Market navigator: week of 8 December 2025
US markets consolidate ahead of pivotal Fed rate decisions this week. Critical Chinese inflation data and earnings reports from Oracle and Broadcom await.
Summary
- What happened last week: Mixed US employment data while core inflation aligned with expectations, supporting a December rate cut. Oil prices advanced on geopolitical tensions.
- Markets in focus: US equities consolidated ahead of Fed meeting. Hong Kong markets experienced subdued volumes as investors secured profits. The yen strengthened on rate hike expectations.
- The week ahead: RBA and Fed monetary policy decisions will dominate, alongside Chinese inflation data and corporate earnings from Oracle and Broadcom.
What happened last week
- Mixed employment signals: The ADP report revealed 32,000 US private sector job losses in November, the weakest since March 2023, driven by small business contractions. Conversely, continuing jobless claims fell to 1.94 million, a seven-week low. While the labour market has decelerated, the 'low hire, low fire' dynamic indicates resilience, supporting the 2026 economic outlook.
- Inflation meets expectations: The Federal Reserve's (Fed) preferred inflation gauge — core personal consumption expenditures (PCE) index — rose 0.2% month-on-month (MoM) in September, matching expectations. Combined with employment moderation, this strengthens the case for a 25 basis-point December rate cut, with market probability at 86%.
- Oil prices edge higher: WTI crude oil futures climbed 3% to $60.08, the highest since 18 November, supported by rate cut expectations and geopolitical tensions from Russia-Ukraine talks and Venezuelan sanction risks, though OPEC+ supplies capped gains.
- Distress in China's property sector deepens: Following a 42% year-on-year (YoY) decline in new home sales amongst the top 100 developers in October, Shenzhen state-backed Vanke is now seeking to postpone repayment of a RMB 2 billion bond due 15 December by one year. Without 90% bondholder approval, the property conglomerate faces imminent default risk.
Markets in focus
Range-bound US market ahead of Fed meeting
US equity markets traded within a narrow range as investors awaited the Fed's 10 December decision. The S&P 500 advanced 0.3% while the Nasdaq 100 and Dow Jones gained 1.0% and 0.5% respectively. Market breadth indicators, particularly the advance/decline line, rebounded sharply from November's sell-off, signalling support for further index appreciation.
Technology stocks spearheaded gains last week. Salesforce rallied 13% as the software enterprise exceeded Q3 earnings and revenue expectations, elevated full-year guidance, and revealed robust demand for its new artificial intelligence (AI) agent platform. Meta reportedly plans to reduce metaverse division budgets by 30% in 2026, reallocating resources within Reality Labs. Meta's share price recovered 4% last week, though remains 15% below its previous peak.
Following the two-week recovery, the US Tech 100 index trades just 500+ points below its historic high. The index currently tests resistance highlighted in our previous Market Navigator — a decisive break above 25,700 would establish a trajectory towards 26,253. However, we continue monitoring diminishing index momentum, evidenced by lower highs in the relative strength index (RSI). Any corrective movement should encounter support from the 50-day moving average (MA) positioned around 25,200.
Figure 1: US Tech 100 index (daily) price chart
Low trading volume in Hong Kong equities
Having delivered more than 30% gains year-to-date in the Hang Seng Index (HSI), investors have initiated profit-taking as the year closes. Trading volume on the Hong Kong Exchange main board has declined substantially since late November. Average daily turnover contracted to HK$187 billion last week, a 27% reduction compared to the HK$256 billion average recorded across the first eleven months of 2025.
The HSI maintained a sideways trajectory, advancing modestly by 0.9% last week. The Materials sector led gains, benefiting from rebounding metal prices. Zijin Mining surged 12.1% while China Hongqiao rose 9.3%. Conversely, Shenzhou International emerged as the worst-performing HSI constituent, declining 6.9% as investors secured profits following analyst target price adjustments.
Market enthusiasm for the initial public offering (IPO) market has similarly waned. Three of four newly listed stocks last week traded below their listing price, with noodle chain operator Guangzhou Xiao Noodles plummeting 27.8% on its inaugural trading day.
The flat 20-day and 50-day moving averages combined with the neutral RSI on the HSI daily chart underscore the prevailing sideways trend. The index appears positioned to trade within the 25,150 to 27,400 range in the near term. The short-term moving averages will likely present resistance around 26,200 while November's low establishes support near 25,180.
