Investing.com-- China's economic outlook for 2025 remains clouded by weak domestic demand and mounting deflationary pressures, despite a recent uptick in expectations for policy stimulus, according to Bank of America (BofA) analysts.

While the country has benefited from a technology product upcycle and resilient demand from the global south, consumer and investor confidence remains subdued, exacerbated by a struggling property market.

BofA analysts, in a research note, revised their forecast for China's GDP growth to 4.5% in 2025, down from 4.8% in 2024. While the Chinese government continues to target a 5% growth rate for the final year of its 14th Five-Year Plan, achieving this goal will hinge on both the effectiveness of domestic stimulus measures and the external pressures posed by escalating trade tensions, particularly with the U.S..

China’s policymakers have signaled a pivot toward more aggressive fiscal and monetary easing. Since late September, a series of modest stimulus measures have been rolled out, including increased fiscal expenditure and efforts to stabilize the property market. Analysts believe these steps reflect a shift in policy orientation, with top leadership prioritizing economic stabilization over structural reforms.

In its base case, BofA anticipates that the U.S. will increase tariffs on Chinese goods in 2025, raising rates from 20% to 30% in the second quarter and up to 40% by the end of the year. Should these tariffs materialize, China is expected to counter with a range of policy responses, including widening the fiscal deficit to 3.5% of GDP, increased bank capital injections, and further interest rate cuts. Additionally, the People's Bank of China (PBoC) may deploy its targeted lending tools to support the property sector, which remains a key drag on overall growth.

WASHINGTON (Reuters) - Sales of new U.S. single-family homes dropped to the lowest level in nearly two years in October, likely as a rise in mortgage rates drove buyers to the sidelines and hurricanes disrupted activity.

New home sales plunged 17.3% to a seasonally adjusted annual rate of 610,000 units last month, the lowest level since December 2022, the Commerce Department's Census Bureau said on Tuesday. The sales pace for September was unrevised at a rate of 738,000 units.

Economists polled by Reuters had forecast new home sales, which account for about 15% of U.S. home sales, would ease to a pace of 725,000 units. New home sales are counted at the signing of a contract, and can be volatile on a month-to-month basis. They dropped 9.4% year-on-year in October.

Mortgage rates have reversed all of the decline that had pushed them to more than a 1-1/2-year low of 6.08% at the end of September after Federal Reserve began cutting interest rates.

The average rate on a 30-year fixed-rate mortgage jumped to 6.72% by the end of October, tracking a rise in the 10-year U.S. Treasury yields, which have increased on strong domestic data that have suggested a slower path of rate cuts from the U.S. central bank.

Expectations of fewer rate cuts next year have also been strengthened by fears of a resurgence in inflation. President-elect Donald Trump said on Monday he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, on his first day in office.

The 30-year fixed-rate mortgage averaged 6.84% last week.

New home sales tumbled 27.7% in the densely populated South, likely as hurricanes disrupted activity. They dropped 9.0% in West, but rose 1.4% in the Midwest and soared 53.3% in the Northeast.

The median new house price increased 4.7% to $437,300 in October from a year earlier. The inventory of new homes increased to 481,000, the highest level since early 2008, from 471, 000 units in September.

At October's sales pace it would take 9.5 months to clear the supply of houses on the market, up from 7.7 months in September.

BERLIN (Reuters) - The mood in Germany's export industry improved slightly in November as companies, generally cautious about foreign business developments, wait to see which trade policies U.S. President-elect Donald Trump will implement, a survey said on Tuesday.

The Ifo economic institute's indicator for export expectations rose to minus 5.9 points in November from minus 6.5 points in October, the first increase in six months.

"Companies are unsettled but are still waiting to see which trade policy Trump will ultimately implement," said Klaus Wohlrabe, head of Ifo surveys.

"In addition, the dollar has appreciated strongly since the election, which may benefit exporters," he added.

