A look at the day ahead in European and global markets from Kevin Buckland

Signs are positive for European stocks’ open, with futures pointing up, and equity indices across most of Asia also in the green.

Like Monday, there’s little news to guide market direction, with a reversal of some of the big moves from last week when world stocks suffered their worst week since the start of September again being the main driver of moves.

The U.S. dollar is trading on the back foot again today, extending its retreat from a one-year peak versus major peers from last week. Treasury yields sagged to new lows in Tokyo, pulling away from Friday’s high above 4.5%, a level last seen 5-1/2-months ago.

The outlook for Federal Reserve easing seems to have returned as the market’s main preoccupation, in the absence of highly anticipated announcements of Donald Trump’s picks for the Treasury and trade portfolios.

A run of robust U.S. data combined with expectations of faster inflation under Trump’s higher-tariff, tighter-immigration policies have seen bets for a December rate cut pared to around 58% on CME FedWatch, from greater than 65% odds a week ago.

Despite the relative news vacuum, AI darling Nvidia (NASDAQ:NVDA)’s earnings on Wednesday loom large as the event likely to set the tone for equity markets at least for the final half of the week, and possibly into year-end.

There’s little on the data docket in Europe today, which is headlined by final consumer inflation readings for October for the euro zone as a whole. Similarly, the U.S. only has housing figures on tap.

There are plenty of central bank speakers though, including Kansas City Fed President Jeffrey Schmid late in the day.

Ahead of that, Bank of England Governor Andrew Bailey and his peers appear in parliament, where they are likely to be peppered with questions about the implications of the government’s big-spending budget and Trump’s potential trade policies.

ECB policy maker Frank Elderson also gives remarks at a green finance forum in Frankfurt. And in Sweden, Riksbank’s First Deputy Governor Anna Breman takes the podium.

Key developments that could influence markets on Tuesday:

-BoE officials speak in parliament

-Euro zone final HICP (Oct)

-ECB’s Elderson speaks

-Riksbank’s Breman speaks

-Kansas City Fed’s Schmid speaks

By Jessie Pang and James Pomfret

HONG KONG (Reuters) -Hong Kong’s High Court on Tuesday sentenced 45 leading democrats to jail terms of up to 10 years in what critics say is a major blow to the financial hub’s rule of law.

The following are comments on this landmark ruling:

REPUBLICAN CHRIS SMITH, CHAIRMAN OF THE U.S. CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA (CECC)

“The Hong Kong government is seeking U.S. investments in the very same week that it brutally silences free speech and jails pro-democracy advocates. The Chinese Communist Party is asking U.S. financial institutions to subsidize their repression in Hong Kong.

“Instead of investment, the Biden Administration must sanction the judges, police, and prosecutors engaged in the political prosecutions of the HK 47 (democrats) and Jimmy Lai.”

PENNY WONG, FOREIGN MINISTER OF AUSTRALIA

“The Australian Government is gravely concerned by the sentence handed down in Hong Kong for Australian citizen Mr Gordon Ng and other members of the NSL47.

“Australia has expressed our strong objections to the Chinese and Hong Kong authorities on the continuing broad application of national security legislation, including in application to Australian citizens.

“We call for China to cease suppression of freedoms of expression, assembly, media and civil society, consistent with the Human Rights Committee and Special Procedure recommendations, including the repeal of the National Security Law in Hong Kong.”

THE INTER-PARLIAMENTARY ALLIANCE ON CHINA (IPAC), A GROUP OF INTERNATIONAL LAWMAKERS ENGAGED IN ISSUES ON CHINA.

“(IPAC) denounce their convictions as a travesty of justice. These 45 men and women are suffering political persecution for organising a democratic primary election. This is clear evidence, if any more were needed, of the precipitous decline in the rule of law in Hong Kong. No credible system would countenance such ludicrously harsh sentences for people who merely wanted to vote.”

