Global financial markets started the week with cautious optimism as investors looked ahead to a busy week filled with major central bank decisions and delayed economic data. European shares rose slightly, while Wall Street futures pointed to a possible recovery from last week’s sharp sell-off.
Europe’s benchmark STOXX index, which tracks 600 large companies, gained 0.6%. In the United States, S&P 500 e-mini futures rebounded 0.4% after Friday’s decline, triggered by fears over an artificial intelligence (AI) stock bubble and ongoing inflation concerns.
Asian markets, however, showed less confidence. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.2%, led by South Korea with losses up to 2.7%, despite being one of the world’s best-performing markets this year.
Marc Velan, head of investments at Lucerne Asset Management in Singapore, said: “The risk-off tone across Asia looks more like a spillover from last Friday’s selloff in U.S. momentum and tech than a region-specific catalyst. The unwind in the AI-capex trade weighed on global risk appetite, and in thin year-end liquidity those moves tend to travel quickly across regions.”
Investors are closely watching U.S. Treasury yields. The yield on the 10-year Treasury bond fell three basis points to 4.1645% as the market awaited critical economic data and central bank announcements.
China’s property sector is again under the spotlight. The U.S. dollar fell slightly to 7.0486 yuan, near its strongest level in more than a year, as November’s factory output and retail sales slowed.
Official data also showed that new home prices continued to decline, despite government efforts to stabilize the market.
State-backed property developer China Vanke announced a second bondholder meeting after failing to get approval to extend a bond payment due Monday. This has raised fears of a possible default.
Jeff Zhang, equity analyst at Morningstar, warned: “If Vanke ultimately defaults, we think the ramifications on the China property sector can be significant. Investors may be more concerned about the balance sheet and government’s attitude towards bailout for even the ‘safe names’.”
Central banks are at the center of attention this week. The Bank of Japan (BOJ) is expected to raise rates by 25 basis points to 0.75%, while the Bank of England (BOE) may cut rates by the same amount to 3.75%.
Meanwhile, the European Central Bank (ECB), Sweden’s Riksbank, and Norway’s Norges Bank are expected to hold rates steady.
Investors will also catch up on delayed U.S. economic data due to the government shutdown, including November’s jobs report and the monthly consumer price index.
Ben Bennett, head of investment strategy Asia at L&G Asset Management in Hong Kong, advised caution: “It’s worth taking this week’s data with a pinch of salt given problems collecting data as well as the direct economic impact of the government shutdown. We’ll have to wait until 2026 to get a clearer reading on the U.S. economy.”
Japanese stocks gained support after the BOJ’s “tankan” survey revealed that big manufacturers’ business sentiment reached a four-year high, suggesting the economy is handling the impact of higher U.S. tariffs.
The Topix index rose 0.2%, while the yen strengthened 0.6% to 154.955 against the U.S. dollar, near a one-week high.
The New Zealand dollar dropped 0.4% to $0.5781 after central bank governor Anna Breman highlighted tightening financial conditions, prompting investors to reduce rate hike expectations.
Commodities also moved, with Brent crude climbing 0.5% to $61.44 amid supply worries tied to U.S.-Venezuela tensions and other global factors. Imperial Oil issued a fire alert at its 120,000-barrel-per-day refinery in Ontario, Canada, while Russia reported its Afipsky refinery was unaffected by a Ukrainian drone attack.
Gold continued its rally for a fifth day, nearing a record high at $4,381.21. Spot gold last traded at $4,348.83, up 1.1%.
Cryptocurrencies recovered from a three-day slump. Bitcoin rose 1.5% to $89,845, and Ethereum increased 2% to $3,145.
On the geopolitical front, U.S. envoy Steve Witkoff stated that “a lot of progress was made” in peace talks to end the war in Ukraine during discussions in Berlin.
Investors are now balancing caution with hope. While central bank decisions, economic data, and geopolitical developments create uncertainty, markets are showing signs of resilience.
Europe’s markets are stabilizing, Wall Street futures suggest recovery, and Asia is navigating a tricky landscape shaped by both domestic issues and international spillovers.
China’s property sector remains a key concern, with potential Vanke defaults adding to investor unease. Analysts warn that outcomes here could have broader implications for the region.
Central banks are sending mixed signals. While some may raise rates to control inflation, others may cut or maintain rates to support economic growth, creating a complex landscape for global investors.
Commodity markets reflect broader global uncertainty. Oil, gold, and cryptocurrencies are sensitive to both supply tensions and investor sentiment.
In currency markets, the yen and U.S. dollar remain focal points, alongside movements in the kiwi dollar, reflecting changing expectations for interest rates and economic stability.
Investors are also carefully watching AI-driven market trends. The recent tech sell-off shows how quickly market sentiment can shift, affecting both equity and commodity markets worldwide.
With multiple economic indicators and central bank decisions on the horizon, this week is shaping up as one of the most closely watched periods in global financial markets this year.
Analysts advise patience and caution, as liquidity remains thin during year-end trading, and global markets are highly sensitive to news flows.
Ultimately, the week’s developments may provide clarity on inflation, growth, and market stability heading into 2026, making it a critical period for investors, traders, and policymakers alike.
