- Activity slowed to a six-month low.
- New order growth was also the weakest in six months, with new business from abroad declining.
- Employment fell for the fifth consecutive month.
- Higher wage and raw material costs pushed input prices upward for a tenth consecutive month, while service providers lowered output charges, citing increased competition.
RatingDog founder Yao Yu commented on the December PMI survey, stating:
“Overall, the services sector ended 2025 with a modest growth, high expectations profile. While the recovery in expectations provides psychological support for 2026 outlook, the contraction in employment and external demand volatility remain key constraints facing the sector.”
Mainland China’s CSI 300 and the Shanghai Composite Index gained 1.59% and 1.07%, respectively, in the morning session. December’s Services PMI underscored the need for monetary and fiscal policy support from Beijing, boosting demand for Mainland China-listed stocks.
US Manufacturing and the Fed in Focus
US futures advanced during the Asian morning session on Monday, January 5. The Nasdaq 100 E-mini and the S&P 500 E-mini gained 93 points and 11 points, respectively, while the Dow Jones E-mini edged 17 points higher.
Later on Monday, US economic data and Fed speakers will influence risk sentiment. Economists forecast ISM Manufacturing PMI to rise from 48.2 in November to 48.3 in December. A continued contraction across the manufacturing sector would support a more dovish Fed rate path, lifting sentiment.
However, traders should consider the sub-components, including prices and employment. Elevated input prices, reflecting the effects of elevated interest rates, combined with job cuts, would likely raise bets on a March Fed rate cut.
Beyond the PMI data, Fed speakers and geopolitical developments are also likely to influence risk appetite.
Increased support for a March Fed rate cut to bolster the economy would fuel speculation about multiple cuts in 2026. Lower borrowing costs would improve company earnings and equity valuations, reinforcing the bullish outlook for US stock futures.
According to the CME FedWatch Tool, the chances of a March Fed rate cut fell from 51.1% on January 2 to 48.4% on January 5. Meanwhile, the probabilities of a cut in April or June stood at 60.1% and 82.9%, respectively.
Key Technical Levels for Dow Jones, Nasdaq 100, and S&P 500
Monday’s gains left the Dow Jones E-mini, the Nasdaq 100 E-mini, and the S&P 500 E-mini trading above their 50-day and 200-day EMAs. The EMAs signaled a bullish short- to medium-term outlook, aligning with positive fundamentals.
Near-term trends will hinge on geopolitical developments, US data, Fed rhetoric, and BoJ comments. Key levels to monitor include:
Dow Jones
- Resistance: The December 26 record high of 49,086, and then 49,500.
- Support: 48,000 followed by the 50-day EMA (47,784).