APAC Market Wrap – Dec 19
Mainland China stock market: At the close, the Shanghai Composite rose 0.36%, the Shenzhen Component rose 0.66%, and the ChiNext Index rose 0.49%. In terms of sectors, Hainan, dairy, retail and others led the gains, while precious metals, semiconductors and others were among the biggest decliners.
Hong Kong stock market: This week, Hong Kong stocks showed overall weakness and oscillation. At Friday’s close, the Hang Seng Index fell 1.10% weekly to 25,690.53 points; the Hang Seng Tech Index fell 2.82% to 5,479.04 points; the H-Shares Index fell 1.96% to 8,901.23 points.
From market performance, gaming, autos, pharmaceuticals and others led gains, while gold and shipping weakened.
Japanese stock market: The Nikkei Index rose 1.03% to 49,507.21 points.
By industry, non-ferrous metals, construction, information & communication and others rose, while fisheries, aquaculture and others declined.
Korean stock market:The KOSPI rose 0.65% to 4,020.55 points. Venture capital, sales, North Korea-related, healthcare management and others rose, while roads, department stores, semiconductors and others declined.
Australian stock market:The S&P/ASX 200 rose 0.39% to 8,621.400 points. Aerospace, semiconductors, apparel and others rose, while furniture, interactive media, homebuilding and others declined.
Singapore stock market:The FTSE Singapore Straits Times Index STI fell 0.02% to 4,569.78 points. Furniture, waste management, interactive media and others rose, while forestry products, personalized services, diversified financials and others declined.
Malaysian stock market:The FTSE Malaysia KLCI rose 1.15% to 1,665.90 points. Financial services, energy and others rose, while construction, industrials and others edged lower.
Key Events
As expected! BOJ announces rate hike – benchmark rate hits 30-year high
The Bank of Japan announced a 25 bps hike to 0.75% Friday midday — the second hike this year, pushing the benchmark rate to its highest since September 1995.
In its statement, the BOJ said the trend of moderate wage and price rises is expected to continue, while uncertainty from U.S. economic and trade policy has declined. Japan’s real rates remain negative, and accommodative financial conditions will continue supporting economic activity.
Don’t get too excited! Goldman Sachs: November CPI unlikely to change Fed easing outlook
Thursday Eastern Time, the latest U.S. November CPI data initially cheered markets: both headline and core CPI came in below expectations, boosting bets on Fed cuts next year.
But Goldman Sachs believes this CPI is unlikely to materially alter the Fed’s near-term policy outlook. The bank notes policymakers will focus more on December CPI to gauge true inflation.
Hike door still open! BOJ Governor: Will continue action if economy and prices develop as expected
Friday, the BOJ raised rates to a 30-year high and hinted at readiness for further hikes — a milestone step in ending decades of massive easing and near-zero rates.
The BOJ raised short-term rates from 0.5% to 0.75% — the second hike this year, the first in January. The policy board passed the decision unanimously 9-0.
Shortly after the announcement, Governor Kazuo Ueda held a press conference discussing hike pace, neutral rate, and inflation.
Institutional Views
Goldman Sachs: Gold rally may extend into 2026, target up to $4,900
Goldman Sachs said the 2025 gold futures rally to records could continue next year.
In its 2026 outlook report released Thursday: “Our base case sees gold up 14% by December 2026 to $4,900/oz, with upside risks.” Goldman expects central-bank gold demand to persist at ~70 tonnes/month in 2026, driven by geopolitical turmoil and hedging via gold holdings.
Citi adds to Fed cut bets: Three cuts expected next year
Citi expects the Fed to cut another 25 bps in September 2026 while maintaining prior January and March 25 bps cut forecasts.
Goldman Sachs: Low inflation data insufficient to sway Fed decisions
Analysts are no longer focusing on this distorted U.S. CPI due to government shutdown (no MoM comparison possible). Goldman Asset Management Fixed Income & Liquidity Solutions Global Co-Head Kay Haigh said: “Given data volatility, today’s low inflation won’t impact Fed decisions.”
“The Fed will turn to mid-January December CPI — released two weeks before the next meeting — as a more accurate gauge.”
State Street: BOJ dovish hike, Ueda likely neutral
State Street Investment Management senior fixed income strategist Masahiko Loo: Markets may interpret the BOJ hike as dovish, causing short-term yen volatility. But supported by Fed easing and Japanese investors raising hedge ratios from historic lows, longer-term target 135–140 unchanged.
Focus now on Governor Ueda’s press conference tone and forward guidance — likely neutral, signaling gradual normalization in 2026–27 without being too dovish or hawkish. Ueda needs delicate balance.
Morgan Stanley: BOJ to hike 25 bps in December, normalization gradual
Morgan Stanley expects the BOJ to hike 25 bps today while stressing policy remains accommodative, with future path data-dependent. Even post-hike, the BOJ will emphasize rates below neutral to signal supportive conditions. Key is guidance stressing further tightening will be gradual and data-dependent, not a preset path.
This suggests continued normalization but no commitment to aggressive or rapid hikes.
ANZ: BOJ future hike path unclear, expect USD/JPY 153 by end-2026
ANZ Group strategist Felix Ryan: Post-hike USD/JPY rose, possibly indicating markets see no clear BOJ hike pace/magnitude signal — to be clarified later today. While we expect BOJ hikes in 2026, yen likely to lag G10 crosses next year as rate differentials remain unfavorable. We forecast USD/JPY at 153 by end-2026.