The dollar index soars to its highest level since late 2022, prompting the PBOC to ramp up efforts in a bid to protect the yuan. Chinese trade data for December beats expectations. Asian equities start the week slowly following Friday’s negative session on Wall Street and the strong December U.S. jobs print. In energy news, Brent rallies to top $81 per barrel on the back of new U.S. sanctions on Russian crude – its highest level for four months. And in Los Angeles, residents are braced for strong Santa Ana winds to return as the death toll from last week’s wildfires rises to 24.   

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Global markets are spooked by elevated yields with the 10-year Treasury yield sitting at a near-eight month high while UK Treasury seeks to reassure investors rising gilts. In China, yields also rise as the yuan hits a 16-month low. The PBOC moves to suspend treasury buying due to a shortage of available bonds. X owner Elon Musk reiterates his support for Germany’s AfD during a livestream conversation with leader Alice Weidel. In aviation news, Airbus delivered 766 jets in 2024, slightly missing expectations. However the French plane maker maintains its lead over rival Boeing for the sixth year running. Wall Street futures point lower following Christmas with investors now eyeing December’s non-farm payroll data due out later today.

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The bond market sell-off continues around the world with the benchmark yield rising in the UK, Germany, Japan and the U.S. The 10-year yield is now at its highest level since April 2024. The Chinese economy is struggling against deflation with CPI data plunging to a 5-month low in December. Manufacturing prices remain in deflationary territory for the 27th-straight month. President Biden is reportedly due to sign off on a final round of A.I. chip export restrictions ahead of the Trump presidency in 11 days’ time in a bid to coerce allies to align themselves with U.S. standards in the sector. And in Los Angeles, wildfires have now spread into the iconic Hollywood Hills. President Biden has declared a major disaster. 

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A strengthening services and jobs scenario Stateside again dampens expectations of further Fed rate cuts this year with tech stocks pushing U.S. indices down, with Nvidia hit by profit-taking. In the UK, long-term borrowing costs soar to a 27-year high potentially wiping out under-fire Chancellor Rachel Reeves’ fiscal headroom. Samsung admits it will miss expectations in Q4 but share are in the green on the back of positive comments from Nvidia CEO Jensen Huang about the company’s ability to deliver A.I.-suitable chips. Facebook owner Meta scraps its fact-checking programme in what CEO Mark Zuckerberg describes as a return “back to our roots” regarding free speech. And in Los Angeles County, wildfires force 30,000 people to flee the Pacific Palisades region. A state of emergency has been declared.

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Nvidia shares are at a record high as CEO Jensen Huang announces at CES his company’s ambitions to expand in robotics, gaming and autonomous vehicles. Samsung Electronics co-CEO Jong-Hee Han tells CNBC the South Korean giant is set to boost its on-device A.I. strategy and says competition in the sector is to be welcomed. Chinese tech conglomerate Tencent leads losses in Hong Kong as the U.S. adds the firm to its list of companies allegedly partnering with the Chinese military. U.S. President-elect Donald Trump denies reports he will water down tariff threats with the 30-year Treasury yield hits its highest point in 14 months. And in Canada, Prime Minister Justin Trudeau announces his resignation after 9 years in power. Former BoE governor Mark Carney is reportedly in the running to replace the Liberal Party leader.  

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Chinese services activity hits a seven-month high on the back of strong domestic demand. The strength of the dollar pushes the yuan to a 16-month low. In autos news, Xpeng shares are up following the announcement of a Chinese EV charging network deal with Volkswagen. Tesla CEO Elon Musk intervenes further into UK politics arguing for a snap election and withdrawing his support for Reform leader Nigel Farage. Strong demand for A.I. helps Foxconn to record quarterly revenues and lifts the wider sector ahead of a key speech by Nvidia CEO Jensen Huang later today.

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The S&P 500 and the Nasdaq begin the year in the red - their fifth-straight negative session. However, the dollar extends its rally into 2025 with the index hitting a two-year high. President Biden is expected to officially announce he is blocking the proposed $15bn takeover of U.S. Steel by Japan’s Nippon Steel. Outnumbered by security forces, South Korean prosecutors abandon their attempt to execute an arrest warrant for impeached President Yoon Suk Yeol over last month’s imposition of martial law. And in autos news, Tesla shares fall more than one per cent on the year after the EV maker posted its first decline in annual deliveries. 

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The U.S. is on high alert as the new year begins with a terror attack involving a pick-up truck ramming into revellers in New Orleans, killing 15 people and injuring dozens more. Hours later, a Tesla Cybertruck explodes outside the Trump Tower hotel in Las Vegas, killing the driver. Asian markets are mostly in the red with investors looking forward to a second Donald Trump presidency and a potentially more hawkish Federal Reserve. New Chinese export orders are down once more ahead of expected U.S. tariffs later this month. And in energy news, Kyiv refuses to renew a gas transit deal for Russian gas flowing into Europe.  

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European equities are largely flat in the holiday-shortened session but the Stoxx 600 is set to deliver a second year in the green for the first time since 2015. The U.S. Treasury Department claims Chinese hackers have stolen documents in a major cyber breach. Beijing has said the allegations were smear tactics. Growth in China slows in December but President Xi Jinping said the country remains on track to hit its 5 per cent target for the year. And Chinese toy company Bloks Group is set to float on the Hong Kong Exchange in a listing that could be worth $188m. 

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The Jeju Air disaster becomes South Korea’s worst air disaster in history with Boeing shares opening lower on the Frankfurt bourse. European equities follow Wall Street with every sector opening in the red. The Stoxx 600, however is still on track to end the year positively for a second straight time. In Japan, the Nikkei rises almost 20 per cent on the year while South Korea’s KOSPI posts its longest monthly losing streak since 2008. Condolences flood in for former U.S. President Jimmy Carter who has passed away aged 100.

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