LEE YUE SHUN, 31, ONE OF THE TWO ACQUITTED DEMOCRATS:

“We should actively care to express our feelings, put forward our views, raise some questions or give some suggestions based on … the conclusion of this case. I think this is what everyone needs to do. Because as a member of society, these cases are not only about legal interests. In fact, everyone has a chance to be affected.”

ROXIE HOUGE, THE U.S. CONSULATE IN HONG KONG’S HEAD OF POLITICAL AND ECONOMIC AFFAIRS

“The U.S. government condemns the continuous prosecution of individuals here in Hong Kong who are expressing their political views … exercising their freedom of speech.”

MAYA WANG, ASSOCIATE CHINA DIRECTOR AT HUMAN RIGHTS WATCH

“Running in an election and trying to win it is now a crime that can lead to a decade in prison in Hong Kong. Today’s harsh sentences against dozens of prominent democracy activists reflect just how fast Hong Kong’s civil liberties and judicial independence have nosedived in the past four years since the Chinese government imposed the draconian National Security Law.”

SARAH BROOKS, CHINA DIRECTOR FOR AMNESTY INTERNATIONAL:

“We have moved into an era where healthy civic debate, the space for public discourse, and the normal interactions and sometimes frictions between civil societies and governments, is no longer seen as acceptable (in Hong Kong).”

STEVE TSANG, DIRECTOR OF THE CHINA INSTITUTE AT THE SCHOOL OF ORIENTAL AND AFRICAN STUDIES (SOAS) IN LONDON:

“Hong Kong’s democratic movement essentially has been put to a stop. It doesn’t mean that people in Hong Kong are not still aspiring for democracy. It doesn’t mean that there are no people in Hong Kong who would still fight for democracy. But as an organised movement, it has effectively been put to a stop. The range of people who are being caught up in this network of 47 shows that even people who are known to be very, very moderate indeed can be caught in the net.”

URANIA CHIU, A DOCTORAL LEGAL RESEARCHER AT OXFORD UNIVERSITY:

“Ultimately I think the damage to Hongkongers’ faith in the courts and the rule of law has already been done in how the case has been handled so far, in terms of the mass arrests, stringent bail requirements, and over 3.5 years of detention for some of the defendants.”

By Sneha Kumar

(Reuters) – Singapore shares jumped to a 17-year high on Tuesday, powered by a rally in index heavyweight financials, as the city-state ramps up efforts to revive its stock market.

The Straits Times Index, comprising 30 biggest companies in the city-state, rose as much as 0.9% to touch a level unseen since November 2007. It has gained 16% so far this year, outperforming most of its rivals in the region.

In August, the Monetary Authority of Singapore (MAS) said it had formed a review group to recommend steps to strengthen the development of the equities market in the island country, which hosts more than $4 trillion of assets under management.

“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” Morgan Stanley (NYSE:MS) analysts said in a note.

DBS Group (OTC:DBSDY), Oversea-Chinese Banking Corp and United Overseas Bank (OTC:UOVEY) rose between 0.4% and 0.6%.

The Singapore dollar traded largely flat.

Among other stock markets in Southeast Asia, Thailand and Taiwan rose 0.9% and 1.4%, respectively.

On Monday, Thailand reported better-than-expected economic growth for the July-September period, although rising government spending and slowing private consumption remain a concern.

The latest economic data is expected to maintain pressure on the central bank to lower interest rates further, helping Thai stocks rise to their highest since Nov. 8.

“Considering uncertainty surrounding the growth outlook, the still elevated real policy rate, and weak credit growth, it is too early to rule out further monetary policy easing in 2025,” ANZ analysts said in a note.

Among currencies in the region, the Taiwan dollar and the Malaysian ringgit gained 0.2% and 0.3%, respectively, against an easing U.S. dollar.

The ringgit is the only Asian currency that has gained so far this year, as the Malaysian economy stays on track to meet official forecasts, reflecting a jump in investments and boost in domestic spending.

