Asian stock markets slipped on Monday as tensions between China and Japan weighed on sentiment and investors prepared for a busy week of delayed U.S. data and major corporate earnings.
Although several economic reports are due this week, Nvidia’s earnings on Wednesday are expected to draw the most attention. The delayed September U.S. labor market data arriving Thursday is viewed as somewhat outdated and may have limited impact.
During the Asian session, S&P 500 futures rose 0.4% and Nasdaq 100 futures gained 0.7%, while European and FTSE futures edged about 0.1% lower. Expectations for a U.S. rate cut in December have dropped below 50% as Federal Reserve officials adopt a more cautious tone. This shift is beginning to pressure stocks, especially in the rate-sensitive technology sector.
China–Japan Tensions Hit Tokyo Markets
Japan’s Nikkei fell 0.2%, with travel and retail stocks suffering steep losses after China advised its citizens to avoid visiting Japan. Shares of Isetan Mitsukoshi, Ryohin Keikaku (Muji’s parent company), and Shiseido dropped around 10%.
In Australia, a 0.6% decline in BHP weighed on the broader market after a UK court ruled the miner liable for a dam disaster in Brazil. Hong Kong and mainland China indexes also slipped roughly 1%.
New data showed that Japan’s economy shrank for the first time in six quarters, largely due to U.S. tariffs hurting exports. Bonds came under pressure following a report that the government is planning a ¥110 trillion ($110 billion) stimulus package, pushing 20-year yields to a 26-year high of 2.75%.
Some analysts warn that the yen could weaken further if confidence in Japan’s fiscal discipline deteriorates, similar to last week’s reaction in the UK when markets fell sharply on budget concerns. U.S. Treasury yields were steady in Asia, with the 10-year holding at 4.163%.
On Wall Street, U.S. indexes recovered from heavy losses to end Friday mixed. The S&P 500 slipped slightly while the Nasdaq posted a modest gain.
Jobs Data and Nvidia Earnings in Focus
The main U.S. economic release this week is Thursday’s delayed September jobs report. But analysts warn the data may already be outdated, given recent private surveys showing a cooling labor market.
Khoon Goh, head of Asia research at ANZ, said a weak payrolls number is unlikely to sway the more hawkish Fed officials, who remain focused on inflation risks and upcoming CPI data.
Rate-cut expectations fell on Friday after comments from Kansas City Fed President Jeffrey Schmid and Dallas Fed President Lorie Logan signaled little urgency to ease policy.
This week’s earnings lineup includes Home Depot, Target, Walmart, and Nvidia. The chipmaker’s results are seen as a major test for the AI-driven market rally. Nvidia shares have surged nearly 1,000% since ChatGPT launched in November 2022 and have climbed more than 40% this year, making it the first company to surpass a $5 trillion market valuation.
In currency markets, the U.S. dollar strengthened slightly, keeping the euro below $1.16 and pushing higher against other major currencies.
Gold held near $4,060 per ounce after Friday’s decline. Brent crude fell 1% to $63.78 as operations resumed at a Russian export hub previously disrupted by a Ukrainian strike.
Bitcoin, which has increasingly traded in line with tech-sector sentiment, nursed its biggest weekly loss since March after falling more than 10%. It traded around $95,000.