Some analysts assume that German deliveries to the United States could initially increase in the coming months as companies there try to order goods before the possible introduction of tariffs, which would make them more expensive.

Trump, who announced plans for drastic tariff increases on imports from Canada, Mexico and China on Monday, had said during his election campaign that he would place high tariffs on goods from the European Union.

That would hit the already lagging German economy particularly hard as the U.S. is the largest buyer of its goods.

SHANGHAI (Reuters) - The yuan fell against the U.S. dollar to its weakest in nearly four months after U.S. President-elect Donald Trump said he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China.

Offshore yuan dropped roughly 0.3% on the news to 7.2730 per dollar, its lowest since July 30, while onshore yuan also fell after the market opening.

"The directional impact is clear for the yuan – weaker – but Chinese authorities will be nervous about devaluing too much and encouraging outflows," said Ben Bennett, head of investment strategy for Asia at LGIM.

Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1910 per dollar, which was 450 pips firmer than the Reuters' estimate.

The effectiveness of the fixing as a tool to manage yuan depreciation expectations is limited, said analysts at Nomura in a note.

"We believe that, if onshore spot USD/CNY rises above the 7.30 level, market activity will shift where USD demand strengthens versus sellers," the Nomura analysts said, adding that this will present a challenge to authorities if they don't allow the yuan fixing to get weaker.

Nomura suggested to go long dollar against the offshore yuan.

The spot yuan opened at 7.2524 per dollar and was last trading 105 pips lower than the previous late session close at 7.2553 as of 0239 GMT.

Actual tariff announcements and negotiations will drive the yuan in coming quarters, said Liang Ding, an analyst at research firm Macro (BCBA:BMAm) Hive.

"Given the 'promise made, promise kept' rhetoric of the Trump campaign, markets may begin to price in additional risk premia related to the second trade war as Trump’s inauguration approaches," Ding said.

During Trump's first term as president, the yuan weakened about 5% against the dollar after the initial round of U.S. tariffs on Chinese goods in 2018, and fell another 1.5% a year later when trade tensions escalated.

As part of his pitch to boost American manufacturing during the recent election campaign, Trump said he would impose tariffs of 60% or more on goods from China.

The proposed tariffs, as well as other policies such as tax cuts, are seen as inflationary and likely to keep U.S. interest rates relatively high, hurting currencies of U.S. trading partners.

The dollar's six-currency index was 0.075% lower at 107.27.

LEVELS AT 02:39 GMT

INSTRUMENT CURRENT UP/DOWN( % DAY'S DAY'S 

vs USD -) VS. CHANGE HIGH LOW

PREVIOUS YR-TO-

CLOSE % DATE

Spot yuan 7.2553  -0.21 -2.12 7.2466 7.2568

Offshore 7.2629  -0.24 -1.91 7.2518 7.273

yuan spot

Investing.com-- U.S. stock index futures fell on Monday evening after President-elect Donald Trump threatened to impose higher import tariffs on China, Canada and Mexico on concerns over illegal drugs and immigration.

S&P 500 Futures fell 0.3% to 5,989.75  points, while Nasdaq 100 Futures fell 0.3% to 20,817.75 points by 19:03 ET (00:03 GMT). Dow Jones Futures fell 0.3% to 44,707.0 points. 

Futures reversed initial gains after Trump’s threat, which cut short momentum from a positive session on Wall Street. U.S. stock benchmarks hit record highs on Monday as investors cheered the nomination of Scott Bessent as Treasury Secretary, while flows into cyclical sectors persisted.

Risk appetite was also supported by reports that a ceasefire between Israel and Lebanon was close, which saw oil prices fall sharply. 

Trump threatens more tariffs 

Trump said in a social media post that he will impose an additional 10% tariff on all Chinese imports, citing a lack of progress on China’s part towards curbing the flow of illegal drugs into the U.S.

His threat follows promises during his campaign that he will impose a 60% tariff on all Chinese goods.