HIGHLIGHTS:

** Bank Indonesia to keep rates steady on Nov. 20 to stabilise battered rupiah

** Philippine central bank signals more rate cuts ahead

** Thai Q3 GDP growth beats forecast, but risks seen ahead

Asian

currenc

ies and

stocks

as of

0357

GMT

COUNTRY FX RIC FX FX INDE STOCK STOCK

DAILY YTD % X S S YTD

% DAILY %

%

Japan +0.31 -8.50 0.73 15.66

China +0.00 -1.85 -0.39 11.30

India -0.02 -1.41 0.32 8.27

Indones +0.22 -2.62 0.99 -0.93

ia

Malaysi +0.34 +2.85 0.20 10.49

a

Philipp +0.07 -5.56 0.40 5.25

ines

S.Korea +0.24 -7.34 0.30 -6.74

Singapo +0.04 -1.41 0.82 16.13

re

Taiwan +0.24 -5.30 1.36 27.45

Thailan -0.10 -1.22 0.90 3.53

d

CEBU, Philippines (Reuters) – The International Monetary Fund (IMF) warned on Tuesday that “tit-for-tat” tariffs could undermine Asia’s economic prospects, raise costs and disrupt supply chains even as it expects the region to remain a key engine of growth for the global economy.

“The tit-for-tat retaliatory tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains,” IMF Asia-Pacific Director Krishna Srinivasan said at a forum in Cebu on systemic risk.

Srinivasan’s remarks come amid concerns over U.S. President-elect Donald Trump’s plan to impose a 60% tariff on Chinese goods and at least a 10% levy on all other imports.

Tariffs could impede global trade, hamper growth in exporting nations, and potentially raise inflation in the United States, forcing the U.S. Federal Reserve to tighten monetary policy, despite a lacklustre outlook for global growth.

In October, the European Union also decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3%, prompting retaliation from Beijing.

The IMF’s latest World Economic Outlook forecasts global economic growth at 3.2% for both 2024 and 2025, weaker than its more optimistic projections for Asia, which stand at 4.6% for this year and 4.4% for next year.

Asia is “witnessing a period of important transition”, creating greater uncertainty, including the “acute risk” of escalating trade tensions across major trading partners, Srinivasan said.

He added that uncertainty surrounding monetary policy in advanced economies and related market expectations could affect monetary decisions in Asia, influencing global capital flows, exchange rates, and other financial markets.

By Selena Li and Kane Wu

HONG KONG (Reuters) -Beijing will support more high-quality enterprises from China to list and issue bonds in Hong Kong, China’s Vice Premier He Lifeng said on Tuesday, offering backing to the city at a time its future as a financial centre is facing scrutiny.

Speaking at the Global Financial Leaders’ Investment Summit hosted by the Hong Kong Monetary Authority (HKMA), He said China’s recent stimulus measures were gradually taking effect and benefitting Hong Kong’s markets.

He said Beijing would help support Chinese financial institutions to expand their businesses in Hong Kong.

“We will improve the mechanism for the regular issuance of treasury bonds, steadily increase issuance in Hong Kong, and support Hong Kong in consolidating its position as a global financial business hub,” He said, without providing specifics.

Hong Kong’s standing as a regional capital markets hub has diminished in the past few years, with the value of initial public offerings and secondary listings sliding.

There have been $9.1 billion worth of listings in Hong Kong in 2024, according to Dealogic data, compared with $5.88 billion in 2023. Despite the pick up, issuance volumes remain well off the 2020 peak of $51.6 billion.

The deals slowdown has prompted Western and Chinese financial firms to slash hundreds of investment banking jobs in the past two years. Some international law firms have scaled back or exited their businesses in the greater China region.

The HKMA event is being attended by some of China’s top policymakers and global bankers who have gathered in the Asian financial hub.

