I. Yesterday’s News
International News

1. The U.S. holiday shopping season is on track to break sales records on the back of surging consumer confidence and increased use of mobile devices. The holiday shopping season brought record-breaking online and in-store spending this year of more than $800 billion, according to Mastercard Inc's analytics arm. Preliminary numbers show total holiday sales will exceed RetailNext's initial forecast of a 3.8 percent increase from last year. RetailNext and most other analytics firms and industry groups are due to publish holiday sales data in January. United Parcel Service Inc, the world's largest package delivery company, said on Wednesday it was on track to return a record number of packages this holiday, having handled more than 1 million returns to retailers daily in December. That pace is expected to continue into early January, UPS said, and would likely peak at 1.4 million on Jan. 3, up 8 percent from this year.

2. The National Association of Realtors said on Wednesday its pending home sales index rose to a reading of 109.5, up 0.2 percent from October boosted by job growth across a strengthening economy. The Conference Board's measure of consumer confidence declined to 122.1 in December, further than the 128.0 anticipated by economists polled by Reuters. In November, the index was revised to 128.6 from 129.5.

3. China's Geely Holding , owner of the Volvo car brand, is buying an 8.2 percent stake in Swedish truckmaker AB Volvo from activist investor Cevian Capital, worth around $3.3 billion at current market prices. But Geely has no plans to reunite with Volvo Cars, which was split from AB Volvo in 1999.

4. South Korea's factory output gained 0.2 percent in November from October on a seasonally adjusted basis, data from Statistics Korea showed on Thursday, well below economists’ forecast. Industrial output in October was sharply revised down. In annual terms, factory output in November declined 1.6 percent, against a 1.0 percent rise forecast by economists. South Korea's business sentiment index ticked down for January, a central bank survey showed on Thursday, as manufacturers of small- and middle-sized businesses became a bit gloomier about economic conditions. Manufacturers who categorize themselves as exporters also slumped 2 index points to 89 , as export growth showed some signs of slowdown during the fourth quarter.

Domestic News

5. The Political Bureau of the Communist Party of China (CPC) Central Committee decided Wednesday to discuss a proposal about amending part of China's Constitution at the second plenary session of the 19th CPC Central Committee in January.

6. China will extend a tax rebate on purchases of so-called new-energy vehicles (NEV) until the end of 2020. Four departments including the finance ministry said in a statement the tax exemption will run from Jan. 1, 2018 until Dec. 31, 2020 for electric, plug-in petrol-electric hybrid and fuel-cell powered vehicles. Boosted by the news, the H-share of BYD Co Ltd surged over 10 percent during one point, while its A-shares jumped over 9 percent.

7. Four departments jointly issued a document, banning developers from refusing home buyers to use house provident fund loans by means of raising prices, cutting discount, or requiring home buyers to sign written documents on waiving their rights to use provident fund loans.

8. China exported no oil products to North Korea in November, Chinese customs data showed, apparently going above and beyond sanctions imposed earlier this year by the United Nations.

II. Market Overview
FX
1. Global Market

The U.S. dollar fell to a 3-1/2 week low against a basket of currencies on Wednesday as traders bet more major central banks will begin reducing monetary stimulus in 2018 because of faster global economic growth. The dollar index that tracks the greenback against six currencies was down more than 0.2 percent at 93.027 after slipping to 92.956, its lowest since Dec. 1 earlier. The euro reached a 3-1/2 week high of $1.1904 on Wednesday. The dollar weakened against the yen on the day at 113.26 yen. Those developments bolstered demand for the currencies of commodity exporting countries, with the Canadian dollar touching C$1.2627, its strongest level in three weeks. The Australian dollar rose 0.6 percent to $0.7773, its highest level in two months. In the cryptocurrency arena, Bitcoin's rebound fizzled as it struggled to stay above $16,000 for a second day.

2. Home Market

China's yuan edged down against the dollar along with the official midpoint rates in the morning session on Wednesday, snapping its recent strength. Turnover remained thinned. Lack of external guidance and rising forex demand pulled yuan off the key mark of 6.56. Yuan is expected to expected to extend wide rangebound around the New Year, but is unlikely to fall sharply.

Precious Metals

Gold rose for an eighth straight session on Wednesday as a weaker U.S. dollar encouraged investors to buy, and palladium hit another near 17-year peak on expectations of strong demand and short supplies. Spot gold was up at $1,287.01 per ounce. The most active U.S. gold futures for February delivery settled up 0.3 percent at $1,291.40 per ounce. Among other precious metals, palladium touched its highest since February 2001 at $1,069.50 an ounce, just $5.50 an ounce from that month's peak.

Commodities
1.Crude Oil

Oil prices dipped on Wednesday after hitting a near two-and-a-half year high in the previous session as a rally fuelled by supply outages in Libya and the North Sea ran out of momentum. Brent crude futures dropped to $66.44 a barrel, down 058 cents after breaking through $67 for the first time since May 2015 the previous day. U.S. West Texas Intermediate (WTI) crude futures were at $59.64 a barrel, down 33 cents from their last settlement. WTI broke through $60 a barrel for the first time since June 2015 in the previous session.

2.Base Metals

Copper prices soared to four-year peaks on Wednesday after a jump in China's imports of the metal in November boosted expectations of stronger demand from the top consumer. Traders said copper's rally accelerated after New York opened, with United States-based funds leaping on the uptrend. Benchmark copper on the London Metal Exchange ended up 1.6 percent at $7,239 a tonne, having touched $7,259, its highest since January 2014. Prices of the metal used widely in power and construction are up 30 percent in the year to date. Aluminium prices rose 2.7 percent to $2,252 a tonne from an earlier $2,254, their highest since March 2012.

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

U.S. Treasuries prices gained on Wednesday as investors rebalanced portfolios before year-end, though the Treasury Department saw weak demand for a $34 billion sale of five-year notes. Benchmark 10-year notes gained 15/32 in price to yield 2.413 percent, down from 2.237 percent late on Tuesday.

2. Chinese bonds

Liquidity in China’s interbank market tightened due to shrinking overnight supply. Cross-year fund prices surged with seven-day financing cost for non-bank institutions hitting 20 percent.

Stock Market
1. U.S. Equities

U.S. stocks eked out a slight gain on Wednesday, as advances in some major technology stocks offset losses in energy and helped keep major indexes just above the unchanged mark. The Dow Jones Industrial Average rose 28.09 points, or 0.11 percent, to 24,774.3, the S&P 500 gained 2.12 points, or 0.08 percent, to 2,682.62 and the Nasdaq Composite added 3.09 points, or 0.04 percent, to 6,939.34.

2. Hong Kong Equities

Hong Kong shares were little changed on Wednesday, their first trading day after the Christmas break, with the benchmark Hang Seng Index rising 0.07 percent. At close of trade, the Hang Seng index was up 19.65 points or 0.07 percent at 29,597.66. The Hang Seng China Enterprises index fell 0.3 percent to 11,617.75. The sub-index of the Hang Seng tracking energy shares rose 1.21 percent while the IT sector dipped 1.06 percent, the financial sector was 0.02 percent lower and property sector rose 1.47 percent.

3. China Equities

Chinese stocks fell almost 1 percent on Wednesday, losing all Tuesday’s gains due to tight liquidity. Market diverged with consumer sector weakening, while NEV names surging on upbeat news. Major indexes are expected to remain low. The Shanghai Composite Index closed down 30.34 points or 0.92 percent at 3,275.78. The trading volume of Shanghai A-shares fell to 198.1 billion yuan from 174.6 billion yuan.