Additionally, Trump also said he will impose a 25% tariff on all imports from Canada and Mexico over inflows of allegedly illegal immigrants and drugs into the U.S. through open borders with the two countries.

Trump’s tariff threats ramped up concerns over a renewed global trade war between the world’s biggest economies- a trend seen through much of his first term. Such a scenario bodes poorly for global trade, especially for countries with heavy trade exposure to the U.S.

The dollar and Treasury yields surged on Trump’s tariff threats. 

Wall St hits record highs on Treasury nomination 

Losses in Wall Street futures came after a positive session on Monday, after Trump’s nomination of Bessent was welcomed by investors.

Bessent- a seasoned investor- is expected to push for more tax reforms for U.S. firms, and is also expected to have a more moderate view on trade tariffs. 

Wall Street was also buoyed by a steady pivot into economically sensitive sectors, as markets bet on more expansionary policies under a Trump administration.

The Dow Jones Industrial Average was an outperformer among its peers, rising 1% to a record high of 44,746.57 points on Monday. The S&P 500 rose 0.3% to 5,987.37 points, while the NASDAQ Composite rose 0.3% to 19,054.89 points. 

Trading volumes are expected to be muted this week, on account of the Thanksgiving holiday. 

But focus is also on key upcoming economic data, with PCE price index data- the Federal Reserve’s preferred inflation gauge- due on Wednesday. 

Investing.com-- President-elect Donald Trump said on Monday that he will impose an additional 10% tariff on all Chinese imports to the U.S. to pressure Beijing into curbing the flow of illegal drugs into the country.

Trump said in a post on Truth.social that he had held numerous talks with Chinese officials over curbing the supply of drugs, particularly fentanyl, to the U.S. 

But he claimed that such talks had not yielded any results, and that “drugs were still pouring into our country, mostly through Mexico, at levels never seen before.”

“Until such time as they stop, we will be charging China an additional 10% Tariff, above any additional Tariffs, on all of their many products coming into the United States of America,” Trump said. 

Trump had threatened to impose an up to 60% tariff on all Chinese goods, a move that could potentially spark a renewed trade war between the world’s biggest economies.

Trump threatens tariffs on Canada, Mexico over immigration

Trump also said on Monday that he will impose a 25% tariff on all imports from Canada and Mexico, citing concerns over allegedly illegal immigrants coming into the U.S. through the countries. 

Trump said he will impose the tariffs “as one of my many first executive orders” when he takes office on January 20.

“This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem,” Trump said in a Truth.Social post.

The President-elect had campaigned on promises of protectionist policies towards trade and immigration- carrying over his rhetoric from his first term, which had seen increased U.S. import tariffs on several trading partners.

(Reuters) -Lawmakers in the U.S. House of Representatives have asked Treasury Secretary Janet Yellen to rethink ties with Hong Kong's banking sector, saying the city has become a top location for money laundering and sanctions evasion.

Hong Kong has turned into a hub for many violations of U.S. trade controls, including export of controlled Western technology to Russia and the creation of front companies to buy Iranian oil, the bipartisan leaders of the House of Representatives Select Committee on the Chinese Communist Party said in a letter to Yellen.

The letter, scheduled to be publicly released on Monday, said that Hong Kong has shifted from being a trusted global financial center to a critical player in the deepening authoritarian axis of China, Iran, Russia and North Korea.

"We must now question whether longstanding U.S. policy towards Hong Kong, particularly towards its financial and banking sector, is appropriate," a copy of the letter seen by Reuters said.

The letter, signed by Republican John Moolenaar, who chairs the committee, and Raja Krishnamoorthi, the committee's ranking Democrat, cited research that shows nearly 40% of goods shipped from Hong Kong to Russia in 2023 were high-priority items such as semiconductors that Russia could use to prosecute its war in Ukraine.

The U.S. Treasury Department did not immediately respond to Reuters' requests for comments. Hong Kong's trade office in New York could not be immediately reached for comment

Investing.com-- Chinese electric vehicle (EV) stocks rose in Hong Kong trade on Monday after media reports stated that China and the European Union were close to reaching a solution on eliminating tariffs on imports into the bloc.