It marks the first appearance of He, China’s top economic official, and all three of its main financial regulatory chiefs at the annual event that has been running since 2022.

TRUMP EFFECT

The event also comes as China is grappling with an economic slowdown, fuelled by a property sector debt crisis and the lingering effects of the pandemic lockdowns. Geopolitical uncertainties remain heightened in light of Donald Trump’s election as the next U.S. president.

Trump has proposed tariffs on Chinese made goods of at least 60%, in a move likely to further strain diplomatic and business ties between the two countries.

“Asia itself has very good core growth, 4.6%, even if you look at the tariff effect on China which will significantly affect Chinese growth, we think China can do quite a lot in terms of remediating that,” UBS chairman Colm Kelleher told the summit.

Citigroup (NYSE:C) chief executive Jane Fraser and Goldman Sachs chairman David Solomon told the forum the return of Trump to the White House next year should spur more corporate buyout activity on the prospect of reduced regulation.

“When we think about deregulation tapering there (U.S), we saw an almost immediate unlock happening with the election result,” Fraser said.

“… We saw a huge growth in our pipelines, almost overnight in M&A, IPOs, our sponsor clients are definitely back and I would call it the big unlock that we’ve been waiting for a long time.”

Beijing unveiled earlier this month a 10 trillion yuan ($1.38 trillion) debt package to ease local government financing strains and stabilise the country’s flagging growth.

($1 = 7.2364 Chinese yuan)

SYDNEY, Nov 19 (Reuters) – Australia’s central bank said on Tuesday that there was no immediate need to change interest rates, having left them steady for a year now, but it was important to be ready to act as the economic outlook evolves.

Minutes of its November 4-5 board meeting released on Tuesday showed the Reserve Bank of Australia (RBA) again discussed scenarios under which the cash rate of 4.35% may need to be cut, raised or held steady for a prolonged period.

In one such scenario, the RBA said a drastic slowdown in inflation could warrant a rate cut, but the board will need to observe more than one good quarterly inflation outcome to be confident that such a decline is sustainable.

Markets have not fully priced a cut in rates until May next year, with a move in February after the fourth-quarter inflation report just at a 38% probability.

A majority of economists, however, still look for a rate cut in February.

The central bank considered a range of scenarios that might require a timely response from policy.

“It is important to remain forward looking, avoiding an excessive reliance on backward-looking information that may lead the board to react too late to a change in economic conditions,” said the RBA.

Policy might need to be tightened if the board judged that the current stance is not restrictive enough, said the RBA, adding that it will closely watch data such as credit growth, banks’ willingness to lend and growth in asset prices.

The central bank has kept rates steady for a year now, judging that the cash rate of 4.35% – up from a record-low 0.1% during the pandemic – is restrictive enough to bring inflation to its target band of 2-3% while preserving employment gains.

The RBA does not expect inflation to return to its target band until 2026. Headline inflation slowed to 2.8% in the third quarter, mainly due to government rebates on electricity, while underlying inflation ran at a still elevated 3.5%.

Other scenarios for a change in the cash rate include developments around consumption and the labour market. Card data from banks showed consumer spending has been weaker than expected even with the government’s tax cuts, while the labour market has stayed surprisingly strong, with the jobless rate staying at 4.1% for six months or so.

If the supply capacity of the economy was much more limited than assumed as productivity growth fails to pick up, it could necessitate a tighter policy stance, noted the RBA.

The central bank was also watching for major changes in U.S. economic policy and the size of the stimulus package from China.

By Kevin Buckland

TOKYO (Reuters) – Asian stocks rose on Tuesday while U.S. bond yields and the dollar hung back from multi-month highs as traders awaited President-elect Donald Trump’s cabinet selection and sought to gauge the outlook for Federal Reserve easing.

Tech shares advanced, tracking Wall Street’s recovery from last week’s steep losses although Nvidia (NASDAQ:NVDA)’s upcoming earnings on Wednesday limited the scope for big moves.

