Asian stock markets started the week cautiously. The MSCI Asia Index fell slightly by 0.1%, in line with weakening US index futures. Australia also weakened, while Japan's Nikkei 225 fell 0.4% amid reports that the Japanese economy shrank again in the third quarter. This situation was exacerbated by the escalating Japan-China relationship, particularly following the incident involving a Chinese fighter jet that aimed its fire control radar at a Japanese jet.

Investors' caution is also heightened as global markets hover near their highs, fueled by the AI-driven stock rally this year. This week, market participants await key decisions from several central banks, from Australia to the US and Brazil. Although the Federal Reserve is expected to cut interest rates, uncertainty remains high for 2026. Barclays analysts believe that the year will likely be a prolonged period of high interest rates unless inflation significantly weakens.

Geopolitical tensions in Asia are a major concern. In addition to the Japan-China military incident, the market is also awaiting China's latest trade data to gauge the country's economic health. In Europe, French President Emmanuel Macron warned that the European Union could take tough action—including tariffs—if China doesn't address its widening trade imbalance. Meanwhile, gold edged up after China's central bank added reserves for the 13th month, while oil held steady above $60 per barrel.

In the United States, the S&P 500 rose 0.2% to a record high after inflation data met expectations. However, the 10-year US Treasury yield rose to 4.14%, closing its worst week since April. Analysts warn that yields could break through 4.5% if the Trump administration's previous fiscal push, strong economic growth, and global reflationary momentum continue. If that happens quickly, pressure on the stock market could intensify. (az)

Source: Newsmaker.id