Brussels and Beijing are nearing a solution on tariffs on Chinese electric vehicle imports into the bloc, Bernd Lange, chair of the trade committee of the European Parliament, told a German broadcaster.

"We are close to an agreement: China could commit to offering e-cars in the EU at a minimum price," Bernd Lange told n-tv, without elaborating. "This would eliminate the distortion of competition through unfair subsidies, which is why the tariffs were originally introduced," Reuters had reported last week.

Shares of Hong Kong-listed NIO Inc (HK:9866) were nearly 4% higher, while Geely Automobile Holdings Ltd (HK:0175) shares rose 1.7%.

Li Auto (NASDAQ:LI) (HK:2015) shares rose 1.4%, while BAIC Motor Corp Ltd (HK:1958) and BYD Co (SZ:002594) (HK:1211) were up 0.9% and 0.4%, respectively.

The European Union had earlier this year hiked import tariffs on Chinese-made electric vehicles by up to 45.3% in a high-profile trade investigation, a decision that drew ire from Beijing.

China's Chamber of Commerce to the EU at the time expressed profound disappointment with the "protectionist" and "arbitrary" measure.

Although neither the European Commission nor China’s Ministry of Commerce has officially commented on Lange’s remarks, progress in the discussions has been reported.

Lange’s comments came just days after Chinese President Xi Jinping and German Chancellor Olaf Scholz discussed the issue during the G20 summit in Rio de Janeiro. Xi emphasized that tariffs on Chinese EVs are a global concern and reiterated China’s commitment to resolving the issue through dialogue.

The EU has indicated that the discussions have yielded technical progress, but the details of the agreement remain under wraps, according to media reports.

Investing.com-- Most Asian stocks rose on Monday as investors piled into cyclical stocks heading into the last week of November, while focus turned to a slew of upcoming economic readings,  including China’s industrial data and India’s third-quarter GDP.

Sentiment was also buoyed by U.S. President-elect Donald Trump's nomination of prominent investor Scott Bessent as Treasury Secretary, with Bessent seen holding a much more moderate view on trade tariffs.

Regional markets tracked Friday's gains on Wall Street, where demand for economically sensitive sectors saw the Dow Jones Industrial Average close at a new high, and S&P 500 mark its fifth winning day in a row.

U.S. stock index futures rose in Asian trade, tracking optimism over Bessent's appointment. Bond yields also fell after his appointment, lending stocks more space to rise. 

Investors shrugged off risk worries induced by heightened tensions between Russia and Ukraine. Moscow launched an advanced hypersonic missile on a Ukrainian facility last week and threatened nuclear retaliation for Kyiv’s use of Western-made, long-range missiles.

Japan’s Nikkei 225 index added 1.2%, while the TOPIX rose 1%. Both indexes logged weekly losses last week.

South Korea’s KOSPI rose 1.4%, while Indonesian shares, specifically the Jakarta Stock Exchange Composite Index jumped 1.7%.

Bucking the trend, China's Shanghai Shenzhen CSI 300 and Shanghai Composite indexes were down 0.6% and 0.4%, respectively. Hong Kong’s Hang Seng index shed 0.4%.

Futures for India’s Nifty 50 index pointed to strong open. Reuters reported that Adani dollar bond prices fell to almost one-year lows on Monday as investors cut their exposure to the Indian conglomerate in the wake of bribery and fraud allegations from U.S. authorities.

Econ. data barrage on tap this week

Singapore is scheduled to release its inflation figures for October later in the day. Economists polled by Reuters expect the headline inflation rate of 1.8%, down from the 2% in the previous month.

South Korea's central bank is set to decide on  interest rates on Wednesday, while November inflation numbers from Japan’s capital city of Tokyo will be released on Friday. 