Markets have pared bets for a quarter-point interest-rate cut at the Fed’s next meeting in December to less than 59%, down from 62% a day earlier and more than 65% a week ago, according to CME FedWatch.

Trump’s mooted fiscal spending, higher tariffs and tighter immigration are seen as inflationary by analysts, potentially impeding Fed rate cuts, which are already being hampered by a run of resilient economic data.

Trump has begun making appointments, filling health and defence roles last week, but key positions for financial markets – Treasury secretary and trade representative – have yet to be announced.

Japan’s Nikkei added 0.2% as of 0129 GMT, while South Korea’s Kospi and Australia’s equity benchmark each ticked up 0.1%.

Hong Kong’s Hang Seng climbed 0.8%, and mainland blue chips gained 0.3%.

U.S. S&P 500 futures pointed slightly lower, but following a 0.4% advance overnight for the cash index.

MSCI’s index of world stocks snapped a four-day losing streak on Monday.

“With a lack of data and a lull in market moving news…the marginal driver of asset prices right now is how the incoming Trump administration will impact economic conditions, international trade and global geopolitics,” said Kyle Rodda, senior financial markets analyst at Capital.com.

“Concurrently, the markets are trying to estimate how those policies will impact interest rate settings, especially the Fed, with the markets walking back the depth of rate cuts previously discounted into the curve.”

U.S. Treasury yields extended overnight declines, with the two-year yield ticking down to 4.278% and the 10-year yield edging down to 4.412%.

That kept pressure on the dollar, which languished close to its overnight low versus major peers. The dollar index, which tracks the currency against a basket of six others, was flat at 106.20, close to Monday’s trough at 106.12. It reached the highest in a year at 107.07 on Thursday.

The dollar sagged 0.35% to 154.165 yen, while firming slightly to $1.0591 per euro.

Bitcoin, which surged to a record high of $93,480 last week on bets for more favourable cryptocurrency regulation under Trump, continued its week-long consolidation around $90,000, last trading at around $90,960.

Safe-haven gold was flat at $2,614.80 after jumping nearly 2% on Monday, its biggest one-day advance since mid-August, amid softness in the dollar and heightened concerns about the Russia-Ukraine conflict.

In a significant reversal of Washington’s policy, President Joe Biden’s administration allowed Ukraine to use U.S.-made weapons to strike deep into Russia, two U.S. officials and a source familiar with the decision said on Sunday.

The Kremlin said on Monday that Russia would respond to what it called a reckless decision by the Biden administration, having previously warned that such a decision would raise the risk of a confrontation with the U.S.-led NATO alliance.

The escalating tensions continued to push both crude oil benchmarks up on Tuesday, following gains of about $2 a barrel each in the previous session.

Brent crude futures added 7 cents to $73.37 a barrel, while U.S. West Texas Intermediate crude futures were at $69.26 a barrel, up 8 cents.

Crude was also buoyed by the shutdown of Norway’s massive Johan Sverdrup oilfield due to a power outage.

SEOUL (Reuters) – South Korean President Yoon Suk Yeol has pledged a 45% increase in the country’s contribution to the World Bank’s International Development Association fund to more than $600 million, the finance ministry said on Tuesday.

The country, once a beneficiary during the 1960-1970s, will contribute this year around 845.6 billion won ($608.26 million) to the fund for financial aid to low-income countries, up from 584.8 billion won in the previous fund replenishment round in 2021.

“It is for South Korea to play a leading role as a global pivot state and to induce active contributions from other countries,” the ministry said in a statement.

U.S. President Joe Biden on Monday pledged a record $4 billion contribution during a closed session of the Group of 20 summit in Rio de Janeiro, up from $3.5 billion in 2021.

