Asian and global stock markets started the week cautiously as investors navigated geopolitical tensions and a packed week of corporate earnings and U.S. economic releases. A deepening dispute between China and Japan weighed on Tokyo shares, while market participants prepared for key data, including Thursday’s delayed U.S. September jobs report and Nvidia’s earnings due Wednesday after market close.
Expectations for a U.S. interest rate cut in December have fallen below 50%, following recent signals from policymakers. This shift has increased pressure on technology stocks, which are highly sensitive to interest rate changes.
Asia Markets and Geopolitics
Japan’s Nikkei fell 0.2%, with tourism and retail stocks hit hard after China advised its citizens against visiting the country. Major declines included Isetan Mitsukoshi, Muji parent Ryohin Keikaku, and Shiseido, each down around 10%.
In Australia, BHP dropped 0.6% after a UK court found the company liable for a dam collapse in Brazil, leaving the overall index relatively flat. Hong Kong’s Hang Seng and China’s CSI300 indexes each fell roughly 1%.
Japan’s economy contracted for the first time in six quarters, partly due to U.S. tariffs, while a reported $110 billion stimulus plan influenced bond markets, pushing 20-year yields to a 26-year high. Analysts caution that shaky fiscal credibility could further pressure the yen, drawing parallels to Britain’s recent market turmoil following uncertainty over tax hikes.
U.S. Data and Treasury Yields
The U.S. Treasury 10-year yield held steady at 4.163% in Asia trading, following a slight rise on Friday. Wall Street indexes ended last week mixed, with a modest drop for the S&P 500 and small gains for the Nasdaq.
Thursday’s U.S. September jobs report is expected to be closely watched, although private-sector surveys have already indicated a slowdown. Analysts note that the headline data may be too stale to significantly shift market expectations, with CPI data remaining the key factor for Fed policy.
Corporate Earnings Spotlight
Investor attention this week is also on U.S. corporate earnings. Retail giants Home Depot, Target, and Walmart are reporting results, but all eyes are on Nvidia. The chipmaker’s stock has soared roughly 1,000% since the launch of ChatGPT in November 2022, including a year-to-date gain of over 40%, making it the first company to surpass a $5 trillion market valuation last month.
Nvidia’s earnings are widely seen as a litmus test for technology stocks and the broader market rally.
Commodities and FX
The U.S. dollar held slightly higher, keeping the euro below $1.16 and strengthening against other major currencies. Gold stabilized at $4,060 an ounce after Friday losses, while Brent crude slipped 1% to $63.78 as Russian supply resumed at a previously disrupted hub.
Bitcoin, often a barometer for tech stocks, rebounded slightly from its largest weekly drop since March, trading at $95,000 after losing more than 10% last week.
Outlook
Markets are entering a pivotal week where U.S. labor data and corporate earnings particularly from Nvidia could influence stock sentiment and interest rate expectations. Geopolitical tensions in Asia add another layer of uncertainty, keeping investors cautious and highlighting the interlinked nature of global markets.
With information from Reuters.