Stock Market Update

The S&P 500 futures currently trade seven points above fair value.

Equity indices in the Asia-Pacific region ended the week on a higher note. The Bank of Japan raised its policy rate by 25 basis points to a 30-year high of 0.75%, as expected. The rate hike vote was unanimous. New Zealand saw a big improvement in business confidence for December while its trade deficit shrunk significantly. Fitch affirmed New Zealand's AA+ rating, observing that gradual recovery has hampered fiscal consolidation. Chinese press speculated that the People's Bank of China is preparing to lower its reserve requirement ratio in January.

• In economic data:
  • China's November FDI -7.5% YTD (last -10.3%)
  • Japan's November National CPI 0.4% m/m (last 0.4%); 2.9% yr/yr (last 3.0%). National Core CPI 3.0% yr/yr, as expected (last 3.0%)
  • South Korea's November PPI 0.3% m/m (last 0.2%); 1.9% yr/yr (last 1.5%)
  • Australia's November Private Sector Credit 0.6% m/m, as expected (last 0.7%) and Housing Credit 0.6% m/m (last 0.6%). November Commodity Prices -3.8% yr/yr (last -1.7%)
  • New Zealand's November trade deficit NZD163 mln (expected deficit of NZD1.175 bln; last deficit of NZD1.598 bln). November Credit Card Spending 4.7% yr/yr (last 1.6%). December ANZ Business Confidence 73.6 (last 67.1)

---Equity Markets---

• Japan's Nikkei: +1.0%
• Hong Kong's Hang Seng: +0.8% 
• China's Shanghai Composite: +0.4%
• India's Sensex: +0.5%
• South Korea's Kospi: +0.7%
• Australia's ASX All Ordinaries: +0.5%

Major European indices trade near their flat lines, tracking a quiet finish to the week. Today's economic data batch included some soft spots like weak November Retail Sales in the U.K. (-0.1%; expected 0.3%) and weak January Consumer Climate in Germany (-26.9; expected -23.0). The EU agreed to provide an EUR90 bln loan to Ukraine but could not agree on spending frozen Russian assets. European Central Bank officials appear comfortable with the current level of rates while Goldman Sachs expects the Bank of England to cut its bank rate three times in 2026.

• In economic data:
  • Eurozone's October Current Account surplus EUR25.7 bln (expected surplus of EUR16.0 bln; last surplus of EUR23.1 bln)
  • Germany's November PPI 0.0% m/m (expected 0.1%; last 0.1%); -2.3% yr/yr (expected -2.2%; last -1.8%). January GfK Consumer Climate -26.9 (expected -23.0; last -23.4)
  • U.K.'s November Retail Sales -0.1% m/m (expected 0.3%; last -0.9%); 0.6% yr/yr (expected 1.6%; last 0.6%). November Core Retail Sales -0.2% m/m (expected 0.2%; last -0.8%); 1.2% yr/yr (expected 1.6%; last 1.6%). November Public Sector Net Borrowing -GBP11.65 bln (expected -GBP10.20 bln; last -GBP21.19 bln). December CBI Distributive Trades Survey -44 (expected -29; last -32)
  • France's November PPI 1.1% m/m (last 0.0%); -3.3% yr/yr (last -0.8%)
  • Italy's December Business Confidence 88.4 (expected 89.3; last 89.5) and Consumer Confidence 96.6 (expected 96.0; last 95.0). October Industrial Sales -0.5% m/m (last 1.9%); 1.7% yr/yr (last 3.4%)

---Equity Markets---

• STOXX Europe 600: flat
• Germany's DAX: +0.1%
• U.K.'s FTSE 100: UNCH 
• France's CAC 40: -0.1%
• Italy's FTSE MIB: +0.4% 
• Spain's IBEX 35: +0.2%