India is set to release its third-quarter GDP report on Friday, while China will release purchasing managers index data on Saturday. Before that, industrial profit data from China is due on Wednesday.

In the U.S., the Federal Reserve’s preferred measure of inflation, the personal consumption expenditures (PCE) price index, is to be released on November 27.

Australian shares hit record high

Australia's ASX 200 hit an all-time-high of 8452.1 points with a 0.7% rise on Monday, helped by gains in cyclical stocks such as banks and miners. The trade was underpinned by a global push into economically sensitive sectors, as investors bet on more expansionary policies under a Trump administration in the U.S..

In corporate news, Australia’s largest vehicle fleet management and leasing group SG Fleet Group Ltd (ASX:SGF) jumped as much as 24% after it confirmed that it is in discussions regarding a A$1.2 billion ($785 million) buyout offer from private equity group Pacific Equity Partners (PEP)

Australian inflation readings for October are also scheduled to be out on Wednesday.

Investing.com -- J.P. Morgan’s 2025 U.S. economic outlook outlines two potential paths for the nation’s economy, hinging on the policy environment set by the recently elected administration. 

Analysts emphasize that these paths reflect a tension between stimulus-oriented policy changes and the uncertainty surrounding trade and regulation. 

The note flags key economic indicators and forecasts for the year ahead, including GDP growth, unemployment trends, inflation dynamics, and fiscal and monetary policy implications.

J.P. Morgan argues that the recent election, which brought a red-wave administration to power, introduces a dual narrative for 2025. 

On one hand, tax cuts and deregulation could invigorate business confidence and productivity, potentially boosting GDP growth while keeping inflation manageable. 

On the other, heightened policy uncertainty—driven by tariffs, restrictive immigration measures, and potential geopolitical tensions—might create a stagflationary scenario with weaker growth and elevated inflation risks.

J.P. Morgan projects a moderate slowdown in GDP growth to 2% in 2025, with unemployment expected to rise slightly to 4.5%. 

Despite this cooling, the business cycle appears resilient, with labor market tightness gradually easing. 

Job growth is predicted to remain subdued, and layoffs are likely to stay low. However, reduced immigration could constrain labor supply and growth in key industries.

Wage growth is also expected to cool further, falling into the low 3% range by the second half of the year. Combined with modest productivity gains, these dynamics suggest that real compensation growth will continue to support consumer spending, albeit at a slower pace.

Core PCE inflation, a key metric for the Federal Reserve, is expected to decelerate to 2.3% by year-end, closer to the Fed’s long-term 2% target. Inflation pressures from tariffs on China, however, could present risks. 
 

A proposed 60% across-the-board tariff on Chinese goods, if implemented, might raise core inflation by 0.2 percentage points, though the broader impact on price stability remains uncertain.

The Federal Reserve is projected to continue easing monetary policy, with incremental rate cuts throughout the year. 

By September, the Fed funds target rate is expected to stabilize at 3.5-3.75%, a shift reflecting the Fed’s cautious optimism about managing inflation without undermining employment.

Trade policy looms large in the 2025 outlook. Analysts expect new tariffs on China to disrupt trade flows, reducing U.S. export growth while raising costs for imported goods. Meanwhile, the potential for broader tariff measures—targeting global trade—adds to the uncertainty.

On the fiscal side, the report anticipates a significant expansion in federal deficits. The likely extension of the 2017 Tax Cuts and Jobs Act provisions, alongside increased defense and domestic spending, could push the deficit to 7% of GDP by 2026. 

Such levels are concerning in an environment of full employment and muted GDP growth.

Corporate investment is expected to grow modestly, buoyed by consumer demand and federal incentives for specific sectors like infrastructure and technology. 

However, analysts note that business spending remains cautious, with companies prioritizing balance sheet health over expansion.

Real consumer spending, a key driver of economic activity, is forecasted to grow at a slightly slower rate of 2% in 2025. 

Moderating wage growth, combined with tighter credit conditions and reduced household savings, will likely temper the pace of consumption.