($1 = 1,390.2000 won)

By Rae Wee

SINGAPORE (Reuters) – The yen got some much-needed respite on Tuesday as it steadied on the stronger side of 155 per dollar thanks to a pullback in the U.S. currency, which ran into profit-taking after a stellar rally that saw it scale a one-year high.

The yen last edged 0.2% higher to 154.40 per dollar, recovering from its fall in the previous session after Bank of Japan Governor Kazuo Ueda stuck to his usual script and failed to offer any hints on whether a rate hike could come in December.

“Recent (yen) weakness had many market participants expecting Ueda to sound hawkish, but in the end the Governor stuck to his recent narrative,” said Rodrigo Catril, senior FX strategist at National Australia Bank (OTC:NABZY).

“We think the economy and price pressures are making a strong case for a hike in December, but much will depend on whether there is any political push back, given the LDP is looking to regain public support, after a poor show at the recent Lower House election.”

The yen has fallen some 7% since October and had weakened past the 156 per dollar level for the first time since July last week, leaving traders on alert for any intervention from Japanese authorities to shore up the currency.

In the broader market, the dollar was on the back foot as it eased further away from last week’s one-year top against a basket of currencies.

Sterling steadied at $1.2676, while the dollar index tacked on 0.04% to 106.26, after falling 0.4% overnight.

“You do get bouts of profit taking after big moves like this,” said Jarrod Kerr, chief economist at Kiwibank.

The greenback has risen more than 2% for the month thus far, buoyed by reduced expectations of the extent of Federal Reserve rate cuts and on the view that President-elect Donald Trump’s touted policies of tariffs, reduced immigration and debt-funded tax cuts will be inflationary to the U.S. economy.

The euro similarly rebounded from last week’s one-year low and last bought $1.0590.

Two top European Central Bank policymakers signalled on Monday they were more worried about the damage that expected new U.S. trade tariffs would do to economic growth in the euro zone than any impact on inflation.

Elsewhere, the Australian dollar fell 0.15% to $0.6499.

Minutes of the Reserve Bank of Australia’s November board meeting released on Tuesday showed policymakers saw no immediate need to change interest rates, having left them steady for a year now, but said it was important to be ready to act as the economic outlook evolves.

Markets have not fully priced a cut in rates until May next year, with a move in February after the fourth-quarter inflation report at just a 38% probability.

The Reserve Bank of New Zealand, meanwhile, meets next week and traders have priced in 50 basis points worth of easing from the central bank.

The kiwi last traded 0.24% lower at $0.5880.

By Scott Murdoch

(Reuters) -China’s largest express delivery company S.F. Holding said on Tuesday it plans to raise up to HK$6.17 billion ($792.71 million) in a Hong Kong listing, the latest sign of a revival in the city’s capital markets.

The Shenzhen-listed company will issue 170 million shares in a price range of HK$32.30 to HK$36.30 per share, according to its regulatory filings.

The final price will be set on Nov. 25, and the stock is due to start trading on Nov. 27.

The courier group, known for its flagship SF Express delivery business, is regarded as China’s answer to FedEx (NYSE:FDX) and DHL.

The listing has attracted ten cornerstone investors, led by Oaktree Capital Management, which have subscribed for up to HK$204.8 million worth of stock, the filings showed.

The company said about 45% of the funds raised in the listing would be spent on growing its international business, especially across South-east Asia. It added it has earmarked about HK$1.1 billion for buyout activity, forming joint ventures or making minority investments in businesses.

S.F. Holding, initially filed for a Hong Kong listing in August last year. Reuters reported in May last year the company was aiming to raise between $2 billion and $3 billion.

There have been $9.1 billion worth of new listings in Hong Kong in 2024, according to Dealogic data, compared to $5.88 billion in 2023.

While well off the 2020 peak of $51.6 billion, the prospect of lower global interest rates has prompted some revival in the city’s listing market.

S.F. Holding’s Shenzhen-listed share price has risen 4.75% this year.

($1 = 7.7834 Hong Kong dollars)