Figure 2: Hang Seng Index (daily) price chart
Yen recovers on rate hike expectations
Bank of Japan (BOJ) Governor Ueda signalled last week that a rate increase may be imminent, as the board weighs the merits of raising interest rates at its 18–19 December meeting. Although Japan's headline inflation has persisted above the 2% target for over three years, the BOJ has exercised caution while awaiting clarity on US tariff implications and sustainable wage growth indicators. Governor Ueda believes tariff risks have diminished and expressed concern that recent yen weakness could elevate import costs, intensifying inflationary pressures. Market participants increased December rate hike probability from approximately 35% to 75%.
Two-year Japanese Government Bond (JGB) yields, most sensitive to policy rate adjustments, rose above 1% for the first time since 2008 while 10-year JGB yields surged to 1.84%, exceeding China's government bond yield for the first time in history.
As JGB yields advance, concerns regarding yen carry trade unwinding have intensified. US Treasury yields similarly increased — the 10-year benchmark rose 11 basis points to 4.14% while the 30-year benchmark climbed from 4.67% to 4.79%.
The yen strengthened against the dollar as central bank policies diverge. USD/JPY breached the ascending channel established since mid-September, declining 0.5% to 155.3 last week. The currency pair approaches the support zone between 153.3 and 154.6. USD/JPY appears positioned to trade sideways within or above this zone unless the BOJ articulates a more hawkish-than-anticipated 2026 stance. The recent high at 157.9 will function as resistance should dovish surprises materialise.
Figure 3: USD/JPY (daily) price chart
The week ahead
The coming week centres on pivotal monetary policy decisions from the Reserve Bank of Australia (RBA) and Fed, alongside crucial Chinese inflation data that will shape market expectations across major economies.
The RBA convenes on Tuesday amid mounting inflationary pressures. October's trimmed mean consumer price index (CPI) surge to 3.3% YoY has fundamentally altered the policy landscape. Markets anticipate the central bank will maintain rates at 3.6% in December. More significantly, investors have begun pricing potential rate increases in 2026 as inflation is projected to rise further before moderating during the first half of next year. Hawkish forward guidance from the RBA would support the Australian dollar but potentially pressure domestic equity markets.
The Federal Open Market Committee's (FOMC) decision on Thursday early morning carries substantial weight beyond the widely anticipated 25 basis-point reduction to 3.5%–3.75%. Market participants will scrutinise Chair Jerome Powell's press conference for clarity on the 2026 policy trajectory, particularly given uncertainty surrounding potential leadership transitions. Speculation regarding Kevin Hassett as a possible successor has elevated expectations for a more accommodative path. Most market participants anticipate two additional rate cuts next year. The Fed's Summary of Economic Projections will also illuminate the US economic growth trajectory in 2026.
China's November inflation data on Wednesday provides essential insight into deflationary pressures following October's modest 0.2% YoY reading. The producer price index (PPI) will indicate whether industrial pricing power is stabilising after 37 consecutive months of contraction. These readings arrive alongside trade data on Monday, offering comprehensive perspective on China's economic health as policymakers evaluate further support measures.
Corporate earnings attention focuses on technology infrastructure leaders Oracle and Broadcom. Both companies' guidance on AI-related revenue growth, cash flow and capital expenditure trends will influence broader technology sector valuations as investors assess the sustainability of the current AI investment cycle.
Figure 4: US interest rate probabilities
Key macro events this week
Monday 8 December 2025
- 7.50am (HK time) — Japan Gross Domestic Product (GDP) Growth Rate annualised (Q3): previous 2.3%, consensus -1.8%
- 11.00am (HK time) — China Trade Balance (November): previous $90.07 billion, consensus $100.2 billion
- 11.00am (HK time) — China Exports YoY (November): previous -1.1%, consensus 3.8%
- 11.00am (HK time) — China Imports YoY (November): previous 1%, consensus 2.8%
Tuesday 9 December 2025
- 8.30am (HK time) — Australia NAB Business Confidence (November): previous 6
- 11.30am (HK time) — Australia RBA Interest Rate Decision: previous 3.6%, consensus 3.6%
- 11.00pm (HK time) — US JOLTs Job Openings (October): previous 7.227M
Wednesday 10 December 2025
- 9.30am (HK time) — China Inflation Rate YoY (November): previous 0.2%, consensus 0.9%
- 9.30am (HK time) — China Producer Price Index YoY (November): previous -2.1%, consensus -2.1%
Thursday 11 December 2025
- 3.00am (HK time) — US Fed Interest Rate Decision: previous 3.75%–4.00%, consensus 3.50%–3.75%
Friday 12 December 2025
- 3.00pm (HK time) — UK GDP MoM (October): previous -0.1%, consensus 0.1%
- China New Yuan Loans (November): previous RMB220 billion
Source: Trading Economics, Nasdaq, LSEG (as of 7 December 2025)
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