energy Secretary, while it was also reported that Trump seeks a pledge that his Treasury Secretary will enact tough tariffs, according to FT.

COMMODITIES

• US President Biden’s administration plans on releasing a study on LNG environmental impacts and hopes to finalise a clean fuel bill before the January 20th Inauguration Day, according to the White House.

GEOPOLITICAL

MIDDLE EAST

• Israel conducted a strike on Beirut which killed Hezbollah’s media relations chief Mohammad Afif, according to security sources cited by Reuters.
• Tens were killed in an Israeli strike on a residential building in northern Gaza’s Beit Lahiya, according to Reuters.
• Iranian Foreign Minister Araqchi said he strongly denies the reported meeting between Iran’s envoy and Elon Musk, while he added if the IAEA Board of Governors passes a resolution against Iran, Tehran will take reciprocal action and implement new measures in its nuclear program.

OTHER

• US President Biden’s administration lifted restrictions on Ukraine using US-made weapons to strike deep inside Russia, according to sources familiar with the decision cited by Reuters. NYT also reported that President Biden allowed Ukraine to strike Russia with long-range US missiles, while Ukrainian President Zelensky said missiles speak for themselves and such things are not announced regarding long-range strikes.
• Russian upper house’s international affairs committee deputy head said the decision to allow Ukraine to strike inside of Russia with US missiles is an unprecedented step that could lead to World War Three and will receive a swift response, according to TASS. Furthermore, it was also that the senior Russian senator said the US decision to allow Kyiv to strike Russia with long-range weapons represents escalation and could result in the Ukrainian statehood being in complete ruins by the morning.
• Ukrainian President Zelensky said Russia launched around 120 missiles and 90 drones in a massive combined air strike on Ukraine’s energy infrastructure early on Sunday morning, while Ukraine’s largest private power company said the Russian air strike damaged thermal power stations, according to Reuters. Furthermore, Russia’s Defence Ministry said Russian forces launched a massive strike on Ukraine’s critical energy infrastructure facilities that support the defence industry and military enterprises, according to RIA.
• Russian forces struck critical infrastructure in Ukraine’s Zaporizhzhia region and western Ukraine’s Rivne region, while Russia’s missile attack damaged energy infrastructure in Ukraine’s north-western Volyn region.
• Poland activated aircraft to ensure airspace security after Russia launched a missile attack on Ukraine.
• French President Macron said the massive Russian attack on Ukraine shows Russian President Putin does not want peace and they must continue helping Ukraine defend itself.
• Australia’s Defence Minister Marles said Japanese troops are to have regular deployment in Australia and focus on cooperation between Australian and US Marines.
• North Korean leader Kim urged the military to improve capabilities for fighting an actual war, while he added that threats by the US and allies brought tensions and calls for war preparations, according to KCNA.
• North Korea said Russia’s delegation led by the national resources minister arrived in North Korea, according to KCNA. It was separately reported that North Korea may end up sending 100k troops to Russian President Putin to support Russia’s war in Ukraine although it was also stated that the move is not imminent and troops could rotate in batches, according to Bloomberg.

ASIA-PAC

NOTABLE HEADLINES

• US President Biden told Chinese President Xi that keeping open lines of leader-to-leader communication is vital through transition and beyond, while they agreed that AI will not ever take control of nuclear weapons and Biden raised concerns about unfair, non-market economic practices by China and issues in the South China Sea.
• Chinese President Xi told US President Biden that China’s commitment to a stable, healthy and sustainable development of China-US relations remains unchanged and China is willing to maintain dialogue, expand cooperation and manage differences with the US government in an effort to realise a smooth transition period in China-US relations. Xi also told Biden that common interests between their countries are expanding rather than shrinking and that containing China is unwise, unacceptable and bound to fail. Furthermore, Xi said the China-US relationship would make considerable progress when the two countries treat each other as a partner and a friend and that he is ready to work with Donald Trump to manage ties.
• Chinese President Xi told US President Biden the Taiwan question, democracy and human rights, the system, and rights to development are China’s four red lines which allow no challenge, while he added the US should refrain from making any moves that have a chilling effect and told Biden to deal with the Taiwan issue with “extreme caution”, according to Chinese state media.
• China’s Commerce Minister met with the Canadian Minister for International Trade in Peru and discussed the tariff situation.
• South Korean President Yoon and Japanese PM Ishiba agreed to continue developing the trilateral cooperation under the new US administration, according to South Korean President Yoon’s office.

EU/UK

NOTABLE HEADLINES

• UK government confirmed the spread of bird flu in commercial poultry at premises near Rosudgeon, St. Ives, Cornwall, according to Reuters.