I. Yesterday’s News
International News

1. A sweeping Republican-sponsored tax overhaul gained momentum in the U.S. Senate on Thursday with the backing of Senator John McCain, as party leaders held behind-the-scenes negotiations to try to secure enough votes for passage. McCain, a key player in July's collapse of a Republican effort to dismantle Obamacare, said the tax bill was "far from perfect." But the war hero and former presidential candidate said the bill would boost the economy and give tax relief to all Americans. The Republican-controlled Senate was expected to begin a potentially chaotic "vote-a-rama" on amendments from Republicans and Democrats later on Thursday before moving to a final vote late in the evening or early on Friday.

2. The United States has formally told the World Trade Organization (WTO) that it opposes granting China market economy status, a position that if upheld would allow Washington to maintain high anti-dumping duties on Chinese goods. The USTR brief, which follows a Commerce Department finding in October that China fails the tests for a market economy, argues that China should not automatically be granted market economy.

3. OPEC and non-OPEC producers led by Russia agreed on Thursday to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude while signalling a possible early exit from the deal if the market overheats. Saudi Energy Minister Khalid al-Falih told reporters the Organization of the Petroleum Exporting Countries and non-OPEC allies had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market.

4. U.S. consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, while a sustained increase in underlying price pressures suggested that a recent disinflationary trend had probably run its course. Other data on Thursday showed a second straight weekly drop in first-time applications for unemployment benefits, pointing to a further tightening in labor market conditions that could soon generate faster wage growth and keep consumer spending supported, as well as push inflation higher. The reports strengthened expectations that the Federal Reserve will raise interest rates next month.

Domestic News

5. China's manufacturing activity expanded at a faster rate in November than expected, as companies revved up production and growth in new orders accelerated, official data showed Thursday, suggesting balanced growth in manufacturing supply and demand and further improvement in corporate production and operational environment. The nonmanufacturing PMI kept running at highs, pointing to resilience in China’s economy in the fourth quarter.

6. China state planner issues report on China's overseas investment, showing policy guidance and system support to Chinese companies’ offshore investment. The NDRC said China will focus on “One Belt One Road” construction in the future to promote international cooperation in capacity, and build a global network on trade, investment & financing, production and service.

7. High property prices in Chinese big cities like Beijing are inevitable, and the upward trend will remain on track due to centralized quality resources, population inflow and supply control, said Li Tie, director of China’s urban and small towns reform and development center,

8. Just days ahead of a Beijing visit, Canadian Prime Minister Justin Trudeau has yet to decide on whether to launch talks on a free trade deal that China has long pressed for and could face a cool reception over his government's decision to snub Chinese interest in Bombardier.

II. Market Overview
FX
1. Global Market

The dollar slipped to a four-day low against the euro on Thursday, hurt by selling pressure due to month-end adjustments, but rallied against the Japanese yen as U.S. Treasury yields rose on optimism about U.S. tax overhaul efforts. The euro was 0.42 percent higher against the greenback to $1.1897, after climbing as high as $1.1931. Against the Japanese yen, the dollar was 0.6 percent higher at 112.59 yen. The dollar index, which measures the greenback against six rival currencies, was down 0.11 percent at 93.06. The British pound strengthened on hopes Britain is close to a deal with the European Union over the Northern Ireland border. Sterling was up 0.86 percent at $1.3521.

2. Home Market

China's yuan fell against the U.S. dollar in the morning session on Wednesday, as the official midpoint rates lowered. The dollar index was losing momentum on the uncertainty over U.S. tax overhaul. Yuan is expected to keep rangebound in the near term due to lack of direction guidance and balanced forex settlement.

Precious Metals

Gold dropped 1 percent on Thursday as upbeat sentiment on equities and positive U.S. growth data dented the appeal of the safe-haven asset, though the metal was still stuck in its narrowest monthly range in 12 years. Spot gold was down at $1,274.36 an ounce, having earlier hit its lowest since Nov. 14 at $1,270.11. U.S. gold futures settled down $8.90, or 0.7 percent, at $1,273.20 per ounce, closing the month up 0.2 percent.

Commodities
1.Crude Oil

Oil rose on Thursday after OPEC and non-OPEC producers led by Russia agreed to extend output cuts until the end of 2018, while also signalling a possible early exit from the deal if the market overheats. Brent crude futures settled up 46 cents or 0.7 percent to $63.57 a barrel. U.S. crude futures settled up 10 cents or 0.2 percent to $57.40 a barrel. Brent rose 3.5 percent on the month, with U.S. crude rising 5.5 percent.

2.Base Metals

Copper ended November down more than 1 percent on concerns over slowing demand from China. Three-month London Metal Exchange copper closed at $6,762 a tonne, little changed from the previous day but down 1.2 percent overall in November. LME nickel ended the day down 3.6 percent at $11,110 a tonne, a seven-week low. LME aluminium finished down 1 percent at $2,048 a tonne, off an earlier 3-1/2 month low of $2,039. It fell 5.2 percent in November, its biggest monthly loss since May last year, but is still on track for its biggest annual rally since 2009.

U.S. Treasuries
1. U.S. Bonds

U.S. Treasury yields rose sharply on Thursday, in line with the steep rally on Wall Street, on news that Senator John McCain had endorsed the U.S. Senate tax bill, potentially easing challenges to its eventual passage in Congress. The 10-year Treasury yield was up at 2.415 percent, from 2.376 percent late on Wednesday. It hit a five-week high of 2.437 percent earlier in the session. U.S. two-year note yields hit a nine-year high of 1.798 percent, from 1.762 percent on Wednesday. U.S. 30-year bond yields were up at 2.833 percent after hitting a two-week high of 2.869 percent.

2. Chinese bonds

Liquidity in China’s inter-bank market tightened in the morning session before big banks inject funds to ease institutionalize investors’ cross-month pressure. Asset prices climbed during one point due to institutional investors’ low appetite for outward financing, maturity of four-day hedge by the central bank.

Stock Market
1. U.S. Equities

The S&P closed at a record high and the Dow Jones Industrial Average broke above the 24,000 mark for the first time on Thursday as investors gained confidence that the Republican party's push for a U.S. tax overhaul would succeed. The Dow Jones Industrial Average rose 331.67 points, or 1.39 percent, to 24,272.35, the S&P 500 gained 21.51 points, or 0.82 percent, to 2,647.58, and the Nasdaq Composite added 49.63 points, or 0.73 percent, to 6,873.97.

2. Hong Kong Equities

Hong Kong shares ended Thursday lower, dragged by tech shares and reflecting fears in the region that the boom in demand for electronic components has peaked. At the close of trade, the Hang Seng index was down 446.48 points or 1.51 percent at 29,177.35. The Hang Seng China Enterprises index fell 1.48 percent to 11,475.72.

3. China Equities

Chinese stocks closed in a three-month low in shrinking turnover, snapping a two-day moderate rebound led by yesterday’s bellwether property sector, due to soft official PMI data. Major indexes are expected to remain tight rangebound as overall risk remained subdued. The benchmark Shanghai Composite Index settled down 20.67 points or 0.62 percent to 3,317.19. It slumped 2.24 percent in November, notching the biggest monthly decline in the year. The trading volume Shanghai A shares fell to 191.9 billion yuan from 217.6 billion yuan. CSI 300 fell 1.18 percent to 4,006.10.