(Dec 8): Asian markets were poised for a cautious open on Monday as traders navigate deteriorating China-Japan relations, a heavy slate of central bank decisions and the broader outlook for risk assets heading into next year.
The dollar held steady against its major peers, while futures signaled that Australian and Hong Kong equity benchmarks may slip when trading resumes. Japanese shares, meanwhile, were set to edge higher as the yen consolidated Friday’s decline.
The subdued tone reflected increasing investor caution over the durability of the AI-driven rally, with global equities hovering near October’s record highs. Markets were also bracing for policy announcements from central banks spanning Australia to Brazil and the US, just as renewed inflation pressures prompt a swift reassessment of next year’s monetary outlook.
While the Federal Reserve is still likely to cut interest rates on Wednesday, “the rate path for 2026 is more uncertain as members balance lingering price pressures from tariffs, a cooling labor market, the likely pick-up in economic activity in the coming months,” Barclays strategists including Andrea Kiguel wrote in a note to clients. “We think 2026 is likely to be a year of prolonged holds, though markets could try to add hike premiums if inflation momentum persists.”
The S&P 500 Index inched 0.2% higher, but stopped short of records Friday, as a dated reading of the Fed’s preferred inflation gauge met expectations. Treasuries declined, pushing the 10-year yield up four basis points to 4.14% and closing out their worst week since April, after conflicting economic data cast fresh uncertainty on the scale of potential Fed rate cuts next year. The dollar slid 0.5% last week.
Treasury yields may extend their rise, possibly toward 4.5%, on the back of impending fiscal boost from Trump’s earlier spending bills, strong growth and “the broader reflationary momentum now ripping through global long-end bond yields,” Tony Sycamore, an analyst at IG Markets in Sydney wrote in a note. “While we think this is likely more of a story for 2026, a rise of this magnitude could impact equities if it unfolds rapidly.”
See also: Asian stocks look muted as traders await Fed clues
This week’s auctions of three-, 10- and 30-year government debt are slated to begin Monday, a day earlier than usual to avoid coinciding with the Dec 10 Fed announcements. Australia is set to reopen a bond line maturing in 2054 just as the 10-year yield hits the highest since Nov. 2023.
The US continues to clear the data backlog with the delayed JOLTS reports scheduled for release. Weekly jobless claims and the employment cost index are also due. Besides the Fed rate decision, economists expect the Bank of Canada, Swiss National Bank and Reserve Bank of Australia will leave their respective policy rates on hold this week.
In Asia, Japanese assets will be in focus on Monday as relations with Beijing cool further after a Chinese fighter aircraft trained fire-control radar on Japanese military jets for the first time. Wages data for October and third quarter growth data will also be parsed to help gauge the prospect of further Bank of Japan rate hikes next year.
See also: Bank group urges caution on faster trade settlements in Asia
Traders will also be keeping a close eye on Chinese trade data for November to help gauge the health of the economy and the impact from modest US tariff relief. Trade Representative Jamieson Greer at the weekend said China has been complying with the terms of the bilateral trade agreements so far.
Meanwhile, French President Emmanuel Macron warned that the European Union may be forced to take “strong measures” against China, including potential tariffs, if Beijing fails to address its widening trade imbalance with the bloc.
In commodities, oil settled above US$60 a barrel on Friday, signaling that a risk premium persists as a peace deal between Russia and Ukraine remains elusive. Gold will be watched after China’s central bank added to its gold reserves for a 13th straight month in November.
Corporate news
- Brookfield Asset Management Ltd and Singapore’s GIC Pte Ltd agreed to a binding deal with National Storage REIT to buy the Sydney-listed firm for around A$4 billion (US$2.7 billion or $3.44 billion).
- Qatar Airways Group named Hamad Ali Al‑Khater as its new group chief executive officer in a surprise shakeup, succeeding Badr Mohammed Al-Meer after just two years in the post.
- An outage that took down markets operated by CME Group Inc for more than 10 hours at the end of last week was caused by human error at a data center owned by CyrusOne.
Some of the main moves in markets:
Currencies
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- The Japanese yen was little changed at 155.23 per dollar as of 7.16am Tokyo time
- The euro was little changed at US$1.1640
- The offshore yuan was little changed at 7.0699 per dollar
- The Australian dollar was little changed at US$0.6637
Cryptocurrencies
- Bitcoin fell 1.1% to US$89,284.82
- Ether fell 1.8% to US$3,031.73
Bonds
- Australia’s 10-year yield advanced three basis points to 4.71%
Stocks
- Hang Seng futures were little changed on Friday
- S&P/ASX 200 futures fell 0.2%
Commodities
- Spot gold fell 0.2% to US$4,197.78 an ounce
Uploaded by Jason Ng
